Micro Exam 2

buyers pay how much of the tax per unit

$1.50

assume demand increase, which causes the equilibrium price to increase from $50-$70. the increase producer surplus to producers already in the market would be

$1200

assume demand increases, which causes the equilibrium price increase from $50 to $70. the increase in producer surplus would be

$1600

the amount of tax per unit is

$2

if the price of the good is 150 then consumer surplus amounts to

$250

the effective price sellers receive after the tax is imposed is

$3

assume demand increases, which causes the equilibrium price to increase from $50-$70. the increase in producer surplus to producers new producers entering the market would be

$400

the price paid by buyers after the tax is imposed is

$5

if the price of the good is $250 then the consumer surplus amounts to

$50

if the price of the good is 50 then consumer surplus amounts to

$600

sellers pay how much of the tax per unit

.50

using the midpoint method, what is the price elasticity of supply between point A and point B

1.67

at the equilibrium price, total surplus is

3500

jenna says she would buy 10 gallons of gas per week regardless of price. if this is true, then jenna's demand for gas is represented by demand curve

A

using the midpoint method, the price elasticity of demand between point A and point B is

A graph

the demand curve representing the demand for a luxury good with several close substitutes is

C (graph)

which demand curve is perfectly eslastic

D

total surplus can be measured as the area

JNL

assuming the line in panel a is the price ceiling, there will be

a shortage

which of the following observations would be consistent with the imposition of a binding price ceiling on a market? after the price ceiling becomes effective,

a smaller quantity of the good is bought and sold

which of the following statements about the prices elasticity of demand is correct

all of the above

if the horizontal line on the graph represents a price floor, then the price floor is

binding and creates a surplus of 60 units of the good

when the price rises from P1 to P2, which of the following statements is not true

buyers place a higher value on the good after the price increase

area C represents the

consumer surplus to new consumers who enter the market when the price falls from P2 to P1

the price elasticity of demand for a good measures the willingness of

consumers to buy less of the good as price rises

the price ceiling causes quantity

demanded to exceed quantity supplied by 85 units graph

all else equal, a decrease in demand will cause an increase in producer surplus

false

efficiency refers to whether a market outcome is fair, while equality refers to whether the maximum amount of output was produced from a given number of inputs

false

if the damnd curve is very inelastic and the supply curve is very elastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers

false

to be binding, a price ceiling must be set above the equilibrium price

false

when demand is inelastic, a decrease in price increases total revenue

false

the price ceiling

graph causes a shortage of 85 units

for quantities less than M, the value to the marginal buyer is

greater than the cost to the marginal seller, so increasing the quantity increases total surplus

if, holding the supply curve fixed, there were an increase in demand that caused the equilibrium price to increase from $6 to $7, then sellers total revenue would

increase

if the price falls from point A to point B, total revenue

increases, and demand is price elastic

if the price rises from point D to point C, total revenue

increases, and demand is price inelastic

the price ceiling

is binding causes a shortage causes the quantity demanded to exceed the quantity supplied (graph) answer: all of the above

for quantities greater than M, the value of the marginal buyer is

less than the cost to the marginal seller, so decreasing the quantity increases total surplus

if the horizontal line on the graph represents a price ceiling, then the price ceiling is

not binding, and there will be no surplus or shortage of the good

assuming both lines in panel a and b are the price floor, a nonbonding price floor is shown in

panel a only

assuming both lines in panel a and b are the price floor, a binding price floor is shown in

panel b only

the smaller the price elasticity of demand , the

smaller the responsiveness of quantity demanded to a change in price

given the market for illegal drugs, when the government is successful in reducing the flow of drugs into United States,

supply decreases, demand is unaffected, and price increases

if the minimum wage exceeds the equilibrium wage, then

the quantity supplied of labor will exceed the quantity demanded

as the figure is drawn, who sends the tax payment to the government

the sellers send the tax payment

goods with close substitutes tend to have more elastic demands than do goods without close substitutes

true

if a firm is facing elastic demand, then the firm should decrease price to increase revenue

true

in a competitive market, sales go to those producers who are willing to supply the product at the lowest price

true

suppose there is an increase in supply that reduces market price. consumer surplus increases because 1 consumer surplus received by existing buyers increases and 2 new buyers enter the market

true

the minimum wage is more often binding for teenagers than for other members of the labor force

true