Test 2 version 2
The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is
$125
The burden of the tax on buyers is
$2 per unit
The amount of the tax per unit is
$3
At nick's bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for
$3.50 each
If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by
$325
The equilibrium price for piano lessons is $400. What is the total producer surplus in the market?
$400
Which of the following price ceilings would be binding in the market?
$50
Bill created a new software program he is willing to sell for $300. He sells his first copy and enjoys a producer surplus of $250. What is the price paid for the software.
$550
The effective price received by sellers after the tax is imposed is
$8
Who experiences the largest loss of consumer surplus when the price of an orange increase from $0.70 to $1.40
Alison (she was willing to pay the most out of everyone)
If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets
Consumer surplus decreases
If the market price for the good is $20, who will purchase the good?
Danita only (willing to pay up to $27)
A price floor is
a legal minimum on the price at which a good can be sold often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor. a source of inefficiency in a market
In response to a shortage caused by the imposition of a binding price ceiling on a market,
a price will no longer be the mechanism that rations scarce resources long lines of buyers may develop sellers could ration the good or service according to their own personal biases
Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?
between $5 and $10
A surplus results when a
binding price floor is imposed on a market
Suppose sellers, rather than buyers, were required to pay this tax ( in the same amount per unit as shown in the graph). Relative to the tax on buyers, the tax on sellers would result in
buyers bearing the same share of the tax burden sellers bearing the same share of the tax burden the same amount of tax revenue for the government
A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes
decreases, and the consumer surplus in the market for red wine decreases
A tax placed on buyers of tuxedoes shifts the
demand curve for tuxedoes downward, decreasing the price received by sellers of tuxedoes and causing the quantity of tuxedoes to decrease
suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the
demand curve will shift upward by $20, and the effective price received by sellers will increase by $20
Sellers of a product will bear the larger part of the tax burden, and buyers will bear a smaller part of the tax burden, when the
demand for the product is more elastic than the supply of the product
Deadweight loss measures the loss
in a market to buyers and sellers that is not offset by an increase in government revenue
If the government removes a tax on a good, the the quantity of the good sold will
increase
taxes cause deadweight losses because they
lead to losses in surplus for consumers and for producers that, when taken together, exceed tax revenue collected by the government distort incentives to both buyers and sellers prevent buyers and sellers from realizing some of the gains from trade.
The price ceiling
makes it necessary for sellers to ration the good
If the government imposes a price ceiling of $8 on this market, then there will be
no shortage (at equilibrium price)
A government-imposed price of $16 in this market could be an example of a
non-binding price ceiling binding price floor
The size of a tax and the deadweight loss that results from the tax are
positively related
A tax imposed on the sellers of a good will raise the
price paid by buyers and lower the equilibrium quantity
When a tax is imposed on a good for which the demand is relatively elastic and the supply is relatively inelastic,
sellers of the good will bear most of the burden of the tax.
Buyers of a product will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the
supply of the product is more elastic than the demand for the product
the term tax incidence refers to
the distribution of the tax burden between buyers and sellers
If a price ceiling is not binding, then
the equilibrium price is below the price ceiling
Which of the following quantities decrease in response to a tax on a good?
the equilibrium quantity in the market for the good, producer surplus, and the well-being of buyers of the good
An outcome that can result from either a price ceiling or a price floor is
undesirable rationing mechanism