Micro exam 3
Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's consumer surplus is
$500
The average tax rate equals
(total tax ÷ total income) × 100
The amount of deadweight loss from a tax depends upon the
-price elasticity of demand. -price elasticity of supply. -amount of the tax per unit.
A tax on the seller of coffee mug
Decrease the size of the coffee mug market
Which of the following is true when the price of a good or service rises?
Some buyers exit the market
In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?
The price elasticity of demand and the price elasticity of supply are both large
If an allocation of resources is efficient, then
all potential gains from trade among buyers are sellers are being realized.
Producer surplus measures the
benefits to sellers of participating in market
enry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound,
both Janine and Henry experience an increase in consumer surplus.
When a country allows trade and becomes an importer of a good,
consumer surplus increases and producer surplus decreases
If the average tax rate ________ as income increases, then the tax is a ________ tax
does not change; proportional
If the United States imposed a tariff on the amount of salmon imported from Chile, the result would be ________ salmon prices in the United States and ________ in the quantity of salmon demanded in the United State
higher; a decrease
Imports ________ society's total surplus because of the ________ in price and ________ in consumption.
increase; fall; increase
The deadweight loss from a tax of $2 per unit will be smallest in a market with
inelastic supply and inelastic demand
Market power and externalities are examples of
market failure.
Consumer surplus
measures the benefit buyers receive from participating in a market
As a result of the decrease in price
new buyers enter the market, increasing consumer surplus
When a nation exports a good, its ________ surplus decreases, and when it imports a good, its ________ surplus decreases
onsumer; producer
When it comes to taxes, horizontal equity means that
people with the same incomes pay the same amount of tats
The marginal tax rate is the
percentage of an additional dollar of income paid in tax
Suppose everybody paid the same total amount of tax regardless of their income. This type of tax system would be
regressive
As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on, the
tax revenue increases at first, but it eventually peaks and then decreases.
Vertical equity is the idea that
taxpayers with a greater ability to pay should bear a greater share of the taxes.
Welfare economics is the study of how
the allocation of resources affects economic well-being
Consumer surplus is
the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,
the country will be an importer of the good.
tax incidence refers to
the division of the burden tax between the buyer and seller
Trade raises the economic well-being of a nation in the sense that
the gains of the winners exceed the losses of the losers
When a country allows trade and becomes an importer of a good
the gains of the winners exceed the losses of the losers
