HW #3 – Flashcards

Deadweight loss measures the loss

Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by J represents

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

Refer to Figure 8-3. The amount of tax revenue received by the government is equal to the area

Refer to Figure 8-5. The price that sellers effectively receive after the tax is imposed is

To fully understand how taxes affect economic well-being, we must compare the

Sellers of a product will bear the larger part of the tax burden, and buyers will bear a smaller part of the tax burden, when the

When a good is taxed, the burden of the tax

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

Suppose that policymakers are considering placing a tax on either of two markets. In Market A, the tax will have a significant effect on the price consumers pay, but it will not affect equilibrium quantity very much. In Market B, the same tax will have only a small effect on the price consumers pay, but it will have a large effect on the equilibrium quantity. Other factors are held constant. In which market will the tax have a larger deadweight loss?

Suppose the government places a per-unit tax on a good. The smaller the price elasticities of demand and supply for the good, the

If the world price of apples is higher than Argentina's domestic price of apples without trade, then Argentina

Assume, for Japan, that the domestic price of automobiles without international trade is lower than the world price of automobiles. This suggests that, in the production of automobiles,

When a country allows trade and becomes an importer of a good,

Refer to Figure 9-1. From the figure it is apparent that

Refer to Figure 9-2. The world price for calculators represents

Scenario 9-1 The before-trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The U.S. is a price-taker in the market for peaches. Refer to Scenario 9-1. If trade in peaches is allowed, the price of peaches in the United States

Refer to Figure 9-5. With trade, this country

Refer to Figure 9-9. Producer surplus in this market after trade is

Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff,

Refer to Figure 9-15. Consumer surplus with trade and without a tariff is

Which of the following statements is correct?

Refer to Figure 10-2. Suppose that the production of plastic creates a social cost which is depicted in the graph above. Without any government regulation, how much plastic will be produced?

Refer to Figure 10-5. Which price and quantity combination represents the social optimum?

If we know that the supply curve for good x fails to reflect the total cost to society of producing that good, then we know that

To enhance the well-being of society, a social planner will encourage firms to increase production when

Flu shots provide a positive externality. Suppose that the market for vaccinations is perfectly competitive. Without government intervention in the vaccination market, which of the following statements is correct?

Because there are positive externalities from higher education,

Refer to Figure 10-10. A decrease in output from 160 units to 120 units would

Before the flu season begins, Jeremy gets a flu shot. As a result, Jeremy and several of his friends and relatives avoid the flu for the entire flu season. It would make sense to argue that

Assuming education results in a positive externality, which of the following statements is correct?

University researchers create a positive externality because what they discover in their research labs can easily be learned by others who haven't contributed to the research costs. What could the federal government do to equate the equilibrium quantity of university research and the socially optimal quantity of university research produced?

Which of the following statements is correct?

The Coase theorem suggests that private markets may not be able to solve the problem of externalities

A television broadcast is an example of a good that is

Which of the following goods is nonrival in consumption and excludable?

People cannot be prevented from using a good if the good is

Which of the following is not a public good?

When good X is produced, some people benefit. A free-rider problem arises when

National defense is provided by the government because

Private companies will invest in medical research if

Each of the following explains why cost-benefit analysis is difficult except

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

The overuse of a common resource relative to its economically efficient use is called

The Tragedy of the Commons occurs because

Imagine a 2,000-acre park with picnic benches, trees, and a pond. Suppose it is publicly owned, and people are invited to enjoy its beauty. When the weather is nice, it is difficult to find parking on summer afternoons. Otherwise, it is a great place. An efficient solution to the parking problem would be to

On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. On these days, electricity is

Which of the following statements is correct?

Which of the following statements is correct?

The amount of money that a wheat farmer could have earned if he had planted barley instead of wheat is

Which of the following expressions is correct?

Scenario 13-1 Korie wants to start her own business making custom furniture. She can purchase a factory that costs $400,000. Korie currently has $500,000 in the bank earning 3 percent interest per year. Refer to Scenario 13-1. Suppose Korie purchases the factory using $200,000 of her own money and $200,000 borrowed from a bank at an interest rate of 6 percent. What is Korie's annual opportunity cost of purchasing the factory?

Refer to Figure 13-1. Which of the following could explain why the total product curve would shift from TP1 to TP2?

Refer to Table 13-6. The Wooden Chair Factory experiences diminishing marginal product of labor with the addition of which worker?

For a construction company that builds houses, which of the following costs would be a fixed cost?

Refer to Table 13-8. What is the average variable cost of producing 5 units of output?

Refer to Table 13-9. What is the marginal product of the third worker?

Scenario 13-17 If Farmer Brown plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he plants 3 bags, he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost.

Refer to Figure 13-5. Curve D is increasing because

Refer to Figure 13-8. Quantity C represents the output level where the firm

At all levels of production higher than the point where the marginal cost curve crosses the average variable cost curve, average variable cost

Which of the following is not a property of a firm's cost curves?

Suppose that a firm's long-run average total costs of producing televisions decreases as it produces between 10,000 and 20,000 televisions. For this range of output, the firm is experiencing

Refer to Figure 13-9. The firm experiences constant returns to scale at which output levels?