MicroEcon 2106 study guide for test 2
MicroEcon 2106 study guide for test 2 Econ 2106 030
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This 8 page Study Guide was uploaded by Gunawork on Sunday March 6, 2016. The Study Guide belongs to Econ 2106 030 at Georgia State University taught by Husain in Spring 2016. Since its upload, it has received 222 views. For similar materials see Microeconomics in Economcs at Georgia State University.
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Date Created: 03/06/16
MicroEcon Test 2 Study Guide Part 1 1. A binding price ceiling is designed to: keep prices low 2. Rent controls set a price ceiling below the equilibrium price and therefore: quantity demanded exceeds the quantity supplied 3. Suppose that the average cost of a doctor’s visit is $100. If the government imposes a price ceiling of $50 on the cost of a doctor visit, there will be: an excess demand for doctor’s visits 4. Price ceiling is: a maximum price sellers are allowed to charge for a good or service 5. A student organization is formed on your college campus to protest against the high rent prices for apartments near campus. This organization is planning a meeting with the dean and president of the college. Which of the following best describes the policy the student organization will fight for? a price ceiling 6. When price controls take the form of maximum prices set below the equilibrium price they are: price ceiling 7. Rent controls usually set a price ceiling below the equilibrium price and therefore: quantity demanded exceeds the quantity supplied 8. The Atlanta symphony wants to make sure that its concert is affordable for all residents of Atlanta and therefore prices all tickets at $25 each. However, outside symphony hall, people can sell the same tickets for $75 or more. The true cost to the concertgoer of a ticket to the symphony is at least: $75 9. In a black market, goods or services are bought and sold: illegally 10. Which of the following is an example of a black mark et: a tenant in rent- controlled apartment subletting at higher rent 11. Look at the rent control figure. If rent controls are imposed and the government wants them to be immediately effective, they will most like ly be set at either Rent0 or Rent 1. 12. West African cotton farmers are very upset about the subsidies the U.S. government pays to American cotton farmers. One reason for this could be that subsidized cotton from the United States: leads to cotton surpluses in the united states and lower prices for the west African farmers 13. When the minimum wage increases: unemployment among unskilled worker’s increases 14. If the government feels that the price in the market is too low for the producers, it can impose a price floor 15. Suppose the government sets a price floor below the current price of the good. This price floor will: have no effect on the price of the good 16. A price floor in the market for wheat: increases the price paid by consumers 17. A price floor is a minimum price set above the equilibrium price. 18. One of the consequences of the minimum wage has been: workers offering to work off the books for less than minimum wage 19. Production may supply a good with an inefficiently high quality if the government imposes: a binding price floor 20. The persistent unwanted surplus that results from a price floor creates inefficiencies that include all of the following except: inefficiently low quality 21. A minimum price set above the equilibrium price is a: price floor 22. If the government decides to impose a $700 tax on U.S. citizens traveling abroad, the deadweight loss from this tax will be: relatively large 23. If the government removed the excise tax on gasoline, which of the following would not occur? Producer surplus would decrease 24. If demand is inelastic, then deadweight loss: be minimized if supply is also inelastic 25. Given any upward-sloping supply curve for a good, the more inelastic the demand curve, the more equilibrium output will fall and the larger will be the deadweight loss when the government imposes and excise tax. 26. An excise tax is a tax charged on: each unit of a good or service that is sold 27. If the government imposes a $5 excise tax on leather shoes and the price of leather shoes increases by $2: producers are paying more of the tax than are the consumers 28. Suppose the government imposes a $9 per month tax on cell phone service. If the demand curve for cell phone service is perfectly elastic and the supply curve is upward sloping, the price the consumers pay each month for cell phone for cell phone service will: not change 29. A tax leads to a decrease in consumer surplus and a decrease in producer surplus. Part 2 1. Accounting profit differs from economic profit because: Economic costs are generally higher than accounting costs because economic costs include all opportunity costs, while accounting costs include explicit costs only. 2. In economic, the short run is defined as: period in which some inputs are considered to be fixed in quantity 3. In the long run: all inputs are variable 4. Diminishing marginal returns occur when: an additional variable factor adds less to total output than the previous unit 5. A factor of production whose quantity cannot be changed during the short run is: a fixed factor of production 6. The total cost curve is: positively sloped 7. If Marie Marionettes is operating under conditions of diminishing marginal product, the marginal costs will be: increasing 8. A firm’s marginal cost is: the ratio of the change in fixed cost to the change in the quantity of output 9. Average total cost is: total cost divided by output 10. Suppose the marginal cost curve in the short run first decreases, then reaches a minimum, and then increases. If we are at an output where marginal cost is decreasing, then: marginal product must be increasing and average variable cost must be decreasing 11. If an excise tax is imposed on automobiles and collected from consumers: the demand curve will shift downward by the amount of the tax 12. The burden of a tax that is imposed on a good is said to fall completely on the consumer if the: price paid by consumers for the good increases by the amount of the tax 13. The burden of a tax that is imposed on a good is said to fall completely on the producer if the: price paid by consumers does not change 14. If the government imposes a $5 excise tax on leather shoes and the price of leather shoes does not change: producers are paying all of the tax 15. Which of the following is an example of an excise tax? A tax of $0.41 per gallon of gas 16. The elasticity of demand for Gala apples is relatively elastic, so if a tax is levied on the consumers of Gala apples, the tax incidence: is typically on producers more than consumers 17.When the government imposes an excise tax in a market: consumer surplus falls, producer surplus falls, and a deadweight loss is created 18. A tax leads to a decrease in consumer surplus and a decrease in producer surplus. 19. If the government imposes an excise tax in a market in which the supply curve is perfectly inelastic, the burden of the tax will fall completely on the producers and the deadweight loss will equal zero. 20. Given any downward-sloping demand curve for a good, the more price- elastic the supply curve, the more equilibrium output will fall and the larger will be the deadweight loss when the government imposes an excise tax. 21. Suppose the demand for good X is perfectly inelastic and a tax is levied on the producers of each unit. Which of the following is a result of this tax? Consumers pay the entire tax, and there is no deadweight loss because the equilibrium quantity of good X remains constant 22. If the government imposes an excise tax in a market in which the demand curve is perfectly inelastic, the burden of the tax will fall completely on the consumers, and the deadweight loss will equal zero. 23. If the demand curve is downward sloping and supply is perfectly elastic, then the burden of an excise tax is: borne entirely by consumers 24. The incidence of a tax: refers to how much of the tax is actually paid by consumers and producers 25. Suppose the government imposes a $10 excise tax on the sale of sweaters by charging suppliers $10 for each sweater sold. Using economic analysis, we would predict that: the price of sweaters will increase but by less than $10 26. Expenses associated with factors of production may be: implicit costs, opportunity costs, or explicit costs 27. Costs that are included in the economic concept of cost but that are not explicit costs are: implicit costs 28. The implicit cost of capital is: the opportunity cost of capital used by a business 29. The costs economists use in the concept of economic profit are: accounting costs and opportunity costs (i.e., the value of the best opportunity forgone)
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