Econ exam 2 practice quizlet

if the government levies a $800 tax per motorcycle on sellers of motorcycles, then the price paid by buyers of motorcycles would increase by less than $800. decrease by an indeterminate amount. increase by exactly $800. increase by more than $800.

A

Refer to Figure 7-6. When the price falls from P2 to P1, producer surplus decreases by an amount equal to C. decreases by an amount equal to A+B. decreases by an amount equal to A+C. increases by an amount equal to A+B.

B

Refer to Figure 7-2. If the government imposes a price floor of $110 in this market, then consumer surplus will decrease by $800. $200. $600. $400.

C

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game? $0 $10 $40 $50

B

Refer to Figure 8-3. As a result of the tax, consumer surplus decreases from $200 to $80. producer surplus decreases from $200 to $145. the market experiences a deadweight loss of $80. total surplus increases from $180 to $200.

C

As a result of a decrease in price, new buyers enter the market, increasing consumer surplus. new buyers enter the market, decreasing consumer surplus. existing buyers exit the market, increasing consumer surplus. existing buyers exit the market, decreasing consumer surplus.

A

Cost is a measure of the seller's willingness to sell. seller's producer surplus. producer shortage. seller's willingness to buy.

A

Refer to Figure 7-4. Which area represents producer surplus when the price is P2? ACH BCG ABGD DGH

A

Refer to Figure 8-2. Producer surplus without the tax is Question options: $4, and producer surplus with the tax is $1. $1, and producer surplus with the tax is $4. $6, and producer surplus with the tax is $1.5. $1.5, and producer surplus with the tax is $6.

A

The Social Security tax is a tax on capital. labor. land. savings.

B

Refer to Figure 6-13. What is the amount of the tax per unit? $1 $2 $3 $4

D

The size of a tax and the deadweight loss that results from the tax are positively related. negatively related. independent of each other. equal to each other.

A

Refer to Figure 7-9. At equilibrium, consumer surplus is represented by the area A. A+B+C. D+H+F. A+B+C+D+H+F.

B

Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $425. Billie Jo's willingness to pay for the dishwasher is $150. $425. $500. $850.

C

Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product? Calvin Calvin and Sam Calvin, Sam, and Andrew Calvin, Sam, Andrew, and Sasha

C

Refer to Table 7-9. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market? $0 $300 $400 $700

C

Under rent control, landlords can cease to be responsive to tenants' concerns about the quality of the housing because with rent control, the government guarantees landlords a minimum level of profit. they become resigned to the fact that many of their apartments are going to be vacant at any given time. with shortages and waiting lists, they have no incentive to maintain and improve their property. with rent control, it becomes the government's responsibility to maintain rental housing.

C

Refer to Figure 6-13. 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. two-thirds of the burden, and sellers bear one-third of the burden. one-half of the burden, and sellers bear one-half of the burden. one-fourth of the burden, and sellers bear three-fourths of the burden.

A

Refer to Figure 6-13. Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on sellers, the tax on buyers would result in buyers bearing a larger share of the tax burden. sellers bearing a larger share of the tax burden. a decrease in the amount of tax revenue for the government. an increase in the amount of tax revenue for the government.

A

Refer to Figure 9-3. With trade and without a tariff, the domestic price is equal to the world price. roses are sold at $4 in this market. there is a shortage of 400 roses in this market. this country imports 200 roses.

A

Refer to Figure 9-3. Without trade, the equilibrium price of roses is Question options: $4 and the equilibrium quantity is 300 roses. $3 and the equilibrium quantity is 200 roses. $3 and the equilibrium quantity is 400 roses. $2 and the equilibrium quantity is 500 roses.

A

Refer to Figure 9-6. Government revenue raised by the tariff is represented by the area E. B + E. D + E + F. B + D + E + F.

A

Refer to Scenario 9-1. Suppose the world price of cardboard is $139 and international trade is allowed. Then Boxland's consumers demand Question options: 102 tons of cardboard and Boxland's producers supply 357 tons of cardboard. 102 tons of cardboard and Boxland's producers supply 204 tons of cardboard. 204 tons of cardboard and Boxland's producers supply 357 tons of cardboard. 204 tons of cardboard and Boxland's producers supply 204 tons of cardboard.

A

Suppose that in a particular market, the supply curve is highly inelastic and the demand curve is highly elastic. If a tax is imposed in this market, then the sellers will bear a greater burden of the tax than the buyers. buyers will bear a greater burden of the tax than the sellers. buyers and sellers are likely to share the burden of the tax equally. buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

A

Which of the following is not correct? Taxes levied on sellers and taxes levied on buyers are not equivalent. A tax places a wedge between the price that buyers pay and the price that sellers receive. The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers. In the new after-tax equilibrium, buyers and sellers share the burden of the tax.

A

In the market for apartments, rent control causes the quantity supplied and quantity demanded to fall. to fall and quantity demanded to rise. to rise and quantity demanded to fall. and quantity demanded to rise.

B

Refer to Figure 8-2. The per-unit burden of the tax on buyers is $1. $3. $4. $6.

B

Refer to Figure 8-2. Total surplus without the tax is $7.5, and total surplus with the tax is $10. $10, and total surplus with the tax is $7.5. $6, and total surplus with the tax is $1.5. $1.5, and total surplus with the tax is $6.

B

Refer to Figure 9-3. When a tariff is imposed in the market, domestic producers Question options: gain $200 of producer surplus. gain $150 of producer surplus. gain $50 of producer surplus. gain $100 of producer surplus.

B

Refer to Figure 9-3. When the tariff is imposed, domestic consumers Question options: lose surplus of $400. lose surplus of $450. gain surplus of $50. gain surplus of $800.

B

Refer to Figure 9-4. Total surplus in this market before trade is A + B. A + B + C. A + B + C + D. B + C + D.

B

Refer to Figure 9-6. The tariff decreases producer surplus by the area C, decreases consumer surplus by the area C + D + E, and decreases total surplus by the area D + F. increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases total surplus by the area D + F. creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F. increases producer surplus by the area C + G and creates government revenue represented by the area D + E + F.

B

Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, producer surplus will be $16. $18. $24. $26.

B

The deadweight loss from a tax per unit of good will be smallest in a market with Question options: inelastic supply and elastic demand. inelastic supply and inelastic demand. elastic supply and elastic demand. elastic supply and inelastic demand.

B

Which of the following is correct? Rent control and the minimum wage are both examples of price ceilings. Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor. Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling. Rent control and the minimum wage are both examples of price floors.

B

Refer to Figure 9-6. The deadweight loss created by the tariff is represented by the area Question options: B. D + F. D + E + F. B + D + E + F

B (D+ F)

A shortage results when a nonbinding price ceiling is imposed on a market. nonbinding price ceiling is removed from a market. binding price ceiling is imposed on a market. binding price ceiling is removed from a market.

C

Evan purchases a wall calendar for $9, and his consumer surplus is $1. How much is Evan willing to pay for the wall calendar? $9 $5 $10 $8

C

If T represents the size of the tax on a good and Q represents the quantity of the good that is sold, total tax revenue received by government can be expressed as T/Q. T + Q. T × Q. (T × Q)/Q.

C

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that OPEC raised the price of crude oil in world markets. U.S. gasoline producers raised the price of gasoline. the U.S. government maintained a price ceiling on gasoline. Americans typically commuted long distances.

C

Refer to Figure 6-5. A government-imposed price of $12 in this market is an example of a binding price ceiling that creates a shortage. nonbinding price ceiling that creates a shortage. binding price floor that creates a surplus. nonbinding price floor that creates a surplus.

C

Refer to Figure 8-2. The amount of the tax on each unit of the good is $1. $3. $5. $2.

C

Refer to Figure 9-4. Total surplus in this market after trade is A + B. A + B + C. A + B + C + D. B + C + D.

C

If a price ceiling is not binding, then there will be a surplus in the market. there will be a shortage in the market. the market will be less efficient than it would be without the price ceiling. there will be no effect on the market price or quantity sold.

D

Refer to Figure 9-3. The size of the tariff on roses is $4. $3. $2. $1.

D

Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. At equilibrium, consumer surplus is $24. $36. $42. $48.

D

Refer to Table 7-7. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 2 if the price is $1,150. $1,400. $700. $950.

D

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market decreases. is unchanged. increases. may increase, decrease, or remain unchanged.

D

Suppose the government imposes a tax on cheese. The deadweight loss from this tax will likely be greater in the first year after it is imposed than in the eighth year after it is imposed because demand and supply will be more elastic in the first year than in the eighth year. first year after it is imposed than in the eighth year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year. eighth year after it is imposed than in the first year after it is imposed because demand and supply will be more elastic in the first year than in the eighth year. eighth year after it is imposed than in the first year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year.

D

The maximum price that a buyer will pay for a good is called consumer surplus. producer surplus. efficiency. willingness to pay.

D

When a tax is levied on a good, the buyers and sellers of the good share the burden, Question options: provided the tax is levied on the sellers. provided the tax is levied on the buyers. provided a portion of the tax is levied on the buyers, with the remaining portion levied on the sellers. regardless of how the tax is levied.

D

When a tax is placed on the sellers of cell phones, the size of the cell phone market and the effective price received by sellers both increase. increases, but the effective price received by sellers decreases. decreases, but the effective price received by sellers increases. and the effective price received by sellers both decrease.

D

Refer to Figure 8-2. The amount of deadweight loss as a result of the tax is $2.5. $6. $4. $5.

A

Refer to Figure 8-2. Consumer surplus without the tax is $6, and consumer surplus with the tax is $1.5. $1.5, and consumer surplus with the tax is $6. $4, and consumer surplus with the tax is $1. $1, and consumer surplus with the tax is $4.

A

Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began importing televisions and the price of a television in Paraguay decreased to $300. importing televisions and the price of a television in Paraguay remained at $350. exporting televisions and the price of a television in Paraguay decreased to $300. exporting televisions and the price of a television in Paraguay remained at $350.

A

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach? A multilateral approach can reduce trade restrictions abroad as well as at home. A multilateral approach has the potential to result in freer trade. A multilateral approach requires the agreement of two or more nations. A multilateral approach may have political advantages.

A

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it maximizes both the total revenue for firms and the quantity supplied of the product. maximizes the combined welfare of buyers and sellers. minimizes costs and maximizes output. minimizes the level of welfare payments.

B

Assume, for India, that the domestic price of copper without international trade is lower than the world price of copper. This suggests that, in the production of copper, India has a comparative advantage over other countries and India will import copper. India has a comparative advantage over other countries and India will export copper. other countries have a comparative advantage over India and India will import copper. other countries have a comparative advantage over India and India will export copper.

B

If a nonbinding price floor is imposed on a market, then the quantity sold in the market will decrease. quantity sold in the market will stay the same. price in the market will increase. price in the market will decrease.

B

Price ceilings and price floors that are binding are desirable because they make markets more efficient and more fair. cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price. can have the effect of restoring a market to equilibrium. are imposed because they can make the poor in the economy better off without causing adverse effects.

B

Refer to Figure 6-9. In this market, a minimum wage of $6 is binding and creates a labor shortage. binding and creates unemployment. nonbinding and creates a labor shortage. nonbinding and creates neither a labor shortage nor unemployment.

B

When a country allows trade and becomes an exporter of silk, which of the following is not a consequence? The price paid by domestic consumers of silk increases. The price received by domestic producers of silk increases. The price paid by domestic consumers of silk decreases. The gains of domestic producers of silk exceed the losses of domestic consumers of silk.

C

A simultaneous increase in both the demand for tablets and the supply of tablets would imply that both the value of tablets to consumers and the cost of producing tablets has increased. both the value of tablets to consumers and the cost of producing tablets has decreased. the value of tablets to consumers has decreased, and the cost of producing tablets has increased. the value of tablets to consumers has increased, and the cost of producing tablets has decreased.

D