Econ 2000--Exam 3 Practice Questions (Final)

Efficiency in a market is achieved when

the sum of producer surplus and consumer surplus is maximized.

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

consumer surplus decreases and total surplus decreases in the market for that good.

Cost is a measure of the

seller's willingness to sell.

Scenario 11-1 ​Becca is a single mother of two young children who spend their days at a daycare center while Becca goes to work. The daycare center closes at 5:30. If parents do not pick up their children at or before 5:30, the daycare center charges a late fee of $5 per child for every 10 minutes the parent is late. Refer to Scenario 11-1. Due to traffic, Anh expects to be 40 minutes late to pick up his children. Which of the following most accurately describes the set of prices that he would be willing to pay for a variable toll road that would get him to the daycare center on time?

Any price less than $20.00.

Flu shots provide a positive externality. Suppose that the market for vaccinations is perfectly competitive. Without government intervention in the vaccination market, which of the following statements is correct?

At the current output level, the marginal social benefit exceeds the marginal private benefit.

$10.

Refer to Figure 8-2. The amount of deadweight loss as a result of the tax is

Under which of the following scenarios would a park be considered a common resource?

Visitors can enter the park free of charge, but frequently all of the picnic tables are in use.

Refer to Figure 11-1. Emma's use of good x does not affect anyone else's use of good x. Neither Emma nor anyone else can be prevented from using the good. Good x is an example of the type of good that belongs in

Box D, which represents public goods.

Refer to Figure 10-4, Graph (b) and Graph (c). The installation of a scrubber in a smokestack reduces the emission of harmful chemicals from the smokestack. Therefore, the external benefit of smokestack scrubber installation is represented by

P4a − P4b.

$8.40 and 48 units, respectively.

Refer to Figure 10-1. This graph represents the tobacco industry. The socially optimal price and quantity are

decreased to Q2.

Refer to Figure 10-2. If this market is currently producing at Q4, then total economic well-being would be maximized if output

decrease government revenue and decrease the deadweight loss from the tax.

Refer to Figure 8-7. If the government changed the per-unit tax from $5.00 to $2.50, then the price paid by buyers would be $7.50, the price received by sellers would be $5, and the quantity sold in the market would be 1.5 units. Compared to the original tax rate, this lower tax rate would

The well-being of domestic crude-oil producers is now higher in that they now sell more crude oil at a higher price per barrel.

Refer to Figure 9-4. A result of this country allowing international trade in crude oil is as follows:

D + F

Refer to Figure 9-6. The deadweight loss created by the tariff is represented by the area

Spain is an importer of computer chips, taking the world price of $10 per chip as given. Suppose Spain imposes a $5 tariff on chips. Which of the following outcomes is possible?

Spanish consumers of chips lose and Spanish producers of chips gain.

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound,

both Janine and Henry experience an increase in consumer surplus.

If a consumer places a value of $13 on a particular good and if the price of the good is $16, then the

consumer does not purchase the good.

When a tax is imposed on a good, the

equilibrium quantity of the good always decreases.

On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. An economist would suggest that

it would be more efficient if the electric company raised its rates for electricity at peak times.

If the size of a tax increases, tax revenue

may increase, decrease, or remain the same.