MICRO ECON Exam 2
Ceteris paribus, when supply shifts to the left, there is:
an increase in price and a decrease in consumer surplus.
According to the Coase Theorem, an efficient outcome can be achieved without any need for active government involvement as long as:
property rights are clearly defined and transaction costs are sufficiently low.
Goods that are both nonrival and nonexcludable are:
pure public goods
After a price floor is established above the equilibrium price in the market for strawberries:
the quantity of strawberries actually bought and sold decreases.
The Tragedy of the Commons refers to:
the tendency to use common resources more than is desirable from society's point of view.
Based on the information in the graph below, the tax generates tax revenue of _________ and a deadweight loss of _________.
$128; $16
Based on the information in the graph below, if there is a price ceiling of $5, then consumer surplus is equal to _______ and producer surplus is equal to ______.
$250; $50
Based on the information in the graph below, in free market equilibrium, total consumer and producer surplus is equal to _______.
$400
Which of the following is an example of a positive externality?
A lower crime rate in a neighborhood patrolled by a security company
Which of the following is not an example of government response to a market failure?
A privately-owned business that does not allow smoking
All of the following are examples of public goods except:
a bagel with cream cheese.
The economic burden of a tax:
is partially shifted to consumers through higher prices in most cases.
The purpose of setting a price ceiling below the equilibrium price is to:
maintain a low price for buyers in the market.
A demand curve can be interpreted as:
marginal benefit curve
An efficient level of an output exists when:
marginal benefit is equal to marginal cost.
Consumer surplus is the difference between ________ and product price and producer surplus is the difference between ________ and product price.
marginal benefit; marginal cost
Products that generate negative externalities tend to be:
overproduced by private markets.
A tax levied on gasoline is predicted to:
reduce production and consumption, leading to less pollution.
The Truth in Lending Act of 1968 protects consumers by:
requiring clear disclosure of the costs of credit.
The "free-rider" problem refers to a situation in which:
the benefits associated with public goods cannot be denied to users, whether or not they are willing to pay for them.