Question 1

The actual division of the burden of a tax between buyers and sellers in a market is called

Accepted Answer

A) tax incidence. 
B) tax liability. 
C) tax bearer. 
D) tax parity. 
A) tax incidence. 
B) tax liability. 
C) tax bearer. 
D) tax parity.

Question 2

What is marginal cost?

Accepted Answer

A) The total cost of producing one unit of a good or service. 
B) The average cost of producing a good or service. 
C) The difference between the lowest price a firm would have been willing to accept and the price it actually receives. 
D) The additional cost to a firm of producing one more unit of a good or service. 
A) The total cost of producing one unit of a good or service. 
B) The average cost of producing a good or service. 
C) The difference between the lowest price a firm would have been willing to accept and the price it actually receives. 
D) The additional cost to a firm of producing one more unit of a good or service.

Question 3

Table 5.2  
-Refer to Table 5.2.The table above lists the highest prices five consumers are willing to pay for a theatre ticket.If the price of one ticket is $25,

Accepted Answer

A) everyone will buy a ticket. 
B) consumer surplus will be maximised. 
C) Anya's consumer surplus is $1. 
D) no one will buy a ticket. 
A) everyone will buy a ticket. 
B) consumer surplus will be maximised. 
C) Anya's consumer surplus is $1. 
D) no one will buy a ticket.

Question 4

Figure 5.5   Figure 5.5 shows the market for apartments in Springfield.Recently, the government imposed a rent ceiling of $1000 per month.
-Refer to Figure 5.5.Suppose that instead of a rent ceiling, the government imposed a price floor of $2000 per month for apartments.What is the value of producer surplus after the imposition of the price floor?

Accepted Answer

A) $40 000 
B) $240 000 
C) $270 000 
D) $290 000 
A) $40 000 
B) $240 000 
C) $270 000 
D) $290 000

Question 5

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximised, then

Accepted Answer

A) maximum deadweight loss occurs. 
B) economic efficiency is achieved. 
C) profits are maximised. 
D) costs are minimised. 
A) maximum deadweight loss occurs. 
B) economic efficiency is achieved. 
C) profits are maximised. 
D) costs are minimised.

Question 6

The marginal cost for Java Joe's to produce its first cup of coffee is $0.75.Its marginal cost to produce its second cup of coffee is $1.25.Its marginal cost increases by $0.50 for each additional cup of coffee it produces.Suppose the market price for coffee is $2.25.Construct a graph showing the producer surplus for each cup of coffee Java Joe's will sell.How many cups of coffee will Java Joe's sell? What is the value of the producer surplus Java Joe's receives for each cup of coffee it sells?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

@#IMG-DLM& Java Joe will sell 3 cups of coffee, th

Question 7

Table 5.5   Table 5.5 above contains information about the corn market.Answer the following questions based on this table.
-Refer to Table 5.5.An agricultural price floor is a price that the government guarantees farmers will receive for a particular crop.Suppose the federal government sets a price floor for corn at $12 per bushel.
a.What is the amount of shortage or surplus in the corn market as result of the price floor?
b.If the government agrees to purchase any surplus output at $12, how much will it cost the government?
c.If the government buys all of the farmers' output at the floor price, how many bushels of corn will it have to purchase and how much will it cost the government?
d.Suppose the government buys up all of the farmers' output at the floor price and then sells the output to consumers at whatever price it can get.Under this scheme, what is the price at which the government will be able to sell off all of the output it had purchased from farmers? What is the revenue received from the government's sale?
e.In this problem we have considered two government schemes: (1)a price floor is established and the government purchases any excess output and (2)the government buys all the farmers' output at the floor price and resells at whatever price it can get.Which scheme will taxpayers prefer?
f.Consider again the two schemes.Which scheme will the farmers prefer?
g.Consider again the two schemes.Which scheme will corn buyers prefer?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

a.10 000 surplus.
b.$12 × 10 000 = $120

Question 8

The sum of consumer surplus and producer surplus is called economic surplus.

Accepted Answer

A) True 
 B)False

Question 9

Figure 5.5   Figure 5.5 shows the market for apartments in Springfield.Recently, the government imposed a rent ceiling of $1000 per month.
-Refer to Figure 5.5.The value of the portion of producer surplus transferred to consumers as a result of the rent ceiling is

Accepted Answer

A) $40 000 
B) $100 000 
C) $125 000 
D) $140 000 
A) $40 000 
B) $100 000 
C) $125 000 
D) $140 000

Question 10

Deadweight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.

Accepted Answer

A) True 
 B)False

Question 11

Figure 5.3   Figure 5.3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40S1U1B1 S1U1B0in order to raise the price to $18.
-Refer to Figure 5.3.The value of producer surplus at a price of $18 is

Accepted Answer

A) $240 
B) $300 
C) $340 
D) $720 
A) $240 
B) $300 
C) $340 
D) $720

Question 12

Frieda is at her local florist to buy a dozen roses.She is willing to pay $75 for the roses, and buys them for $75.What is Frieda's consumer surplus from the purchase?

Accepted Answer

A) $150. 
B) $75. 
C) $37.50. 
D) $0. 
A) $150. 
B) $75. 
C) $37.50. 
D) $0.

Question 13

If the price of hairspray is represented by equation P = 10 - 0.2 QD, then the corresponding quantity of hairspray demanded is represented by the equation

Accepted Answer

A) QD = 5P - 2.  
B) QD = 0.5P + 2.  
C) QD = 50 -5P.  
D) QD = -10 + 0.2P. 
A) QD = 5P - 2.  
B) QD = 0.5P + 2.  
C) QD = 50 -5P.  
D) QD = -10 + 0.2P.

Question 14

If the demand curve for a product is vertical, any tax increase on the product is paid for entirely by the consumer.

Accepted Answer

A) True 
 B)False

Question 15

A tax is efficient if it imposes a large excess burden relative to the tax revenue it raises.

Accepted Answer

A) True 
 B)False

Question 16

What does the total amount of producer surplus in a market equal?

Accepted Answer

A) The difference between quantity supplied and quantity demanded. 
B) The area above the market supply curve and below the market price. 
C) The area above the market supply curve. 
D) The area between the demand curve and the supply curve below the market price. 
A) The difference between quantity supplied and quantity demanded. 
B) The area above the market supply curve and below the market price. 
C) The area above the market supply curve. 
D) The area between the demand curve and the supply curve below the market price.

Question 17

If, in a competitive market, marginal benefit is less than marginal cost,

Accepted Answer

A) the net benefit to consumers from participating in the market is less than the net benefit to producers. 
B) the government must force producers to raise prices in order to achieve economic efficiency. 
C) the quantity sold is greater than the equilibrium quantity. 
D) the quantity sold is less than the equilibrium quantity. 
A) the net benefit to consumers from participating in the market is less than the net benefit to producers. 
B) the government must force producers to raise prices in order to achieve economic efficiency. 
C) the quantity sold is greater than the equilibrium quantity. 
D) the quantity sold is less than the equilibrium quantity.

Question 18

Table 5.2  
-Refer to Table 5.2.The table above lists the highest prices five consumers are willing to pay for a theatre ticket.If the price of one of the tickets is $10,

Accepted Answer

A) everyone will buy a ticket except for Esther. 
B) only Anya and Basil will buy tickets. 
C) Celeste's consumer surplus is $25. 
D) the total consumer surplus from the purchase of tickets will be $61. 
A) everyone will buy a ticket except for Esther. 
B) only Anya and Basil will buy tickets. 
C) Celeste's consumer surplus is $25. 
D) the total consumer surplus from the purchase of tickets will be $61.

Question 19

Figure 5.5   Figure 5.5 shows the market for apartments in Springfield.Recently, the government imposed a rent ceiling of $1000 per month.
-Refer to Figure 5.5.Suppose that instead of a rent ceiling, the government imposed a price floor of $2000 per month for apartments.What is the value of consumer surplus after the imposition of the price floor?

Accepted Answer

A) $6000 
B) $30 000 
C) $100 000 
D) $240 000 
A) $6000 
B) $30 000 
C) $100 000 
D) $240 000

Question 20

Figure 5.4  
-Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $3,

Accepted Answer

A) the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low. 
B) producers should raise the price to $9 in order to sell the quantity demanded of 12 000. 
C) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. 
D) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low. 
A) the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low. 
B) producers should raise the price to $9 in order to sell the quantity demanded of 12 000. 
C) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. 
D) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low.

The actual division of the burden of a tax between buyers and sellers in a market is called

What is marginal cost?

Table 5.2 -Refer to Table 5.2.The table above lists the highest prices five consumers are willing to pay for a theatre ticket.If the price of one ticket is $25,

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximised, then

The sum of consumer surplus and producer surplus is called economic surplus.

Figure 5.5 Figure 5.5 shows the market for apartments in Springfield.Recently, the government imposed a rent ceiling of $1000 per month. -Refer to Figure 5.5.The value of the portion of producer surplus transferred to consumers as a result of the rent ceiling is

Deadweight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.

Figure 5.3 Figure 5.3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40in order to raise the price to $18. -Refer to Figure 5.3.The value of producer surplus at a price of $18 is

Frieda is at her local florist to buy a dozen roses.She is willing to pay $75 for the roses, and buys them for $75.What is Frieda's consumer surplus from the purchase?

If the price of hairspray is represented by equation P = 10 - 0.2 Q_D, then the corresponding quantity of hairspray demanded is represented by the equation

If the demand curve for a product is vertical, any tax increase on the product is paid for entirely by the consumer.

A tax is efficient if it imposes a large excess burden relative to the tax revenue it raises.

What does the total amount of producer surplus in a market equal?

If, in a competitive market, marginal benefit is less than marginal cost,

Table 5.2 -Refer to Table 5.2.The table above lists the highest prices five consumers are willing to pay for a theatre ticket.If the price of one of the tickets is $10,

Figure 5.4 -Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $3,

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 5: Economic Efficiency, Government Price Setting and Taxes

The actual division of the burden of a tax between buyers and sellers in a market is called

What is marginal cost?

Table 5.2 -Refer to Table 5.2.The table above lists the highest prices five consumers are willing to pay for a theatre ticket.If the price of one ticket is $25,

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximised, then

The sum of consumer surplus and producer surplus is called economic surplus.

Figure 5.5 Figure 5.5 shows the market for apartments in Springfield.Recently, the government imposed a rent ceiling of $1000 per month. -Refer to Figure 5.5.The value of the portion of producer surplus transferred to consumers as a result of the rent ceiling is

Deadweight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.

Figure 5.3 Figure 5.3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40 in order to raise the price to $18. -Refer to Figure 5.3.The value of producer surplus at a price of $18 is

Frieda is at her local florist to buy a dozen roses.She is willing to pay $75 for the roses, and buys them for $75.What is Frieda's consumer surplus from the purchase?

If the price of hairspray is represented by equation P = 10 - 0.2 QD, then the corresponding quantity of hairspray demanded is represented by the equation

If the demand curve for a product is vertical, any tax increase on the product is paid for entirely by the consumer.

A tax is efficient if it imposes a large excess burden relative to the tax revenue it raises.

What does the total amount of producer surplus in a market equal?

If, in a competitive market, marginal benefit is less than marginal cost,

Table 5.2 -Refer to Table 5.2.The table above lists the highest prices five consumers are willing to pay for a theatre ticket.If the price of one of the tickets is $10,

Figure 5.4 -Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $3,

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Figure 5.3 Figure 5.3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40in order to raise the price to $18. -Refer to Figure 5.3.The value of producer surplus at a price of $18 is

If the price of hairspray is represented by equation P = 10 - 0.2 Q_D, then the corresponding quantity of hairspray demanded is represented by the equation