ECON test 2 practice

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lower than the price floor

when a price floor is binding, the equilibrium price is

a shortage of computers would develop

if a binding price ceiling were imposed in the computer market

cause surpluses and shortages to persist since price cannot adjust to the market equilibrium price

price ceilings and price floors that are binding

lowest price employers may pay for labor

minimum wage laws dictate the

the equilibrium price is below the price ceiling

suppose a price ceiling is NOT BINDING; this means that

leads to a surplus

a price floor is binding if it

shortage of 20 units

looking at graph, if government imposes a price ceiling in this market at a price of $5, the result would be a

a market in equilibrium

looking at graph, if the government imposes a price floor of $5 in this market, the result would be

the demand curve downward, causing both the price received by sellers and the equilibrium quantity to fail

a tax legally imposed on buyers of bicycles would shift

reading a graph

look at practice test for figure 6-8

buyers and sellers hare the burden of the tax

which is the most correct statement about the burden of a tax imposed on buyers of sugar

sellers will bear most of the burden of the tax

if a tax is imposed on a market with elastic demand and inelastic supply

a tax burden falls most heavily on the side of the market that is les elastic

which of the following is the most correct statement about tax burdens

demand is more inelastic than the supply

suppose that a tax is placed on books. If the buyers bear the majority of the tax burden, we know that the

how the allocation of resources afects economic well-being

welfare economics is the study of

measures the value that a buyer places on a good

willingness to pay

the consumer does not purchase the good

if a consumer places a value of $15 on a particular good and if the price of the good is $17, then

look at table 7-1

look at table 7-1

area below the demand curve and above the price

consumer surplus in a market can be represented by the

look at figure 7-6

look at figure 7-6

the sum of producer surplus and consumer surplus is maximized

efficiency in a market is achieved when

consumer surplus plus producer surplus

total surplus in a market is equal to

graph 7-11

graph 7-11

$6800 and $600

suppose a tax of $4 per unit is imposed on a good and the tax caused the equilibrium quantity of the good to decrease from 2000 units to 1700 units. The tax decreases consumer surplus by $3000 and it decreases producer surplus by $400. Total tax revenue and the dead weight loss of the tax are

taxes reduce the sum of producer and consumer surpluses by more than the amount of tax revenue taxes prevent buyers and sellers from realizing some of the gains from trade/taxes cause marginal buyers and marginal sellers to leave the market, causing the quantity sold to fall. (all of the above)

taxes cause deadweight losses because

deadweight loss

the loss in total surplus resulting from a tax is called

figure 8-4

figure 8-4

the greater are the price elasticities of supply and demand, the greater is the deadweight loss

which of the following statements is correct regarding a tax on a good and the resulting deadweight loss

the larger is the deadweight loss of the tax

suppose a tax of $1 per unit is imposed on a good. The more elastic the supply of the good, other things equal

the country will be an importer of the good

if a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

the gains of the winners exceed the losses of the losers

trade raises the economic well being of a nation in the sense that

the losses of domestic consumers of the good exceed the gains of domestic producers of the good

When a country allows trade and becomes an exporter of a good, which of the following is NOT a consequence

the domestic price of sugar will equal the world price of sugar

After a country goes from disallowing trade in sugar with other countries to allowing trade in sugar with other countries

graph 9-1

graph 9-1

figure 9-5

figure 9-5

domestic sellers better off and domestic buyers worse off

a tariff on a product makes

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