Econ test 2

when a tax is placed on the sellers of an energy drink, the burden of the tax will be shared by the ________ and ___________, but the division is ____________________________

buyers and sellers, not always equal

on a graph, consumer surplus is represented by the area

below the demand curve and above the supply curve

causes a surplus and is set at a price above equilibrium price

binding price floor

when a good is taxed, the burden of the tax falls more heavily on the side of the market that is

closer to unit elastic

for any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

export copper bc they have a comparative advantage in copper

if the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would

increase by less than $1000

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

price ceiling

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

price floor

a tax on a imported good is called a

tariff

what makes domestic sellers better off and domestic buyers worse off

tariff

the distribution of the tax burden between buyers and sellers

tax incidence

a supply curve can be used to measure producer surplus because it reflects

the sellers cost

if martin sells a shirt for $40 and his producer surplus is $8 his cost was

$32

bob purchases a book and his consumer surplus is $3, if he's willing to pay $8 for it then the price of the book must be

$5

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

deadweight loss

a consumers willingness to pay directly measures

how much they value a good

suppose the government increases the size of a tax by 20%, the deadweight loss from that tax

increases by more than 20%

between the demand and supply curves up to the point of equilibrium

total surplus

can be used to measure a markets efficiency is the sum of consumer and producer surplus is the value to buyers minus the cost to sellers

total surplus

we can say that the allocation of resources is efficient if

total surplus is maximized

total surplus s equal to

value to buyers - cost to sellers

the price of a good that prevails in a world market is called the

world price