micro test 2
If the government imposes a price ceiling of $55 in this market, then total surplus will be
250
If you have two (essentially) identical tickets that you sell to the group in an auction, what will be the selling price for each ticket?
26
What is the equilibrium quantity of output in the market?
3 units
Panel (a) and Panel (b) each illustrate a $4 tax placed on a market. In comparison to Panel (a), Panel (b) illustrates which of the following statements?
When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is
A city street is
a common resource when it is congested, but it is a public good when it is not congested.
parable called the Tragedy of the Commons applies to goods such as
clean air and clean water.
. Assume that your roommate is very messy. According to campus policy, you have a right to live in an uncluttered apartment. Suppose she gets an $80 benefit from being messy but imposes a $60 cost on you. The Coase theorem would suggest that an efficient solution would be for your roommate to
pay you at least $60 but less than $80 to live with the clutter.
(2nd) Which of the following is an appropriate label for Line 1?
demand
Producers have little incentive to produce a public good because
there is a free-rider problem.
If you have a ticket that you sell to the group in an auction, what will be the selling price?
. slightly more than $50.
In the absence of trade, the equilibrium price of coffee in Guatemala is
90
Suppose the government imposes a $1 tax in each of the four markets represented by demand curves D1, D2, D3, and D4. The deadweight will be the largest in the market represented by
d4
With trade, Guatemala will
export 22 units of coffee
This graph represents the tobacco industry. The industry creates
negative externalities
If the government imposes a price ceiling of $8 on this market, then there will be
no shortage
If the government imposes a price floor of $6 on this market, then there will be
no surplus
This graph represents the tobacco industry. Without any government intervention, the equilibrium price and quantity are
$1.60 and 42 units, respectively.
Suppose the government imposes a tax of P' - P'''. Total surplus before the tax is measured by the area
. I+J+K+L+M+Y.
Suppose the government imposes a tax of P' - P'''. Total surplus after the tax is measured by the area
. J+K+L+M.
The amount of the tax per unit is
14
At the equilibrium price, producer surplus is
150
Consumer surplus in Nicaragua without trade is
2250
The per-unit burden of the tax on seller is
6
The provision of a public good generates a
positive externality and the use of a common resource generates a negative externality.
Which of the following is an appropriate label for Line 1?
private value
Suppose the government imposes a tax of P' - P'''. The area measured by M represents
producer surplus after the tax
When trade in coffee is allowed, producer surplus in Guatemala
increases by the area B + D + G.
The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States. Any farmer with land above the aquifer can at present pump water out of it. We might expect that
over time, the aquifer is likely to be overused.
With trade, Nicaragua
imports 250 calculators.
Which of the following is an appropriate label for Line 2?
social value
The effective price that sellers receive after the tax is imposed is
10
which of the following price ceilings would be binding in this market
6
Panel (a) and Panel (b) each illustrate a $2 tax placed on a market. In comparison to Panel (b), Panel (a) illustrates which of the following statements?
When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic.
On holiday weekends thousands of people picnic in state parks. Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero. An overcrowded picnic area is an example of
a Tragedy of the Commons.
The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full, the Sunday Service is
a common resource.
In which of the following cases would sellers have to develop a rationing mechanism?
a price ceiling set at 6
This graph represents the tobacco industry. The socially optimal price and quantity are
b. $1.80 and 35 units, respectively.
In the absence of trade, total surplus in Guatemala is represented by the area
b. A + B + C + D + F.
Suppose the government imposes a tax of P' - P'''. The area measured by J represents
consumer surplus after tax
6. Cost-benefit analysis is important to determine the role of government in our economy because
cost-benefit analysis identifies the possible gains to society from government provision of a particular good.
Suppose the government imposes a tax of P' - P'''. The area measured by I+Y represents the
deadweight loss due to tax
The change in total surplus in Nicaragua because of trade is
$625, and this is an increase in total surplus.
At the equilibrium price, consumer surplus is
100
If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for
100 or slightly less
What is the socially-optimal quantity of output in this market?
2 units
If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been
200
The price that buyers pay after the tax is imposed is
24
If tickets sell for $40 each, then what is the total consumer surplus in the market?
30
If Evan, Selena, Angie, and Kris sell the good, and the resulting producer surplus is $700, then the price must have been
300
If the sellers bid against each other for the right to sell the good to a consumer, then the producer surplus will be
50 or slightly less
The per-unit burden of the tax on buyers is
8
which of the following statements is not correct
a price floor set at 6 would result in a shortage
When trade in coffee is allowed, consumer surplus in Guatemala
decreases by the area B + D.
the U.S. patent system
makes specific, technical knowledge excludable.
Assume that your roommate is very messy. Suppose she gets a $25 benefit from being messy but imposes a $50 cost on you. The Coase theorem would suggest that an efficient solution would be for you to
pay your roommate at least $25 but no more than $50 to clean up after herself.
Suppose the government imposes a tax of P' - P'''. The area measured by L+M+Y represents
producer surplus before the tax
A common theme among examples of market failure is
some item of value does not have an owner with the legal authority to control it.
Suppose the government imposes a tax of P' - P'''. The area measured by K+L represents
tax revenue
If trade in peaches is allowed, U.S. producers of peaches
will be better off.
If trade in peaches is allowed, the United States
will become an exporter of peaches.
