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Micro Final Practice (Exam 2 Questions)

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Practice quiz for the final. only includes exam 2 questions.
tran.melissa2015
Quiz by tran.melissa2015, updated more than 1 year ago
tran.melissa2015
Created by tran.melissa2015 almost 9 years ago
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Resource summary

Question 1

Question
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...
Image:
15a22d81-9d77-4681-a351-e9908379e6f0 (image/jpeg)
Answer
  • $3
  • $0
  • $2
  • $1

Question 2

Question
The minimum wage, if it is binding, lowers the incomes of...
Answer
  • only those workers who become unemployed.
  • only those workers who have jobs.
  • no workers.
  • all workers.

Question 3

Question
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...
Image:
a672db7d-86cc-4a79-89c4-b7cfb411061b (image/jpeg)
Answer
  • $860
  • $1,400
  • $1,050
  • $1,650

Question 4

Question
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...
Answer
  • $500
  • $3,500
  • $3,000
  • $6,500

Question 5

Question
Each additional unit of the good that is produced yields an external...
Image:
3d7cee46-bb8f-4c5d-9375-34b006f09dcd (image/jpeg)
Answer
  • benefit of $36
  • cost of $15
  • cost of $36
  • benefit of $15

Question 6

Question
Sellers will be unwilling to sell more than...
Image:
505dfe7b-f527-4996-8127-e655746aeb52 (image/jpeg)
Answer
  • 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.

Question 7

Question
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?
Image:
c5167072-b199-4d65-8980-423fe320a186 (image/jpeg)
Answer
  • 650
  • 200
  • 500
  • 900

Question 8

Question
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?
Answer
  • 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.

Question 9

Question
If a sawmill creates too much noise for local residents,...
Answer
  • 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.

Question 10

Question
An overcrowd beach is an example of...
Answer
  • a positive externality.
  • an economically unfair allocation of resources.
  • an environmentally inefficient allocation of resources.
  • a Tragedy of the Commons.

Question 11

Question
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...
Image:
8c1d3ace-c957-4321-8bae-7903585cb528 (image/jpeg)
Answer
  • P3 - P2
  • P2 - P1
  • P3 - P1
  • P4 - P3

Question 12

Question
Which area represents the INCREASE in producer surplus when the price rises from P1 to P2?
Image:
087f825b-07f4-43eb-bfe3-bf1e0808c724 (image/jpeg)
Answer
  • ABGD
  • AHGB
  • ACH
  • BCG

Question 13

Question
Demand is said to be price elastic if...
Answer
  • 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.

Question 14

Question
If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the...
Answer
  • 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.

Question 15

Question
If the price of the good is $150, then consumer surplus amounts to...
Image:
c48e137d-d668-40be-b31a-f4bf3e4147ae (image/jpeg)
Answer
  • $250
  • $200
  • $300
  • $150

Question 16

Question
If the government imposes a price ceiling of $2 on this market, then there will be...
Image:
9959e687-f96a-420f-aff9-6b23a51a0168 (image/jpeg)
Answer
  • 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.

Question 17

Question
A tax levied on the buyers of a good shifts the...
Answer
  • 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).

Question 18

Question
Relative to a situation in which gasoline is not taxed, the imposition of a tax on gasoline causes the quantity of gasoline demanded to...
Answer
  • 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.

Question 19

Question
For a price floor to be binding in this market, it would have to be set at...
Image:
025d2199-fe64-4f1e-99e2-cefcc4bb4a86 (image/jpeg)
Answer
  • a price between $2 and $3.
  • a price between $3 and $4.
  • any price above $3.
  • any price below $3.

Question 20

Question
Suppose a price ceiling of $5 is imposed on this market. As a result,...
Image:
38c29a91-368c-47ac-91b0-8677f37d30b7 (image/jpeg)
Answer
  • 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.

Question 21

Question
If the price of the product is $130, then who would be willing to purchase the product?
Answer
  • Calvin, Sam, and Andrew
  • Calvin and Sam
  • Calvin
  • Calvin, Sam, Andrew, and Lori

Question 22

Question
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...
Answer
  • 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.

Question 23

Question
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...
Answer
  • $10
  • $80
  • $30
  • $20

Question 24

Question
A supply curve can be used to measure producer surplus because it reflects...
Answer
  • the actions of sellers.
  • sellers' costs.
  • the amount that will be purchased by consumers in the market.
  • quantity supplied.

Question 25

Question
Which area represents consumer surplus at a price of P1?
Answer
  • ABC
  • ABDG
  • AFG
  • BDF

Question 26

Question
The vertical distance between points A and B represents a tax in the market. The per-unit burden of the tax on buyers is...
Image:
120d298f-de88-4a62-a17f-8ce326bf7760 (image/jpeg)
Answer
  • $5
  • $8
  • $3
  • $4

Question 27

Question
If demand is price inelastic, then...
Answer
  • 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.

Question 28

Question
If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?
Image:
af30dc91-24e0-4f4c-b4dc-abaf6ab14ee3 (image/jpeg)
Answer
  • $625
  • $5,000
  • $2,500
  • $1,250

Question 29

Question
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?
Answer
  • $3,700
  • $3,000
  • $700
  • $2,300

Question 30

Question
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...
Answer
  • internalize the positive externality.
  • internalize the negative externality.
  • externalize the positive externality.
  • externalize the negative externality.
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