Micro Econ Final
The size of the tariff on roses is
$1
Evan purchases a wall calendar for $9, and his consumer surplus is $1. How much is Evan willing to pay for the wall calendar?
$10
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 clubs play the White Sox to accept the ticket and go to the game?
$10
Total surplus without the tax is
$10, and total surplus with the tax is $7.50
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
$18
Suppose Korie purchases the factory using $200,000 of her own money and $200,00 borrowed from a bank at an interest rate of 6 percent. What is Korie's annual opportunity cost of purchasing the factory?
$18,000
the amount of deadweight loss as a result of the tax is
$2.50
The per-unit burden of the tax on buyers is
$3
What is the amount of the tax per unit?
$4
What is the average fixed cost of producing 5 units of output?
$4
Without trade, the equilibrium price of roses is
$4 and the equilibrium quantity is 300 roses
Producer surplus without the tax is
$4, and producer surplus with the tax is $1
The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market?
$400
Both the demand curve and the supply curve are straight lines. At equilibrium, consumer surplus is
$48
The amount of the tax on each unit of the good is
$5
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
$500
Consumer surplus without the tax is
$6, and consumer surplus with the tac is $1.50
if the government imposes a price floor of $110 in this market, then consumer surplus will decrease by
$600
Taking into account private and external benefits, the total surplus to society at the socially efficient quantity is
$62.5
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
$950
Suppose the world price of cardboard is $139 and international trade is allowed. Then Boxland's consumers demand
102 tons of cardboard and Boxland's producers supply 357 tons of cardboard
At which number of workers does diminishing marginal product begin?
2
The market equilibrium quantity of output is
3 units
The socially optimal quantity of output is
5 units
Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Murphy can paint five houses per week. What is the maximum total output possible if Eldin hires Murphy?
8 houses
The marginal product of the second worker is
80 units
At equilibrium, consumer surplus is represented by the area
A+B+C
Total surplus in this market before trade is
A+B+C
Total surplus in this market after trade is
A+B+C+D
Which area represents producer surplus when the price is P2?
ACH
If the price of the product is $110, then who would be willing to purchase the product?
Calvin, Sam, and Andrew
The deadweight loss created by the tariff is represented by the area
D+F
Government revenue raised by the tariff is represented by the area
E
In which of the following cases is the Coase theorem most likely to solve the externality?
Ed is allergic to his roommate's cat
Which graph represents a market with a negative externality?
Graph B only
Assume, for India, that the domestic price of copper without the international trade is lower than the world price of copper. This suggest that, in the production of copper,
India has a comparative advantage over other countries and India will export copper
If all external costs were internalized, then the market's output would be
Q2
The overuse of antibiotics leads to the development of antibiotic-resistant diseases. Therefore, the socially optimal quantity of antibiotics is represented by the point
Q2
The socially optimal output would be
Q2
The overuse of antibiotics leads to the development of antibiotic-resistant diseases. Therefore, a government policy that internalized the externality would move the quantity of antibiotics used from point
Q3 to point Q2
Which of the following is correct?
Rent control is an example of a price ceiling and the minimum wage is an example of a price floor.
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 x Q
Which of the following is NOT an advantage of corrective taxes?
They subsidize the production of goods with positive externalities
Which of the following is an example of a positive externality?
Your neighbor plants a nice garden in front of his house
Zaria and Hannah are roommates. Zaria assigns a $30 value to smoking cigarettes. Hannah values smoke-free air at $15. Which of the following scenarios is a successful example of the Coase theorem?
Zaria pays Hannah $16 so that Zaria can smoke
Which of the following is NOT an advantage of a multilateral approach to free trade over a unilateral approach?
a multilateral approach requires the agreement of two or more nations
Employing a lawyer to draft and enforce a private contract between parties wishing to solve an externality problem is an example. of
a transaction cost
The average fixed cost curve
always declines with increased levels of output
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 decrease
marginal cost is equal to average total cost when
average total cost is at its minimum
In this market, a minimum wage of $6 is
binding and creates unemployment
A government imposed price of $12 in this market is an example of a
binding price floor that creates a surplus
A shortage results when a
binding price is imposed on a market
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
price ceilings and price floors that are binding
cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price
When the price falls from P2 to P1, producer surplus
decrease by an amount equal to A+B
If the government removes a tax on a good, then the price paid by buyers will
decrease, and the price received by sellers will increase
Suppose the government imposes a tax on cheese. The deadweight loss from this tax will likely be greater in the
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
When a tariff is imposed in the market, domestic producers
gain $150 of producer surplus
Which of the following statements is NOT correct?
government policies cannot improve upon private market outcomes
Suppose the world price of cardboard is $139. Then relative to the no-trade situation, international trade in cardboard
harms Boxlandian consumers by $7,803.00 and benefits Boxlandian producers by $14,305.50
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
If the government levies a $700 tax per motorcycle on sellers of motorcycles, hen the price paid by buyers of motorcycles would
increase by less than $700
The tariff
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
The deadweight loss from a tax per unit of good will be the smallest in a market with
inelastic supply and inelastic demand
The Social Security tax is a tax on
labor
Firms may experience diseconomies of scale when
large management structures are bureaucratic and inefficient
When the tariff is imposed, domestic consumers
lose surplus of $450
The minimum points of the average variable cost and average total cost curves occur where the
marginal cost curve intersects those curves
As the number of workers increase
marginal product decreases
If marginal cost is rising,
marginal product must be falling
A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it
maximizes the combined welfare of buyers and sellers
Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market
may increase, decrease, or remain unchanged
This market is characterized by
negative externality
As a result of a decrease in price,
new buyers enter the market, increasing consumer surplus
An externality is the uncompensated impact of
one person's actions on the well-being of a bystander
The size of a tax and the deadweight loss that results from the tax are
positively related
The graph illustrates a typical
production function
According to the Coase theorem, private parties can solve the problem of externalities if
property rights are clearly defined
If a nonbinding price floor is imposed on a market, then the
quantity sold in the market will stay the same
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
Cost is a measure of the
seller's willingness to sell
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 it a greater burden of the tax than the buyers
Rent control
serves as an example of a price ceiling
When positive externalities are present in a market
social benefits will be greater than private benefits
Which of the following is NOT a way of internalizing technology spillovers?
taxes
Which of the following is NOT correct?
taxes levies on sellers and taxes levied on buyers are not equivalent
In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that
the U.S. government maintained a price ceiling on gasoline
With trade and without a tariff,
the domestic price is equal to the world price
As a result of the tax,
the market experiences a deadweight loss of $80
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 decreases
From the given information, it is apparent that
the production of gasoline involves a negative externality, so the market will produce a larger quantity of gasoline than is socially desirable
A simultaneous increase in both demand for tablet and the supply of tablets would imply that
the value of tablets to consumers has increased, and the cost of producing tables has decreased
If a price ceiling is not binding, then
there will be no effect on the market price or quantity sold.
If a price floor is not binding, then
there will be no effect on the market price or quantity sold.
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.
In the market for apartments, rent control causes the quantity supplied
to fall and quantity demanded to rise
Graph (a) and graph (b) each illustrate a $4 tax placed on a market. In comparison to graph (a), graph (b) illustrates which of the following statements?
when demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic
The maximum price that a buyer will pay for a good is called
willingness to pay
Under rent control, landlords can cease to be responsive to tenants' concerns about the quality of the housing because
with shortages and waiting lists, they have no incentive to maintain and improve their property
