Test 2 version 2

The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

$125

The burden of the tax on buyers is

$2 per unit

The amount of the tax per unit is

$3

At nick's bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

$3.50 each

If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

$325

The equilibrium price for piano lessons is $400. What is the total producer surplus in the market?

$400

Which of the following price ceilings would be binding in the market?

$50

Bill created a new software program he is willing to sell for $300. He sells his first copy and enjoys a producer surplus of $250. What is the price paid for the software.

$550

The effective price received by sellers after the tax is imposed is

$8

Who experiences the largest loss of consumer surplus when the price of an orange increase from $0.70 to $1.40

Alison (she was willing to pay the most out of everyone)

If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets

Consumer surplus decreases

If the market price for the good is $20, who will purchase the good?

Danita only (willing to pay up to $27)

A price floor is

a legal minimum on the price at which a good can be sold often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor. a source of inefficiency in a market

In response to a shortage caused by the imposition of a binding price ceiling on a market,

a price will no longer be the mechanism that rations scarce resources long lines of buyers may develop sellers could ration the good or service according to their own personal biases

Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

between $5 and $10

A surplus results when a

binding price floor is imposed on a market

Suppose sellers, rather than buyers, were required to pay this tax ( in the same amount per unit as shown in the graph). Relative to the tax on buyers, the tax on sellers would result in

buyers bearing the same share of the tax burden sellers bearing the same share of the tax burden the same amount of tax revenue for the government

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes

decreases, and the consumer surplus in the market for red wine decreases

A tax placed on buyers of tuxedoes shifts the

demand curve for tuxedoes downward, decreasing the price received by sellers of tuxedoes and causing the quantity of tuxedoes to decrease

suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

demand curve will shift upward by $20, and the effective price received by sellers will increase by $20

Sellers of a product will bear the larger part of the tax burden, and buyers will bear a smaller part of the tax burden, when the

demand for the product is more elastic than the supply of the product

Deadweight loss measures the loss

in a market to buyers and sellers that is not offset by an increase in government revenue

If the government removes a tax on a good, the the quantity of the good sold will

increase

taxes cause deadweight losses because they

lead to losses in surplus for consumers and for producers that, when taken together, exceed tax revenue collected by the government distort incentives to both buyers and sellers prevent buyers and sellers from realizing some of the gains from trade.

The price ceiling

makes it necessary for sellers to ration the good

If the government imposes a price ceiling of $8 on this market, then there will be

no shortage (at equilibrium price)

A government-imposed price of $16 in this market could be an example of a

non-binding price ceiling binding price floor

The size of a tax and the deadweight loss that results from the tax are

positively related

A tax imposed on the sellers of a good will raise the

price paid by buyers and lower the equilibrium quantity

When a tax is imposed on a good for which the demand is relatively elastic and the supply is relatively inelastic,

sellers of the good will bear most of the burden of the tax.

Buyers of a product will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the

supply of the product is more elastic than the demand for the product

the term tax incidence refers to

the distribution of the tax burden between buyers and sellers

If a price ceiling is not binding, then

the equilibrium price is below the price ceiling

Which of the following quantities decrease in response to a tax on a good?

the equilibrium quantity in the market for the good, producer surplus, and the well-being of buyers of the good

An outcome that can result from either a price ceiling or a price floor is

undesirable rationing mechanism