EC120 Study Guide - Midterm Guide: Marginal Revenue, Production Function, Perfect Competition

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15 Oct 2018
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Test 2 2012
Multiple Choice
Identify the choice that best completes the statement or answers the question by filling in the bubble on the scantrons.
____ 1. Jeff decides that he would pay as much as $4,000 for a new laptop computer. He buys the computer and
realizes consumer surplus of $800. How much did Jeff pay for his computer?
a.
$700
b.
$2,300
c.
$3,000
d.
$3,200
e.
$3,700
____ 2. Which of the following is the most correct statement about tax burdens?
a.
A tax burden falls most heavily on the side of the market that is elastic.
b.
A tax burden falls most heavily on the side of the market that is inelastic.
c.
A tax burden falls most heavily on the side of the market that is closer to unit elastic.
d.
A tax burden is distributed independently of relative elasticities of supply and demand.
____ 3. When the government places a tax on a product
a.
the cost of the tax to buyers and sellers will be less than the revenue raised from the tax by
the government.
b.
the cost of the tax to buyers and sellers will equal the revenue raised from the tax by the
government.
c.
the cost of the tax to buyers and sellers exceeds the revenue raised from the tax by the
government.
d.
without additional information, such as the elasticity of demand for this product, it is
impossible to compare tax cost with tax revenue.
____ 4. When evaluating the size of the deadweight loss due to a tax we know that the
a.
greater the elasticities of supply and demand, the greater the deadweight loss.
b.
smaller the elasticities of supply and demand, the greater the deadweight loss.
c.
smaller the decrease in both quantity demanded and quantity supplied, the greater the
deadweight loss.
d.
primary factor that determines the size of the deadweight loss in the percentage the tax is
of price.
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Figure 8-2
____ 5. Refer to Figure 8-2. The amount of tax revenue received by the government is equal to the area
a.
P3 A C P1.
b.
A B C.
c.
P2 D A P3.
d.
P1 C D P2.
____ 6. Refer to Figure 8-2. The amount of deadweight loss associated with the tax is equal to
a.
P3 A C P1.
b.
A B C.
c.
P2 A D P3.
d.
P1 D C P2.
____ 7. Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade
restrictions, it discovers that it is importing clothing, exporting steel, and neither importing nor exporting
rugs. We can conclude that producer surplus in Aquilonia is now higher for
a.
steel, lower for clothing, and the same for rugs.
b.
clothing and steel, but not rugs.
c.
clothing and rugs, but not steel.
d.
clothing, lower for steel, and the same for rugs.
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Figure 9-1
____ 8. Refer to Figure 9-1. Without trade, consumer surplus would be
a.
$210.
b.
$245.
c.
$420.
d.
$455.
e.
$490.
____ 9. Refer to Figure 9-1. With free trade, this country would
a.
import 70 baskets.
b.
export 65 baskets.
c.
export 35 baskets.
d.
import 40 baskets.
e.
export 105 baskets.
____ 10. Refer to Figure 9-1. With free trade, consumer surplus would be
a.
$45.
b.
$80.
c.
$160.
d.
$210.
e.
$245.
____ 11. When a country allows trade and becomes an importer of a good, which of the following would NOT be true?
a.
The gains of domestic consumers exceed the losses of domestic producers.
b.
The losses of domestic producers exceed the gains of domestic consumers.
c.
The price paid by domestic consumers of the good decreases.
d.
The price received by domestic producers of the good decreases.
____ 12. XYZ corporation produced 300 units of output but sold only 275 of the units it produced. The average cost of
production for each unit of output produced was $100. Each of the 275 units sold was sold for a price of $100.
Total revenue for the XYZ corporation would be
a.
-$2,500..
b.
$2,500.
c.
$26,125.
d.
$27,500.
e.
$30,000.
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Identify the choice that best completes the statement or answers the question by filling in the bubble on the scantrons. ___: jeff decides that he would pay as much as ,000 for a new laptop computer. He buys the computer and realizes consumer surplus of . How much did jeff pay for his computer: , ,300, ,000, ,200, ,700. The amount of tax revenue received by the government is equal to the area: p3 a c p1, a b c, p2 d a p3, p1 c d p2. The amount of deadweight loss associated with the tax is equal to: p3 a c p1, a b c, p2 a d p3, p1 d c p2. ___: aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing clothing, exporting steel, and neither importing nor exporting rugs.

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