Microeconomics2

Question 1
1 out of 1 points


Welfare economics is the study of how
Answer
Selected Answer:
 a.  
the allocation of resources affects economic well-being.
Correct Answer:
 a.  
the allocation of resources affects economic well-being.
Question 2
1 out of 1 points


The study of how the allocation of resources affects economic well-being is called
Answer
Selected Answer:
 b.  
welfare economics.
Correct Answer:
 b.  
welfare economics.
Question 3
1 out of 1 points


An example of positive analysis is studying
Answer
Selected Answer:
 a.  
how market forces produce equilibrium.
Correct Answer:
 a.  
how market forces produce equilibrium.
Question 4
1 out of 1 points


Which of the Ten Principles of Economics does welfare economics explain more fully?
Answer
Selected Answer:
 d.  
Markets are usually a good way to organize economic activity.
Correct Answer:
 d.  
Markets are usually a good way to organize economic activity.
Question 5
1 out of 1 points


The maximum price that a buyer will pay for a good is called the
Answer
Selected Answer:
 a.  
willingness to pay.
Correct Answer:
 a.  
willingness to pay.
Question 6
0 out of 1 points


Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called
Answer
Selected Answer:
 d.  
a resistance price.
Correct Answer:
 c.  
willingness to pay.
Question 7
1 out of 1 points


On a graph, the area below a demand curve and above the price measures
Answer
Selected Answer:
 b.  
consumer surplus.
Correct Answer:
 b.  
consumer surplus.
Question 8
0 out of 1 points


Table 7-2This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
Buyer
Willingness To Pay
David
$8.50
Laura
$7.00
Megan
$5.50
Mallory
$4.00
Audrey
$3.50




Refer to Table 7-2. If the market price is $3.80,
Answer
Selected Answer:
 d.  
David, Laura, and Megan will be the only buyers of Vanilla Coke.
Correct Answer:
 c.  
Megan’s consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80.
Question 9
1 out of 1 points


Table 7-3
The only four consumers in a market have the following willingness to pay for a good:


Buyer
Willingness to Pay
Carlos
$15
Quilana
$25
Wilbur
$35
Ming-la
$45




Refer to Table 7-3.  If the market price for the good is $20, who will purchase the good?
Answer
Selected Answer:
 a.  
Quilana, Wilbur, and Ming-la only
Correct Answer:
 a.  
Quilana, Wilbur, and Ming-la only
Question 10
0 out of 1 points


Table 7-4The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal’s baseball game at Wrigley Field. 


Buyer
Willingness to Pay
Jennifer
$10
Bryce
$15
Dan
$20
David
$25
Ken
$50
Lisa
$60




Refer to Table 7-4.  If tickets sell for $20 each, then what is the total consumer surplus in the market?
Answer
Selected Answer:
 c.  
$40
Correct Answer:
 b.  
$75
Question 11
0 out of 1 points


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 Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.


 
First Orange
Second Orange
Third Orange
Allison
$2.00
$1.50
$0.75
Bob
$1.50
$1.00
$0.80
Charisse
$0.75
$0.25
$0




Refer to Table 7-5. If the market price of an orange is $1.20, then consumer surplus amounts to
Answer
Selected Answer:
 d.  
$0.70.
Correct Answer:
 c.  
$1.40.
Question 12
0 out of 1 points


Table 7-6
Buyer
Willingness to Pay
Michael
$500
Earvin
$400
Larry
$350
Charles
$300




Refer to Table 7-6.  You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men’s NCAA basketball tournament.  The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game.  You offer to sell the tickets for $325.  How many tickets do you sell, and what is the total consumer surplus in the market?
Answer
Selected Answer:
 c.  
one ticket; $175
Correct Answer:
 d.  
three tickets; $275
Question 13
1 out of 1 points


Table 7-6
Buyer
Willingness to Pay
Michael
$500
Earvin
$400
Larry
$350
Charles
$300




Refer to Table 7-6.  You are selling extra tickets to the Midwest Regional Sweet 16 game in the men’s NCAA basketball tournament.  The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game.  Which of the following graphs represents the market demand curve?
Answer
Selected Answer:
 a.  


Correct Answer:
 a.  


Question 14
0 out of 1 points


You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field.  Assume the ticket has no resale value.  Willie Nelson is performing on the same night, and his concert is your next-best alternative activity.  Tickets to see Willie Nelson cost $40.  On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform.  Assume there are no other costs of seeing either event.  Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?
Answer
Selected Answer:
 c.  
$0
Correct Answer:
 b.  
$10
Question 15
0 out of 1 points


Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15.  Chuck values the dog show at
Answer
Selected Answer:
 b.  
$5.
Correct Answer:
 a.  
$20.
Question 16
1 out of 1 points


If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the 
Answer
Selected Answer:
 d.  
consumer does not purchase the good.
Correct Answer:
 d.  
consumer does not purchase the good.
Question 17
0 out of 1 points


If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the 
Answer
Selected Answer:
 d.  
market is out of equilibrium.
Correct Answer:
 b.  
consumer does not purchase the good.
Question 18
1 out of 1 points


If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to
Answer
Selected Answer:
 c.  
$4.
Correct Answer:
 c.  
$4.
Question 19
1 out of 1 points


Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be
Answer
Selected Answer:
 b.  
$45.
Correct Answer:
 b.  
$45.
Question 20
0 out of 1 points


Abraham drinks Mountain Dew. He can buy as many cans of Mountain Dew as he wishes at a price of $0.55 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Abraham is rational in deciding how many cans to buy. His consumer surplus is
Answer
Selected Answer:
 d.  
$0.50.
Correct Answer:
 a.  
$0.70.
Question 21
1 out of 1 points


Cameron visits a sporting goods store to buy a new set of golf clubs. He is willing to pay $750 for the clubs but buys them on sale for $575. Cameron's consumer surplus from the purchase is
Answer
Selected Answer:
 c.  
$175.
Correct Answer:
 c.  
$175.
Question 22
1 out of 1 points


Suppose there is an early freeze in California that reduces the size of the lemon crop. What happens to consumer surplus in the market for lemons?
Answer
Selected Answer:
 b.  
Consumer surplus decreases.
Correct Answer:
 b.  
Consumer surplus decreases.
Question 23
1 out of 1 points


All else equal, what happens to consumer surplus if the price of a good decreases?
Answer
Selected Answer:
 a.  
Consumer surplus increases.
Correct Answer:
 a.  
Consumer surplus increases.
Question 24
1 out of 1 points


If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets?
Answer
Selected Answer:
 a.  
Consumer surplus decreases.
Correct Answer:
 a.  
Consumer surplus decreases.
Question 25
1 out of 1 points


When the demand for a good increases and the supply of the good remains unchanged, consumer surplus
Answer
Selected Answer:
 b.  
may increase, decrease, or remain unchanged.
Correct Answer:
 b.  
may increase, decrease, or remain unchanged.
Question 26
1 out of 1 points


Figure 7-1


Refer to Figure 7-1.  If the price of the good is $250, then consumer surplus amounts to
Answer
Selected Answer:
 b.  
$50.
Correct Answer:
 b.  
$50.
Question 27
0 out of 1 points


Figure 7-1


Refer to Figure 7-1.  If the price of the good is $50, then consumer surplus amounts to
Answer
Selected Answer:
 a.  
$500.
Correct Answer:
 c.  
$600.
Question 28
1 out of 1 points


Figure 7-1


Refer to Figure 7-1.  If the price of the good is $200, then
Answer
Selected Answer:
 b.  
consumer surplus is $150.
Correct Answer:
 b.  
consumer surplus is $150.
Question 29
1 out of 1 points


Figure 7-2


Refer to Figure 7-2. When the price rises from P1 to P2, consumer surplus
Answer
Selected Answer:
 a.  
decreases by an amount equal to B+C.
Correct Answer:
 a.  
decreases by an amount equal to B+C.
Question 30
1 out of 1 points


Figure 7-2


Refer to Figure 7-2. Area C represents the
Answer
Selected Answer:
 a.  
consumer surplus to new consumers who enter the market when the price falls from P2 to P1.
Correct Answer:
 a.  
consumer surplus to new consumers who enter the market when the price falls from P2 to P1.
Question 31
0 out of 1 points


Figure 7-5




Refer to Figure 7-5.  At the equilibrium price, consumer surplus is
Answer
Selected Answer:
 a.  
$600.
Correct Answer:
 b.  
$300.
Question 32
1 out of 1 points


Figure 7-6




Refer to Figure 7-6.  What happens to the consumer surplus if the price rises from $100 to $150?
Answer
Selected Answer:
 c.  
The new consumer surplus is 25 percent of the original consumer surplus.
Correct Answer:
 c.  
The new consumer surplus is 25 percent of the original consumer surplus.
Question 33
1 out of 1 points


Consumer surplus is a good measure of economic welfare if policymakers want to
Answer
Selected Answer:
 a.  
respect the preferences of buyers.
Correct Answer:
 a.  
respect the preferences of buyers.
Question 34
1 out of 1 points


When policymakers are considering a particular action, they can use consumer surplus as a(n)
Answer
Selected Answer:
 d.  
Both b) and c) are correct.
Correct Answer:
 d.  
Both b) and c) are correct.
Question 35
1 out of 1 points


To fully understand how taxes affect economic well-being, we must compare the
Answer
Selected Answer:
 b.  
decrease in total surplus to the increase in revenue raised by the government.
Correct Answer:
 b.  
decrease in total surplus to the increase in revenue raised by the government.
Question 36
1 out of 1 points


Which of the following tools help us evaluate how taxes affect economic well-being?
(i)
consumer surplus
(ii)
producer surplus
(iii)
tax revenue
(iv)
deadweight loss
Answer
Selected Answer:
 d.  
(i), (ii), (iii), and (iv)
Correct Answer:
 d.  
(i), (ii), (iii), and (iv)
Question 37
1 out of 1 points


A tax affects
Answer
Selected Answer:
 a.  
buyers, sellers, and the government.
Correct Answer:
 a.  
buyers, sellers, and the government.
Question 38
0 out of 1 points


When a tax is imposed on a good, the
Answer
Selected Answer:
 c.  
demand curve for the good always shifts.
Correct Answer:
 b.  
equilibrium quantity of the good always decreases.
Question 39
1 out of 1 points


A tax levied on the sellers of a good shifts the
Answer
Selected Answer:
 d.  
supply curve upward (or to the left).
Correct Answer:
 d.  
supply curve upward (or to the left).
Question 40
1 out of 1 points


A tax levied on the buyers of a good shifts the
Answer
Selected Answer:
 d.  
demand curve downward (or to the left).
Correct Answer:
 d.  
demand curve downward (or to the left).
Question 41
1 out of 1 points


When tires are taxed and sellers of tires are required to pay the tax to the government,
Answer
Selected Answer:
 d.  
the quantity of tires bought and sold in the market is reduced.
Correct Answer:
 d.  
the quantity of tires bought and sold in the market is reduced.
Question 42
1 out of 1 points


When a tax is placed on the buyers of a product, a result is that buyers effectively pay
Answer
Selected Answer:
 d.  
more than before the tax, and sellers effectively receive less than before the tax.
Correct Answer:
 d.  
more than before the tax, and sellers effectively receive less than before the tax.
Question 43
0 out of 1 points


A tax placed on a good
Answer
Selected Answer:
 b.  
causes the effective price to sellers to increase.
Correct Answer:
 a.  
causes the equilibrium quantity of the good to decrease.
Question 44
1 out of 1 points


The benefit to buyers of participating in a market is measured by
Answer
Selected Answer:
 b.  
consumer surplus.
Correct Answer:
 b.  
consumer surplus.
Question 45
1 out of 1 points


For the purpose of analyzing the gains and losses from a tax on a good, we use tax revenue as a direct measure of the
Answer
Selected Answer:
 b.  
government's benefit from the tax.
Correct Answer:
 b.  
government's benefit from the tax.
Question 46
1 out of 1 points


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
Selected Answer:
 d.  
decrease and the quantity of gasoline supplied to decrease.
Correct Answer:
 d.  
decrease and the quantity of gasoline supplied to decrease.
Question 47
1 out of 1 points


Total surplus with a tax is equal to
Answer
Selected Answer:
 d.  
consumer surplus plus producer surplus plus tax revenue.
Correct Answer:
 d.  
consumer surplus plus producer surplus plus tax revenue.
Question 48
1 out of 1 points


Taxes cause deadweight losses because taxes
Answer
Selected Answer:
 d.  
All of the above are correct.
Correct Answer:
 d.  
All of the above are correct.
Question 49
1 out of 1 points


A deadweight loss is a consequence of a tax on a good because the tax
Answer
Selected Answer:
 d.  
induces buyers to consume less, and sellers to produce less.
Correct Answer:
 d.  
induces buyers to consume less, and sellers to produce less.
Question 50
0 out of 1 points


Figure 8-1




Refer to Figure 8-1.  Suppose the government imposes a tax of P' - P'''.  Total surplus before the tax is measured by the area
Answer
Selected Answer:
 c.  
J+K+L+M.
Correct Answer:
 d.  
I+J+K+L+M+Y.
Question 51
0 out of 1 points


Figure 8-1




Refer to Figure 8-1.  Suppose the government imposes a tax of P' - P'''.  The tax revenue is measured by the area
Answer
Selected Answer:
 c.  
J+K+L+M.
Correct Answer:
 d.  
K+L.
Question 52
0 out of 1 points


Figure 8-1




Refer to Figure 8-1.  Suppose the government imposes a tax of P' - P'''.  The area measured by L+M+Y represents
Answer
Selected Answer:
 a.  
producer surplus after the tax.
Correct Answer:
 c.  
producer surplus before the tax.
Question 53
1 out of 1 points


Figure 8-1




Refer to Figure 8-1.  Suppose the government imposes a tax of P' - P'''.  The area measured by M represents
Answer
Selected Answer:
 c.  
producer surplus after the tax.
Correct Answer:
 c.  
producer surplus after the tax.
Question 54
1 out of 1 points


Figure 8-1




Refer to Figure 8-1.  Suppose the government imposes a tax of P' - P'''.  The producer surplus after the tax is measured by the area
Answer
Selected Answer:
 a.  
M.
Correct Answer:
 a.  
M.
Question 55
1 out of 1 points


Figure 8-1




Refer to Figure 8-1.  Suppose the government imposes a tax of P' - P'''.  The area measured by J represents
Answer
Selected Answer:
 c.  
consumer surplus after the tax.
Correct Answer:
 c.  
consumer surplus after the tax.
Question 56
0 out of 1 points


Figure 8-1




Refer to Figure 8-1.  Suppose the government imposes a tax of P' - P'''.  The consumer surplus after the tax is measured by the area
Answer
Selected Answer:
 c.  
J+K+I.
Correct Answer:
 a.  
J.
Question 57
0 out of 1 points


Figure 8-1




Refer to Figure 8-1.  Suppose the government imposes a tax of P' - P'''.  The deadweight loss due to the tax is measured by the area
Answer
Selected Answer:
 b.  
J+K+L+M.
Correct Answer:
 a.  
I+Y.
Question 58
0 out of 1 points


Figure 8-2
The vertical distance between points A and B represents a tax in the market.




Refer to Figure 8-2.  The imposition of the tax causes the price paid by buyers to
Answer
Selected Answer:
 d.  
decrease by $4.
Correct Answer:
 c.  
increase by $3.
Question 59
1 out of 1 points


Figure 8-2
The vertical distance between points A and B represents a tax in the market.




Refer to Figure 8-2.  The per-unit burden of the tax on sellers is
Answer
Selected Answer:
 a.  
$2.
Correct Answer:
 a.  
$2.
Question 60
1 out of 1 points


Figure 8-2
The vertical distance between points A and B represents a tax in the market.




Refer to Figure 8-2.  Consumer surplus without the tax is
Answer
Selected Answer:
 c.  
$6, and consumer surplus with the tax is $1.50.
Correct Answer:
 c.  
$6, and consumer surplus with the tax is $1.50.
Question 61
0 out of 1 points


Figure 8-2
The vertical distance between points A and B represents a tax in the market.




Refer to Figure 8-2.  The loss of consumer surplus associated with some buyers dropping out of the market as a result of the tax is
Answer
Selected Answer:
 a.  
$4.50.
Correct Answer:
 d.  
$1.50.
Question 62
1 out of 1 points


Figure 8-3The vertical distance between points A and C represents a tax in the market.




Refer to Figure 8-3. The price that sellers effectively receive after the tax is imposed is
Answer
Selected Answer:
 b.  
P1.
Correct Answer:
 b.  
P1.
Question 63
0 out of 1 points


Figure 8-3The vertical distance between points A and C represents a tax in the market.




Refer to Figure 8-3. The per-unit burden of the tax on sellers is
Answer
Selected Answer:
 d.  
P3 - P1.
Correct Answer:
 b.  
P2 - P1.
Question 64
1 out of 1 points


Figure 8-3The vertical distance between points A and C represents a tax in the market.




Refer to Figure 8-3. Which of the following equations is valid for the deadweight loss of the tax?
Answer
Selected Answer:
 a.  
Deadweight loss = (1/2)(P3 - P1)(Q2 - Q1)
Correct Answer:
 a.  
Deadweight loss = (1/2)(P3 - P1)(Q2 - Q1)
Question 65
0 out of 1 points


Figure 8-4The vertical distance between points A and B represents a tax in the market.


Refer to Figure 8-4. The equilibrium price before the tax is imposed is
Answer
Selected Answer:
 a.  
$12, and the equilibrium quantity is 70.
Correct Answer:
 c.  
$8, and the equilibrium quantity is 100.
Question 66
0 out of 1 points


Figure 8-4The vertical distance between points A and B represents a tax in the market.


Refer to Figure 8-4. The amount of the tax on each unit of the good is
Answer
Selected Answer:
 a.  
$8.
Correct Answer:
 d.  
$7.
Question 67
1 out of 1 points


Figure 8-4The vertical distance between points A and B represents a tax in the market.


Refer to Figure 8-4. The amount of deadweight loss as a result of the tax is
Answer
Selected Answer:
 b.  
$105.
Correct Answer:
 b.  
$105.
Question 68
0 out of 1 points


Figure 8-4The vertical distance between points A and B represents a tax in the market.


Refer to Figure 8-4. The tax results in a loss of producer surplus that amounts to
Answer
Selected Answer:
 c.  
$45.
Correct Answer:
 a.  
$255.
Question 69
1 out of 1 points


Figure 8-5Suppose that the government imposes a tax of P3 - P1.




Refer to Figure 8-5. The equilibrium price before the tax is imposed is
Answer
Selected Answer:
 a.  
P2.
Correct Answer:
 a.  
P2.
Question 70
1 out of 1 points


Figure 8-5Suppose that the government imposes a tax of P3 - P1.




Refer to Figure 8-5. After the tax is levied, consumer surplus is represented by area
Answer
Selected Answer:
 a.  
A.
Correct Answer:
 a.  
A.
Question 71
1 out of 1 points


Figure 8-5Suppose that the government imposes a tax of P3 - P1.




Refer to Figure 8-5. The tax causes a reduction in producer surplus that is represented by area
Answer
Selected Answer:
 d.  
D+H.
Correct Answer:
 d.  
D+H.
Question 72
1 out of 1 points


Figure 8-5Suppose that the government imposes a tax of P3 - P1.




Refer to Figure 8-5. The benefit to the government is measured by
Answer
Selected Answer:
 b.  
tax revenue and is represented by area B+D.
Correct Answer:
 b.  
tax revenue and is represented by area B+D.
Question 73
0 out of 1 points


Figure 8-5Suppose that the government imposes a tax of P3 - P1.




Refer to Figure 8-5. The loss in total welfare that results from the tax is represented by area
Answer
Selected Answer:
 c.  
A+B+D+F.
Correct Answer:
 b.  
C+H.
Question 74
0 out of 1 points


Figure 8-6The vertical distance between points A and B represents a tax in the market.




Refer to Figure 8-6. When the tax is imposed in this market, the price buyers effectively pay is
Answer
Selected Answer:
 b.  
$6.
Correct Answer:
 c.  
$16.
Question 75
1 out of 1 points


Figure 8-6The vertical distance between points A and B represents a tax in the market.




Refer to Figure 8-6. The amount of the tax on each unit of the good is
Answer
Selected Answer:
 d.  
$10.
Correct Answer:
 d.  
$10.
Question 76
1 out of 1 points


Figure 8-6The vertical distance between points A and B represents a tax in the market.




Refer to Figure 8-6. Total surplus with the tax in place is
Answer
Selected Answer:
 a.  
$4,500.
Correct Answer:
 a.  
$4,500.
Question 77
0 out of 1 points


Figure 8-6The vertical distance between points A and B represents a tax in the market.




Refer to Figure 8-6. What happens to producer surplus when the tax is imposed in this market?
Answer
Selected Answer:
 d.  
Producer surplus falls by $600.
Correct Answer:
 c.  
Producer surplus falls by $1,800.
Question 78
0 out of 1 points


Figure 8-6The vertical distance between points A and B represents a tax in the market.




Refer to Figure 8-6. What happens to total surplus in this market when the tax is imposed?
Answer
Selected Answer:
 b.  
Total surplus increases by $3,000.
Correct Answer:
 d.  
Total surplus decreases by $1,500.
Question 79
0 out of 1 points


Figure 8-6The vertical distance between points A and B represents a tax in the market.




Refer to Figure 8-6. The tax results in a deadweight loss that amounts to
Answer
Selected Answer:
 b.  
$1,800.
Correct Answer:
 d.  
$1,500.
Question 80
0 out of 1 points


Figure 8-7The vertical distance between points A and B represents a tax in the market.




Refer to Figure 8-7. Which of the following statements is correct?
Answer
Selected Answer:
 d.  
All of the above are correct.
Correct Answer:
 a.  
Total surplus before the tax is imposed is $250.
Question 81
0 out of 1 points


Figure 8-7The vertical distance between points A and B represents a tax in the market.




Refer to Figure 8-7. Which of the following statements is correct?
Answer
Selected Answer:
 d.  
All of the above are correct.
Correct Answer:
 c.  
After the tax is imposed, producer surplus is 36 percent of its pre-tax value.
Question 82
1 out of 1 points


Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. 




Refer to Figure 8-8. The decrease in consumer and producer surpluses that is not offset by tax revenue is the area
Answer
Selected Answer:
 d.  
C+F.
Correct Answer:
 d.  
C+F.
Question 83
0 out of 1 points


Scenario 8-1
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.


Refer to Scenario 8-1. If Erin pays Ernesto $80 to clean her house, Erin’s consumer surplus is
Answer
Selected Answer:
 d.  
$10.
Correct Answer:
 a.  
$20.
Question 84
0 out of 1 points


Scenario 8-1
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.


Refer to Scenario 8-1. Assume Erin is required to pay a tax of $15 when she hires someone to clean her house. Which of the following is true?
Answer
Selected Answer:
 d.  
All of the above are correct.
Correct Answer:
 a.  
Erin will continue to hire Ernesto to clean her house, but her consumer surplus will decline.
Question 85
0 out of 1 points


Scenario 8-2Tom mows Stephanie's lawn for $25. Tom’s opportunity cost of mowing Stephanie’s lawn is $20, and Stephanie's willingness to pay Tom to mow her lawn is $28.


Refer to Scenario 8-2. If Stephanie hires Tom to mow her lawn, Stephanie’s consumer surplus is
Answer
Selected Answer:
 b.  
$5.
Correct Answer:
 c.  
$3.
Question 86
0 out of 1 points


Scenario 8-2Tom mows Stephanie's lawn for $25. Tom’s opportunity cost of mowing Stephanie’s lawn is $20, and Stephanie's willingness to pay Tom to mow her lawn is $28.


Refer to Scenario 8-2. If Stephanie hires Tom to mow her lawn, Tom’s producer surplus is
Answer
Selected Answer:
 c.  
$3.
Correct Answer:
 a.  
$5.
Question 87
0 out of 1 points


Suppose a tax of $5 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units.  The tax decreases consumer surplus by $450 and decreases producer surplus by $300.  The deadweight loss from the tax is
Answer
Selected Answer:
 a.  
$750.
Correct Answer:
 c.  
$250.
Question 88
0 out of 1 points


Andre walks Julia’s dog once a day for $50 per week.  Julia values this service at $60 per week, while the opportunity cost of Andre’s time is $30 per week.  The government places a tax of $35 per week on dog walkers.  After the tax, what is the loss in total surplus?
Answer
Selected Answer:
 b.  
$25
Correct Answer:
 c.  
$30
Question 89
0 out of 1 points


Andre walks Julia’s dog once a day for $50 per week.  Julia values this service at $60 per week, while the opportunity cost of Andre’s time is $30 per week.  The government places a tax of $35 per week on dog walkers.  After the tax, what is the total surplus?
Answer
Selected Answer:
 c.  
$50
Correct Answer:
 b.  
$0
Question 90
1 out of 1 points


Diana is a personal trainer whose client Charles pays $80 per hour-long session.  Charles values this service at $100 per hour, while the opportunity cost of Diana’s time is $75 per hour.  The government places a tax of $10 per hour on personal trainers.  Before the tax, what is the total surplus?
Answer
Selected Answer:
 b.  
$25
Correct Answer:
 b.  
$25
Question 91
0 out of 1 points


Diana is a personal trainer whose client Charles pays $80 per hour-long session.  Charles values this service at $100 per hour, while the opportunity cost of Diana’s time is $75 per hour.  The government places a tax of $10 per hour on personal trainers.  After the tax, what is likely to happen in the market for personal training?
Answer
Selected Answer:
 c.  
The price will remain at $80, and Diana will pay the $10 tax.
Correct Answer:
 d.  
Diana and Charles will agree to a new price somewhere between $85 and $100.
Question 92
1 out of 1 points


A tax
Answer
Selected Answer:
 d.  
Both b) and c) are correct.
Correct Answer:
 d.  
Both b) and c) are correct.
Question 93
1 out of 1 points


Figure 8-9
The vertical distance between points A and C represent a tax in the market.




Refer to Figure 8-9.  The equilibrium price and quantity before the imposition of the tax is
Answer
Selected Answer:
 c.  
P=$600 and Q=40.
Correct Answer:
 c.  
P=$600 and Q=40.
Question 94
0 out of 1 points


Figure 8-9
The vertical distance between points A and C represent a tax in the market.




Refer to Figure 8-9.  The amount of the tax on each unit of the good is
Answer
Selected Answer:
 c.  
$300.
Correct Answer:
 b.  
$500.
Question 95
1 out of 1 points


Figure 8-9
The vertical distance between points A and C represent a tax in the market.




Refer to Figure 8-9.  The amount of tax revenue received by the government is
Answer
Selected Answer:
 c.  
$10,000.
Correct Answer:
 c.  
$10,000.
Question 96
1 out of 1 points


Figure 8-9
The vertical distance between points A and C represent a tax in the market.




Refer to Figure 8-9.  The producer surplus with the tax is
Answer
Selected Answer:
 a.  
$3,000.
Correct Answer:
 a.  
$3,000.
Question 97
0 out of 1 points


Figure 8-10


Refer to Figure 8-10.  Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.  The price that buyers pay is
Answer
Selected Answer:
 b.  
P5.
Correct Answer:
 d.  
P2.
Question 98
0 out of 1 points


Figure 8-10


Refer to Figure 8-10.  Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.  The price that sellers receive is
Answer
Selected Answer:
 b.  
P5.
Correct Answer:
 d.  
P8.
Question 99
1 out of 1 points


Figure 8-10


Refer to Figure 8-10.  Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.  With the tax, the producer surplus is
Answer
Selected Answer:
 c.  
½ x (P8-0) x Q2.
Correct Answer:
 c.  
½ x (P8-0) x Q2.
Question 100
1 out of 1 points


Figure 8-11


Refer to Figure 8-11.  The price labeled as P3 on the vertical axis represents the price
Answer
Selected Answer:
 b.  
paid by buyers after the tax is imposed.
Correct Answer:
 b.  
paid by buyers after the tax is imposed.

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