Econ 160 - Multiple choice Set 5 (#93-115)

Refer to the figure above. If S and D are the initial supply and demand curves and S' represents a tax, the burden of the tax to consumers is measured by the distance

EA

Refer to the figure above. Suppose S and D are the initial supply and demand curves and a tax represented by S' is imposed on sellers. The distance that represents the per unit amount of the tax is

EG

Refer to the figure above. The loss in efficiency due to the tax, represented by S', is measured by the area ______ and stems from ______

IJC; the trades that do not occur because of the tax

On a given linear demand curve, at high prices demand is ______ than at low prices

more price elastic

Moe's reservation price for his economics textbook is $100. The week before the semester began, Moe found a copy of the required text online for $75. Moe's consumer surplus is

$25

Refer to the figure above. The deadweight loss due to the price ceiling is represented by the area

FEC

Refer to the figure above. When the market is unregulated, consumer surplus equals

1/2 * (AB) * (BC).

Which of the following policies maintains efficiency in the housing market while assisting the poor with their housing needs?

A price floor

Fred runs a fishing lodge, and has a very successful business during the summer. In the fall, the number of guests at the lodge starts to decline, and by November very few people stay at Fred's Lodge. Fred should

Keep the lodge open only during those months in which revenues exceed total costs.

Which of the following statements best characterizes the inefficiency caused by a price floor? A. Consumers are encouraged to consume too much

Trades that benefit both the buyer and the seller are available at prices less than the price floor

Suppose you quit your job to start a business. In the first month, your total revenue was $6,000. You paid $1,000 in monthly rent for office space.$ 200 in monthly rent for equipment.$3,000 to your workers in wages for the month.$1,000 for the supplies you used that month.You determine that your true profit that month was negative $200. Why?

You accounted for lost salary of $1000

For which of the following products is income elasticity likely to be greatest

airplane travel

Suppose the market for coffee is in equilibrium at a price of $5 per pound. This means

all remaining consumers value a pound of coffee at less than $5

A change in consumers' income levels

changes demand

Your state legislature is considering increasing the sales tax on two different commodities: prescription drugs and restaurant meals. You estimate price elasticity of demand for prescription drugs to be -0.08 and price elasticity of demand for restaurant meals to be -2.

drugs because demand is price inelastic

Sven likes to water ski, but can only water ski during the one week that he is on vacation. Therefore, he plans to ski every day, for eight hours a day. The first day, Sven skied for eight hours and enjoyed every hour. The second day, Sven slept in and then skied for seven hours, which was fun but not as much fun as the first day. The third day, Sven skied for six hours, but was starting to get a bit bored by the end. The fourth day, Sven skied for four hours and then took a nap. On the fifth day of Sven's vacation, Sven went blueberry picking all day.

even for activities he really enjoys, diminishing marginal utility eventually sets in.

During Thanksgiving you participated in a pumpkin-pie eating contest since you love pumpkin pie. You really enjoyed the first two pies, the third one was OK, but as soon as you ate the 4th one you became ill and lost the contest.

first increased than decreased

Suppose the government fines the firm an amount equal to the damage imposed on the fish. This government action

increases efficiency in the market

The difference between the price of a good and the marginal cost of that good is called

producer surplus

During recessions, when workers lose their jobs and have lower incomes, sales of durable goods (goods with a life expectancy of 3 years or more) decline. Apparently, durables are

normal goods

If consumers completely cease purchasing a product when its price increases by any amount, demand is classified as

perfectly elastic

If the percent change in quantity demanded is zero for any percent change in the price, demand is classified as

perfectly inelastic

When the price of insulin was $10 consumers demanded 100 units, when the price was $15 consumers demanded 100 units, and when the price was $20 consumers demanded 100 units. Based on this information, insulin must have a(n) _______ demand curve.

perfectly inelastic