Micro Han Exam 2 (Chapters 8-14) GRAPHS
420 units to any other quantity of output.
A benevolent social planner would prefer
The country will export soybeans (domestic quantity supplied > domestic quantity demanded)
A small economy opens to trade, and the world price for Soybeans is $6, does the country import or export Soybeans?
The country will import TVs (domestic quantity demanded > domestic quantity supplied)
Assume the following small economy opens to trade, and the world price for TVs is $1500, does the country export or import TVs?
imports 400 roses.
Before the tariff is imposed, this country
There is no deadweight loss following the imposition of a $2 per unit tax
Giving the following demand and supply, what is the deadweight loss following the imposition of a $2 per unit tax?
When the tax is small, increasing it causes tax revenue to rise. When the tax is larger, increasing it causes tax revenue to fall.
How does the tax revenue vary with the size of tax?
Deadweight loss: tax size*∆quantity*0.5: 2*200*0.5= $200
How much deadweight loss results from a $2 per unit tax?
Deadweight loss results from a $4 per unit tax is $800.
How much deadweight loss results from a $4 per unit tax?
Quantity sold ↓ by 1,000 Total surplus ↓ by $1,500 (3*1,000*0.5)
If the government imposes a $3 price ceiling, how does it affect the total surplus in this market?
decreased to Q2.
If this market is currently producing at Q4, then total economic well-being would be maximized if output
$2,000.
Refer to Figure 10-6. If the government imposed a corrective tax that successfully moved the market from the market equilibrium to the social optimum, then tax revenue for the government would amount to
60 units
Refer to the table, what is the marginal product of the third worker?
(i) and (iii) only
Suppose a competitive market is comprised of firms that face identical cost curves. The firms experience an increase in demand that results in positive profits for the firms. Which of the following events are then most likely to occur?
five
Suppose that a firm in a competitive market faces the following prices and costs. What is the firm's profit-maximizing quantity?
The amount of surplus transferred from consumers to producers is $2 × 3000 = $6000
Suppose that the government imposes a $7 price floor. Relative to the competitive market, how much surplus is transferred from consumers to producers?
$200
The amount of revenue collected by the government from the tariff is
negative externality
The graph represents the market for plastic. The production of plastic creates
$4.50.
The loss of consumer surplus as a result of the tax is
D+F
The tax causes producer surplus to decrease by the area
A. impose a tax on the production of plastic
To maximize social well-being, the government should
The import quota raises domestic price and reduces imports.
What happens to the domestic price and the imports if the government imposes an import quota of 30 units on the imports of t-shirt?
The deadweight loss becomes larger as the demand becomes more elastic.
What happens to the size of the deadweight loss if the demand becomes more elastic?
The total surplus increases after trade Consumers are worse off (↓ CS) while producers are better off (↑ PS)
What happens to the total surplus, consumer surplus, and producer surplus from the Soybeans market after the small economy opens to trade?
The total surplus increases after trade Consumers are better off (↑ CS) while producers are worse off (↓ PS)
What happens to the total surplus, consumer surplus, and producer surplus from the TV market after the small economy opens to trade?
Domestic CS decreases, while domestic PS increases
What happens to the welfare of domestic consumers and producers if the govt. imposes an import quota of 30 units on the imports of t-shirt?
$0.32
What is the average total cost of producing 280 units of output?
D + F <= Deadweight loss <= D + F + E E goes to persons who owns the licenses to import (e.g., foreign producers) If the govt. owns and sells the import licenses at PD − PW, then E goes to the govt.
What is the deadweight loss that results from an import quota of 30 units on the imports of t-shirt?
consumer surplus for domestic crude oil consumers decreases.
When the country for which the figure is drawn allows international trade in crude oil,
The deadweight loss that results from the price floor is $6000($6*2,000*0.5)
When the government imposes a $7 price floor, what is the deadweight loss due to the price floor?
decreases by the area B + D.
When trade in coffee is allowed, consumer surplus in Guatemala
Market B would suffer a larger deadweight loss following the imposition of a $20 per unit tax.
Which market would suffer a larger deadweight loss following the imposition of a $20 per unit tax?
500
Which quantity maximizes the total well-being of the society?
$6,480
Without trade, total surplus amounts to
