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Principle of Economic, practicle Essay

Icon 202 Exam 2 Practice Problems Principles of Microeconomics Dry. Phillip Miller Multiple Choice Identify the choice that best completes the statement or answers the question. Chapter 6 1 . If a binding price ceiling is imposed on the computer market, then a. The quantity of computers demanded will increase. B. The quantity of computers supplied will decrease. C. A shortage of computers will develop. D. All of the above are correct. 2. 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. B. Eng lines of buyers may develop. C. Sellers could ration the good or service according to their own personal biases. D. All of the above are correct. 3. As rationing mechanisms, prices a. And long lines are efficient. B. Are efficient, but long lines are inefficient. C. Are inefficient, but long lines are efficient. D. And long lines are inefficient. 4. A tax imposed on the sellers off good will a. Raise both the price buyers pay and the effective price sellers receive. B. Raise the price buyers pay and lower the effective price sellers receive. C.

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Lower the price buyers pay and raise the effective price sellers receive. Lower both the price buyers pay and the effective price sellers receive. Figure 6-9 10 price Principle of Economic, practical By Abeyance s 8 7 6 5 4 3 2 D after tax 20 50 70 quantity 5. Refer to Figure 6-9. Suppose the same supply and demand curves apply and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. Now, relative to the case depicted in the figure, a. The burden on buyers will be larger and the burden on sellers will be smaller. B. The burden on buyers will be smaller and he burden on sellers will be larger. . The burden on buyers will be the same and the burden on sellers will be the same. D. The relative burdens in the two cases cannot be determined without further information. 6. If a tax is imposed on a market with inelastic demand and elastic supply, then a. B. Sellers will bear most of the burden of the tax. C. The burden of the tax will be shared equally between buyers and sellers. D. It is impossible to determine how the burden of the tax will be shared. Chapter 7 Table 7-1 Buyer Mike Sandy Jonathan Haley Willingness To Pay $50. 00 $30. 00 $20. 00 $10. 00 7. Refer to Table 7-1 .

If the price of the product is $51, then who would be willing to purchase the product? A. Mike b. Mike and Sandy c. Mike, Sandy, and Jonathan d. No one 8. Refer to Table 7-1 . If the price of the product is $18, then the total consumer surplus is a. $38. B. $42. C. $46. D. $72. Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carols are the only three buyers of oranges, and only three oranges can be supplied per day. Alex Barb Carols First Orange $2. 00 $0. 75 Second Orange 1. 50 $1. 00 $0. 5 Third Orange $0. 80 $0 9. Refer to Table 7-5. If the market price of an orange is $0. 40, a. 6 oranges are demanded per day, and total consumer surplus amounts to $4. 45. B. 6 oranges are demanded per day, and total consumer surplus amounts to $5. 10. C. 7 oranges are demanded per day, and total consumer surplus amounts to $5. 35. D. 7 oranges are demanded per day, and total consumer surplus amounts to $5. 50. 10. Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $1 5 each. Laurel’s willingness to pay was $35, Lisle’s willingness to pay was $25, ND Lydia willingness to pay was $30.

Total consumer surplus for these three would be a. $15. B. $30. C. $45. D. $90. 1 1 . Ally mows lawns for a living. Allays out-of-pocket expenses (for equipment, gasoline, and so on) plus the value that she places on her own time amount to her a. Producer surplus. B. Producer deficit. C. Cost of mowing lawns. D. Profit. 12. Producer surplus is the a. Area under the supply curve to the left of the amount sold. B. Amount a seller is paid minus the cost of production. C. Area between the supply and demand curves, above the equilibrium price. D. Cost to sellers of participating in a market. 3.

At present, the maximum legal price for a human kidney is $0. The price of $0 maximizes a. Consumer surplus but not producer surplus. B. Producer surplus but not consumer surplus. C. Both consumer and producer surplus. D. Neither consumer nor producer surplus. 14. A simultaneous increase in both the demand for MPH players and the supply of MPH players would imply that a. Both the value of MPH players to consumers and b. Both the value of MPH players to consumers and the cost of producing MPH players has decreased. C. The value of MPH players to consumers has decreased, and the cost of producing

MPH players has increased. D. The value of MPH players to consumers has increased, and the cost of producing MPH players has decreased. Chapter 8 15. If a tax shifts the supply curve downward (or to the right), we can infer that the tax was levied on a. Buyers of the good. B. Sellers of the good. C. Both buyers and sellers of the good. D. We cannot infer anything because the shift described is not consistent with a tax. 16. If T represents the size of the tax on a good and Q represents the quantity of the good that is sold, total tax revenue received by government can be expressed as b. T+Q. C. TXT. D.

TXT)/Q. 17. For good B, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. When good B is taxed, the area on the relevant supply-and-demand graph that represents a. Government’s tax revenue is a rectangle. B. The deadweight loss of the tax is a triangle. C. The loss of consumer surplus caused by the tax is neither a rectangle nor a triangle. D. All of the above are correct. 18. In the market for widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line.

The equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. As a result, the government is able to raise $750 per month in tax revenue. We can conclude that the equilibrium quantity of widgets has fallen by a. 25 per month. B. 50 per month. C. 75 per month. D. 100 per month. 19. Suppose that the government imposes a tax on dairy products. The deadweight loss from this tax will likely be greater in the a. First year after it is imposed than in the fifth year after it is imposed because demand and supply will be more elastic in the first year than in the fifth year. First year after it is imposed than in the fifth year after it is imposed because demand and supply will be less elastic in the first year than in the fifth year. C. Fifth year after it is imposed than in the first year after it is imposed because demand and supply will be more elastic in the first year than in the fifth year. D. Fifth year after it is imposed than in the first year after it is imposed because demand and supply will be less elastic in results from a tax of a given size is determined by a. Whether the tax is levied on buyers or sellers. B. He number of buyers in the market relative to the number of sellers. . The price elasticity of demand and supply. D. The ratio of the tax per unit to the effective price received by sellers. Chapter 10 Note:

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