econ

soup is an inferior good if the demand

for soup falls when income rises

for a market for a good or service to exist, there must be a

group of buyers and sellers

if the labor supply curve is nearly vertical, a tax on labor

has little impact on the amount of work that workers are willing to do

a minimum wage that is set below a market's equilibrium wage will

have no impact on unemployment

a candle manu. produces 4000 units when the market price is $11 per unit and produces 6000 units when the market price is $13 per unit. using the midpoint method, for this range of prices, the price elasticity of supply is about

2.4

studies indicate that the price elasticity of demand for cigarettes...

40%

If the government removes a binding price ceiling from a market, then the producer surplus in that market will increase

true

Individual demand curves are summed horizontally to obtain the market demand curve.

true

Price elasticity of demand along a linear, downward-sloping demand curve decreases as price falls.

true

The tax burden falls more heavily on the side of the market that is more inelastic.

true

a free-rider is someone who receives the benefit of a good but avoids paying for it

true

a government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn

true

a tax on sellers and an increase in input prices affect the supply curve in the same way

true

despite the appealing logic of the coase theorem, private actors often fail to resolve on their own the problems caused by externalities

true

taxes on labor tend to encourage the elderly to retire early

true

the tax burden falls more heavily on the side of the market that is more inelastic

true

trade allows a country to consume outside its production possibilities frontier

true

when a tax is imposed on sellers, consumer surplus and producer surplus both decrease

true

The price elasticity of supply measures how responsive

sellers are to a change in price.

which of the following is a subject that economists study

all the above are correct

Seymour

an entry fee be charged on summer weekend days when many people tend to visit the beach

In markets, the invisible hand allocates resources efficiently

when the buyers and sellers are the only interested parties

private markets fail to reach a socially optimal equilibrium when negative externalities are present because

social costs exceed private costs at the private market solution

Each of the following would be considered a common resource except a

streetlight.

wheat is the main input in the production of flour. if the price of wheat decreases, then we would expect the

supply of flour to increase

the Ogallala aquifer

over time, the aquifer is likely to be overused

a demand schedule is a table that shows the relationship between

price and quantity demanded

which of the following statements is correct?

the efficient provision of public goods is intrinsically more difficult than the efficient provision of private goods

an example of a positive analysis is studying

how market forces produce equilibrium

If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is about

0.5, and supply is inelastic.

If a 20% change in price results in a 15% change in quantity supplied, then the price elasticity of supply is about

0.75, and supply is inelastic.

suppose your own demand curve for tomatoes slopes downward.

your consumer surplus on the last tomato you bought is zero

which of the following claims is consistent with the views of mainstream economists

if we increase the rate of inflation from 3% to 6%, then the rate of unemployment will temporarily fall

Suppose that a $4 per unit tax is imposed on the sellers of DVDs. The effect of the tax will be to

​shift the supply curve up by exactly $4 and the price paid by buyers will rise by less than $4.

Jamaica has a comparative advantage in the production of aluminum, but currently allows no international trade in aluminum. We can conclude that

​the domestic price of aluminum in Jamaica is lower than the world price for aluminum.

the deadweight loss from a tax of $x per unit will be smallest in a market

in which demand and supply are inelastic

which of the following will cause a decrease in producer surplus?

income increases and buyers consider the good to be inferior

How does the concept of elasticity allow us to improve upon our understanding of supply and demand?

Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept.

the price paid by buyers in a market will increase if the government

increases a binding price ceiling in that market

Which of the Ten Principles of Economics does welfare economics explain more fully?

Markets are usually a good way to organize economic activity.

a tariff on a product

increases the domestic quantity supplied

if car manu. begin using new labor-saving tech. on their assembly lines, we would not expect

individual car manu. to move up and to the right along their individual supply curves

the less freedom young mothers have to work outside the home, the

less elastic the supply of labor will be

for which of the following types of goods would the income elasticity of demand be positive and relatively large

luxuries

when a tax is imposed in a market, it will

affect the behavior of both buyers and sellers

alternating incentives so that people take account of the external effects of their actions

all of the above are correct

the incidence of tax is

always determined by the interaction of the demand and supply side of the market

a surplus results when a

binding price floor is imposed on a market

if demand is price inelastic, then

buyers do not respond much to a change in price

for which pairs of goods is the cross-price elasticity most likely to be positive

canoes and kayaks

using a toll to reduce traffic when congestion is greatest is an example of a

corrective tax

a traffic light at an intersection is

not rival and not excludable in consumption

suppose buyers of coffee and sugar regard the two goods as complements. then an increase in the price of coffee will cause a

decrease in the demand for sugar and a decrease in the quantity supplied of sugar

Suppose buyers of coffee and sugar regard the two goods as complements. Then an increase in the price of coffee will cause a(n)

decrease in the demand for sugar and a decrease in the quantity supplied of sugar.

The price received by sellers in a market will decrease if the government

decreases a binding price ceiling in that market.

the highest form of competition is called

perfect competition

in the tragedy of the commons parable, if the medieval townspeople had forseen the tragedy,

pollution

the minimum wage is an example of a

price floor

for a particular good, a 2% increase in price causes a 12% decrease in quantity demanded. which of the following statements is most likely applicable to this good?

the good is a luxury

which of the following will cause no change in producer surplus?

the imposition of a nonbinding price ceiling in the market

which of the following statements is not correct

the invisible hand can remedy all types of market failures

for which of the following goods is the income elasticity of demand likely highest

diamonds

When a tax is imposed on the buyers of a good, the demand curve shifts

downward by the amount of the tax

Holding all other forces constant, if decreasing the price of a good leads to an increase in total revenue, then the demand for the good must be

elastic

when quantity demanded responds strongly to changes in price, demand is said to be

elastic

cheese crackers

elastic, 1.74

To increase living standards, public policy should

ensure that workers are well educated and have the necessary tools and technology.

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

fall now

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

false

a price ceiling set above the equilibrium price causes a surplus in the market

false

a tax in insulin is likely to cause a very large deadweight loss to society

false

a tax on buyers increases the size of the market

false

an advantage of using the midpoint method to calculate the price elasticity of demand is that it uses the metric system

false

corrective taxes cause deadweight losses, reducing economic efficiency.

false

demand is inelastic if the price elasticity of demand is greater than 1

false

if a country has a lower opportunity cost than its potential trading partner, the country should decide to be self-sufficient

false

imposing a quota on the import of a good is preferable to a tariff because a tariff creates a deadweight loss while a quota does not

false

in general, demand curves for necessities tend to be price elastic

false

renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments

false

the cross-price elasticity of garlic salt and onion salt is -2, which indicates

false

the tax incidence depends on whether the tax is levied on buyers or sellers

false

trade does not benefit a nation if that nation has a comparative advantage in the production of that good

false