Econ exam 2

Mike:1,600 Laura:1,400 Sasha:1,100 David:900 Codi:700 Refer to the Table. If the market price is $1,000, the producer surplus in the market is

$400.

Refer to the Figure. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the total surplus?

$5,000

Refer to the Figure. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Between $5 and $7

Refer to the Figure. Suppose the government imposes a tax of P'-P'''. Total surplus before the tax is measured by the area

I + J + K + L + M + Y.

The demand and supply schedules for pizza are in the table above. A price ceiling of $4 per slice results in a surplus of 20 slices of pizza. a shortage of 20 slices of pizza. a shortage of 40 slices of pizza. a shortage of 60 slices of pizza.

a shortage of 20 slices of pizza.

If a binding price floor is imposed on the drone market, then

a surplus of drones will develop.

A drought in Spain destroys many red grapes causing the prices of both red grapes and red wine to rise. As a result, the consumer surplus in the market for red grapes

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

To say that a price ceiling is nonbinding is to say that the price ceiling

is set above the equilibrium price.

If a landlord will rent an apartment only to married couples, the landlord is using a ________ allocation method.

personal characteristics

A legal minimum on the price at which a good can be sold is called a

price floor.

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

quantity demanded of physicals increases, and the quantity supplied of physicals decreases.

When a tax is levied on a good, the buyers and sellers of the good share the burden,

regardless of how the tax is levied.

Refer to the Figure. How is the burden of the tax shared between buyers and sellers? Buyers bear

three-fourths of the burden, and sellers bear one-fourth of the burden.

The decrease in total surplus that results from a market distortion, such as a tax, is called a

deadweight loss.

A tax levied on the sellers of a good shifts the

supply curve upward (or to the left).

For widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. A tax of $15 per unit is imposed on widgets. The tax reduces the equilibrium quantity in the market by 200 units. The deadweight loss from the tax is

$1,500.

Refer to the Figure. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?

$2,500

Suppose a tax of $5 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300. The deadweight loss from the tax is

$250.

At Sarah's Bakery, the cost of making one cake is $1.00. If Sarah sells 20 cakes and gains producer surplus of $40.00, then Sarah must be selling her cakes for

$3.00 each.

The vertical distance between points E and F represents a tax in the market.​Refer to the Figure. The amount of tax revenue received by the government is

$5.

The graph shows the labor market for teenagers in Cape Coast, a city in Ghana. If the government sets a minimum wage of $6 an hour, the number of teenagers employed is

3,000.

Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift

supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially sweetened beverages.

The maximum price that a buyer will pay for a good is called

willingness to pay.

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Dallas's consumer surplus would increase.

Refer to the Figure. Suppose that the price falls from P2 to P1. Area B represents the

additional consumer surplus to initial consumers when the price falls.

Refer to the Figure. A government-imposed price of $12 in this market is an example of a

binding price floor that creates a surplus.

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.

The vertical distance between points E and F represents a tax in the market.​Refer to the Figure. The imposition of the tax causes the quantity sold to

consumer surplus after the tax.

Refer to the Figure. Suppose the government imposes a tax ofP' - P'''. The area measured by J represents

decrease by 1 unit.