FYI: The vertical distance between Points A and B represents a tax in the market. The loss of producer surplus for those sellers of the good who continue to sell it after the tax is imposed is...
$3
$0
$2
$1
The minimum wage, if it is binding, lowers the incomes of...
only those workers who become unemployed.
only those workers who have jobs.
no workers.
all workers.
Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 4 if the price is...
$860
$1,400
$1,050
$1,650
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
$3,500
$3,000
$6,500
Each additional unit of the good that is produced yields an external...
benefit of $36
cost of $15
cost of $36
benefit of $15
Sellers will be unwilling to sell more than...
2 units of the good if its price is below $450.
1 unit of the good if its price is below $200.
3 units of the good if its price is below $700.
All of the answers are correct.
Suppose that the production of plastic creates a social cost which is depicted in the graph shown here. Without any government regulation, how much plastic will be produced?
650
200
500
900
A variable toll on a road in Washington reached a high during the evening rush hour of $5.75. This toll bought the drivers who paid it a 27 minute time savings. Which of the following is correct?
A) For some customers, the toll was more than the opportunity cost of the time they would have spent in traffic.
B) For some customers, the toll was less than the opportunity cost of the time they would have spent in traffic.
C) No customers would find this tolls worth the time saved in traffic.
Both A and B are correct.
If a sawmill creates too much noise for local residents,...
noise restrictions will force residents to move out of the area.
the government can raise economic well-being through noise-control regulations.
a sense of social responsibility will cause owners of the mill to reduce noise levels.
the government should avoid intervening because the market will allocate resources efficiently.
An overcrowd beach is an example of...
a positive externality.
an economically unfair allocation of resources.
an environmentally inefficient allocation of resources.
a Tragedy of the Commons.
FYI: The vertical distance between Points A and C represents a tax in the market. The amount of the tax on each unit of the good is...
P3 - P2
P2 - P1
P3 - P1
P4 - P3
Which area represents the INCREASE in producer surplus when the price rises from P1 to P2?
ABGD
AHGB
ACH
BCG
Demand is said to be price elastic if...
buyers respond substantially to changes in the price of the good.
buyers do not respond much to changes in the price of the good.
demand shifts substantially when income or the expected future price of the good changes.
the price of the good responds substantially to changes in demand.
If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the...
price of the good will rise due to market forces.
consumer has consumer surplus of $5 if he buys the good.
market is out of equilibrium.
consumer does not purchase the good.
If the price of the good is $150, then consumer surplus amounts to...
$250
$200
$300
$150
If the government imposes a price ceiling of $2 on this market, then there will be...
no shortage of the good.
a shortage of 30 units of the good.
a shortage of 20 units of the good.
a shortage of 10 units of the good.
A tax levied on the buyers of a good shifts the...
demand curve upward (or to the right).
supply curve downward (or to the right).
demand curve downward (or to the left).
supply curve upward (or to the left).
Relative to a situation in which gasoline is not taxed, the imposition of a tax on gasoline causes the quantity of gasoline demanded to...
increase and the quantity of gasoline supplied to increase.
increase and the quantity of gasoline supplied to decrease.
decrease and the quantity of gasoline supplied to decrease.
decrease and the quantity of gasoline supplied to increase.
For a price floor to be binding in this market, it would have to be set at...
a price between $2 and $3.
a price between $3 and $4.
any price above $3.
any price below $3.
Suppose a price ceiling of $5 is imposed on this market. As a result,...
the quantity of the good supplied decreases by 20 units.
the demand curve shifts to the left; quantity sold is now 30 units and the price is $5.
the price of the good continues to serve as the rationing mechanism.
buyers' total expenditure on the good decreases by $80.
If the price of the product is $130, then who would be willing to purchase the product?
Calvin, Sam, and Andrew
Calvin and Sam
Calvin
Calvin, Sam, Andrew, and Lori
Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last tomato you bought this week, you paid a price exactly equal to your willingness to pay. Then...
you already have bought too many tomatoes this week.
you should buy more tomatoes before the end of the week.
your consumer surplus on all of the tomatoes you have bought this week is zero.
your consumer surplus on the last tomato you bought is zero.
Erin would be willing to pay as much as $100 per week to have her house cleaned. Ernesto's opportunity cost of cleaning Erin's house is $70 per week. If Erin pays Ernesto $90 to clean her house, Erin's consumer surplus is...
$10
$80
$30
$20
A supply curve can be used to measure producer surplus because it reflects...
the actions of sellers.
sellers' costs.
the amount that will be purchased by consumers in the market.
quantity supplied.
Which area represents consumer surplus at a price of P1?
ABC
ABDG
AFG
BDF
The vertical distance between points A and B represents a tax in the market. The per-unit burden of the tax on buyers is...
$5
$8
$4
If demand is price inelastic, then...
buyers do not respond much to a change in price.
buyers do not alter their quantities demanded much in response to advertising, fads, or general changes in tastes.
buyers respond substantially to a change in price, but the response in very slow.
the demand curve is very flat.
If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?
$625
$5,000
$2,500
$1,250
Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?
$3,700
$700
$2,300
Corrective taxes that are imposed upon the producer of a nasty smell can be successful in reducing that smell because the tax makes the producer...
internalize the positive externality.
internalize the negative externality.
externalize the positive externality.
externalize the negative externality.
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