Dorcas Exaxm 2
Table 5-6: Using the midpoint method the income elasticity of demand for good Y is
-2.33 and good Y is an inferior good
Figure 7-19: If the price were P3 consumer surplus would be represented by the area
A
Figure 9-1: In the absence of trade total surplus in Scotland is represented by the area
A+B+C+D+F
Figure 8-8: The government collects tax revenue that is the area of
B+D
Which of the following is not an example of a public policy?
Equilibrium laws
Figure 5-14: Along which of these segments of the supply curve is supply least elastic?
GH
Figure 8-8: After the tax goes into effect producer surplus ins the area
J
Figure 7-16: Total surplus can be measured as the area
JNL
Figure 7-1: If the price of the product is $15 then who would be willing to purchase the product?
Lori, Aubrey, and Zach
Which of the following is not a commonly advanced argument for trade restrictions?
The efficiency argument
When a country allows trade and becomes and exporter of a good which of the following is not a consequence?
The losses of domestic consumers of the good exceed the gains of domestic producers of the good.
Figure 6-4: Which of the following statements is not correct?
When the price is $6 there is a surplus of 8 units
When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans
all of the above are correct
A decrease in supply will cause the largest increase in a price when
both supply and demand are inelastic
When a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic
buyers of the good will bear most of the burden of tax
Price controls
can generate inequities of their own
If the cross price elasticity of two goods is negative then the two goods are
complements
Total surplus with a tax is equal to
consumer suplus plus producer surplus plea tax revenue
The decrease in total surplus that results from a market distortion such as a tax is called a
deadweight loss
Figure 8-9: The imposition of the tax causes the quantity sold to
decrease by 20 units
Figure 7-2: When the price rises from P1 to P2 consumer surplus
decreases by an amount equal to B+C
The goal of rent control is to
help the poor by making housing more affordable
Figure 9-1: When trade in wool is allowed producer surplus in Scotland
increases by the area B+D+G
Necessities such as food and clothing tend to have
low price elasticities of demand and low income elasticities of demand
When a tax is placed on the sellers of the product buyers pay
more and sellers receive less then they did before the tax
At present the maximum legal price for a human kidney is 0 the price 0 maximizes
neither consumer nor producer surplus
A minimum wage that is set below a market's equilibrium wage will result in excess
none of the above is correct
Assume for the US that the domestic price of wheat without international trade is higher than the world price of wheat. This suggests that in the production wheat
other companies will have a comparative advantage over the US and the US will import wheat
Figure 6-3: A binding price floor is shown in
panel b only
Ronal Reagan believed that reducing income tax rates would
raise economic well-being and perhaps even tax revenue
Figure 6-2: The price ceiling causes a
shortage of 85 units
A tax on an imported good is called a
tariff
If a country allows trade for a certain good the domestic price without trade is lower than the world price
the country will be an exporter of the good
If a price ceiling is not binding then
the equilibrium price is below the price ceiling
When a country allows trade and becomes and importer of a good
the gains of the winners exceed the loss of the losers
The invisible hand refers to
the marketplace guiding the self interests of market participation into promoting general economic well being
Cross price elasticity of demand measures how
the quantity demanded of one good changes in response to a change in the price of another good
The Laffer Curve relates to
the tax rate to tax revenue raised by the tax
The study of how the allocation of resources affects the economic well being is called
welfare economics
Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called
willingness to pay
