ECON 2100 Midterm: ECON 2100 Kennesaw State ECON2100 Summer2016 Exam2B

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turquoisegnu128

31 Jan 2019

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Econ 2100 (summer 2016 sections 10 & 11) Rent controls are an example of _________; a minimum wage is an example of _________. a price ceiling; a price floor. a price floor; a price ceiling. a price curtain; a price wall. a price wall; a price curtain. Consider a market in which the unique efficient level of trade is 12,000 units. If 9,400 units are traded, then deadweight loss may be positive or negative (it depends upon how elastic demand and supply are). will be positive. will be equal to zero. will be negative. Suppose that a 10% increase in consumer income leads to a 6% increase in consumption of. Good x and a 4% decrease in consumption of good y. this observation would imply that. Good x is _______________ and good y is _______________. a normal good; a normal good. an inferior good; an inferior good. a normal good; an inferior good. an inferior good; a normal good.

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Under a binding price ceiling, what does the change in consumer surplus represent?
A) The gain in surplus for those buyers who can still purchase the product at the lower price.
B) The loss in surplus for those buyers who previously purchased some units of the good at the higher price, but these units are no longer produced at the lower price.
C) The loss in surplus for those buyers who would like the purchase the excess demand created by the price ceiling policy.
D) Both A and B are correct.
E) Both A and C are correct.

When the market price is held above the competitive level, the deadweight loss is composed of:

A) producer surplus losses associated with units that used to be traded on the market but are no longer exchanged.

B) consumer surplus losses associated with units that used to be traded on the market but are no longer exchanged.
C) producer and consumer surplus losses associated with units that used to be traded on the market but are no longer exchanged.
D) There is no deadweight loss if the government uses a price floor policy to increase the price.

Compared to a tariff, an import quota, which restricts imports to the same amount as the tariff, will leave the country as a whole
A) worse off than a comparable tariff.
B) not as bad off as a comparable tariff.

C) about the same as a comparable tariff.

D) Any of the above can be true.

What is the welfare impact of a subsidy policy?
A) Producer surplus increases, consumer surplus declines, and total welfare declines.
B) Producer and consumer surplus increase, and these gains are larger than the government cost.

C) Producer and consumer surplus increase, and these gains are smaller than the government cost.

D) Producer surplus increases, consumer surplus declines, and total welfare increases due to the subsidy program.

Why is there a deadweight loss associated with subsidy payments?
A) There is no deadweight loss from a subsidy.
B) Quantity supplied is less than the equilibrium amount, so consumers and producers lose surplus value on those units that are no longer produced.
C) Quantity supplied exceeds the equilibrium amount, and consumer willingness to pay for these additional units is smaller than the marginal cost of producing them.
D) The subsidy payment does not distort quantities in the market, but the government cost exceeds consumer willingness to pay for the quantity demanded.

violetmole943

1.) An excise tax on a good typically reduces the net price received by the seller. (TRUE/FALSE)

2.) The burden of an excise tax on gasoline falls entirely on consumers of gasoline. (TRUE/FALSE)

3.) Rent controls are one of the few examples of a price floor in market economies. (TRUE/FALSE)

4.) Imposing a price ceiling below the equilibrium price of a good often leads to_____.

A) A greater supply of the good

B) A black market for the good

C) A rightward shift of the supply curve for the good.

D) A leftward shift of the demand curve for the good.

E) All of these

5.) Which of the following is true of price floors and ceilings?

A) Lead to the same price and quantity as in competitive market.

B) Lead to technical efficiency

C) Cause the demand curve to shift left

D) Usually result from government intervention

E) Cause the supply curve to shift right.

6.) Price ceilings often lead to black markets. (TRUE/FALSE)

7.) When minimum wage is above the equilibrium wage what occurs?

A) There will be a shortage of labor

B) There will be no effect on the number of people employed

C) There will be an increase in unemployment rate

D) There will be a decrease in unemployment rate

8.) An excise tax on a good typically reduces the price paid by the consumer (TRUE/FALSE)

9.) If a price ceiling is below the equilibrium price is imposed on a market, it will cause the quantity demanded to rise and the quantity supplied to fall. (TRUE/FALSE)

10.) Price floors often lead to black markets. (TRUE/FALSE)

11.) If an excise tax is imposed on restaurant meals what occurs?

A) Fewer meals will be produced and sold

B) More meals will be produced and sold

C) Market price of the meals will fall

D) Government tax revenue will fall.

mauveyellowjacket715

You work for Segway, in the sales division of the Drift W1 (which are basically motorized roller skates). Youâve traveled into the future (since they arenât available yet) and collected data on monthly sales (S) and the price of the Drift W1 (P), both in dollars, as well as the daily average summer temperature in your most popular market (T) in degrees Fahrenheit. You estimate the following regression model: S=a+bP+cT In your regressions, you usually look for a 10%-or-better level of confidence.

The expected sign of

Select one:

a. b is negative and c is positive.

b. b is negative and c is negative.

c. b is positive and c is positive.

d. b is positive and c is negative.

Your regression yields the following results:

Dep. Var.: S
Adj. R-square 0.820

Variable	Coefficient	Standard Error	t-stat	P-value
Intercept	1936	309	6.259	0.00153
P	-4.71	0.81	-5.816	0.00212
T	6.57	3.50	1.879	0.11902

The estimated coefficient for aa (intercept) suggests that

Select one:

a. If PP and TT are zero, we could still expect about $1,936 in sales per month.

b. aa cannot be interpreted with confidence since its parameter estimate is not statistically significant.

c. Sales will range between $309 and $1,936 per month, but not outside those limits.

d. Sales will be $1,936 per month when PP and TT are at their optimal values.

The estimated coefficient for bb (price of the Drift W1) suggests that

Select one:

a. a $1 increase in the price of the Drift W1 is associated with a decrease of monthly sales of $4.71.

b. monthly sales will increase by $5.816 if the price of the Drift W1 decreases by $4.71.

c. a one-dollar increase in price is associated with an increase in monthly sales of 4.71 units.

d. when price is close to $212, then consumers will demand one more unit per month if price drops by $4.71.

The estimated coefficient for cc (daily average summer temperature) suggests that

Select one:

a. a one-degree increase in temperature is associated with a $3.50 increase in monthly sales.

b. temperature has a more important effect on our sales than does the price of our units, since c>bc>b.

c. a one-degree increase in temperature is associated with a $119.02 increase in price.

d. a one-degree increase in temperature is associated with a $6.57 increase in monthly sales.

The price of the Drift W1 has a statistically significant effect on our sales.

Select one:

True

False

Daily average summer temperature affects the sales of the Drift W1 in a statistically significant way.

Select one:

True

False

What portion of the total variation in sales of the Drift W1 remains unexplained?

Select one:

a. 0.872, or 87.2%

b. 0.180, or 18.0%

c. 0.00153, or 0.153%

d. 0.051, or 5.1%

Segway is considering selling the Drift W1 in a new city, where the average daily summer temperature is 73Â°, for a price of $320. What level of sales would you expect in this new city (rounded to the nearest dollar)?

Answer:

ochreleopard420

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