Study Guide Exam 2
Study Guide Exam 2 ECON 221
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This 10 page Study Guide was uploaded by Katie Rosen on Sunday November 1, 2015. The Study Guide belongs to ECON 221 at University of South Carolina taught by Jones in Summer 2015. Since its upload, it has received 288 views. For similar materials see Principles of Economics: Microeconomics in Economcs at University of South Carolina.
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Date Created: 11/01/15
Micro Economics 221 Exam 2 Study Guide 1.The figure to the right exhibits the market for vacation rentals in Charleston. The government just implements a rent ceiling of $1,000 a month which makes the value of consumer surplus: a.$100,000 b. $230,000 c. $250,000 d. $420,000 2. The figure to the right exhibits the market for vacation rentals in Charleston. Due to a recently imposed rent ceiling of $1000 a month the value of deadweight loss is: a. $50,000 b. $60,000 c. $175,000 d. $225,000 3. The figure to the right represents the market for vacation rentals in Charleston. The government recently imposed a rent ceiling of $1000 a month. If instead of a rent ceiling the government imposed a price floor of $2,000 per month for rentals. What is the value of consumer surplus after the imposition of the price floor? a. $6,000 b. $240,000 c. $30,000 d. $120,000 4. Considering the above questions and the same figure to the right, if instead of a rent ceiling the government imposed a price floor of $2,000 per month for rentals. What is the value of the deadweight loss after the imposition of the price floor? a. $50,000 b. $125,000 c. $175,000 d. $260,000 5. The above table shows the supply and demand schedules for the labor market. What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)? a. W*= $10.50; Q* = 590,000 b. W*= $11.50; Q* = 570,000 c. W*= $10.50; Q* = 1,200,000 d. W*= $9.50; Q* = 570,000 6. Considering the above table, if a minimum wage of $12.50 per hour is imposed what will the quantity of labor supplied be? a. 590,000 b. 530,000 c. 630,000 d. 570,000 7. Considering the above table if a minimum wage of $9.50 an hour is imposed what will the quantity of labor demanded be? a. 650,000 b. 590,000 c. 550,000 d. 610,000 8. If for a given percentage increase in price, quantity demanded falls by a proportionately smaller percentage, then demand is a. relatively elastic b. perfectly elastic c. unitelastic d. relatively inelastic 9. If a 20 percent increase in price of golf balls led to a 27 percent decrease in quantity demanded then the demand for golf balls is a. relatively inelastic b. relatively elastic c. unitelastic d. percently elastic 10. The price elasticity of demand for beef is estimated to be .6 (absolute value). This means that a 20 percent increase in the price of beef, holding everything else constant, will cause the quantity of beef demanded to a. decrease by 12 percent b. decrease by 26 percent c. decrease by 32 percent d. decrease by 60 percent 11. The actual division of the burden of a tax between buyers and sellers in a market is called a. tax bearer b. tax liability c. tax parity d. tax incidence 12. This graph shows the market for peanut butter, which is a market that the government intends to impose a unit tax for. What is the size of the unit tax? a. $2 b. $7 c. $5 d. $25 13. (Look at above graph) How much of the tax is paid by buyers? a. $5 b. $13 c. $12 d. $8 14. (Look at above graph) What is the price buyers pay after the tax? a. $25 b. $27 c. $26 d. $29 15. (Look at above graph) For each unit sold, the price sellers receive after the tax (net of tax) is a. $22 b. $30 c. $20 d. $32 16. (Look at above graph) How much of the tax is paid by producers? a. $5 b. $7 c. $9 d. $2 17. (Look at above graph) As a result of the tax, is there a loss in consumer surplus? a. No the producer pays the tax b. No consumers are charged a lower price to cover their tax burden c. Yes consumers paying a price above the economically efficient price d. No the market reaches a new equilibrium 18. If an excise tax of one dollar is imposed on every bag of chips sold and sellers are responsible for paying this tax, how would the imposition of the tax be illustrated in a graph? a. the supply curve for bags of chips would shift to the left by $1 b. the supply curve for bags of chips would shift to the right by $1 c. the supply curve would not change d. the supply curve would shift by $1.50 19. Dose the incident of a tax depend on whether the government collects the tax from the buyer or seller? a. yes b. no 20. If the demand curve for a certain product is vertical, does a tax increase on the product get paid for entirely by the consumer? a. yes b. no 21. Which of these is not an externality? a. Elizabeth, who has a nut allergy, has an allergic reaction from the peanut oil in a chick fila sandwich? b. Samantha has the flu and can’t rest because there is a loud party at the house across the street c. Bill is in the hospital because he fell and broke his leg in the movie theater d. Bob has asthma due to fumes emitted by a nearby paper mill 22. If the production of cars causes a negative externality how will this impact the production levels for car factories if negative externalities are present? (based on market forces only) a. It will produce the good above the socially efficient level b. it will produce the good below the socially efficient level c. it will produce the save level regardless of externalities d. if the externalities are negative they do not affect production levels 23. (Refer to above graph) What is the efficient output level? a. Qd b. Qb c. Qa d. QbQd 24. (Refer to above graph) The size of marginal external costs can be determined by a. the supply curve S2 b. the supply curve S1 c. S2S1 at each output level d. S2+S1 at each output level 25. (Refer to above graph) What is the marginal benefit of the last unit produced? a. $Pf b. $Pb c. $Pc d. $Pa 26. competitive markets are efficient a. true b. false 27. If a market is in equilibrium, it is efficient a. true b. false 28. Sometime there is a tradeoff between equity and efficiency a. true b. false 29. Can the government intervene in a competitive market by restricting prices and quantities? a. yes b. no 30. What is the federal minimum wage? a. 6.25 b. 7.15 c. 7.50 d. 7.25 31. How many states have a higher minimum wage? a. 20 b. 21 c. 33 d. 18 32. Which state has the highest minimum wage at 9.32? a. Connecticut b. New Hampshire c. Washington d. Texas 33. Obama recently raised minimum wage to: a. 10.10 b. 10.25 c. 9.30 d. 8.50 34. When the government implements a maximum price for a good it is called a. a price floor b. a price ceiling c. minimum wage d. monetary regulations 35. When a price ceiling is less than the previous price of a good a _____ will occur a. shortage b. surplus 36. Deadweight loss is defined as a. the opportunities gained when a price ceiling is imposed b. the opportunities gained when a price floor is imposed c. the opportunities missed due to high taxes d. missed opportunities for transactions that people would like to make 37. Price floors generate a a. shortage b. surplus 38. this measures how responsive buyers are to changes in prices: a. elasticity of supply b. inelastic responsiveness c. elasticity of demand d. inelasticity of demand 39. The formula for elasticity of demand is: a. % change in Qd/ % change in P b. % change in P/ % change in Qd c. % change in Qs/ % change in P d. % change in Qs/ % change in Qd 40. If the result of this formula is less than 1% it is________ and if it is more than 1% it is _____ a. relatively responsive demand; relatively unresponsive demand b. relatively unresponsive demand; relatively responsive demand 41. Taxes on the purchase or sale of a good that raise the price of a particular good by some specified amount are a. precise taxes b. good taxes c. excise taxes d. exact taxes 42. What determine who bears the burden of a tax? a. economic incidence b. statutory incidence 43. Activity that impacts individuals not directly involved in transactions are a. taxes b. purchases c. externalities d. price floors ANSWERS: 1.B 2.A 3.C 4.A 5.A 6.C 7.D 8.D 9.B 10.A 11.D 12.B 13.A 14.B 15.C 16.D 17.C 18.A 19.B 20.A 21.C 22.A 23.C 24.C 25.B 26. A 27.B 28.A 29.A 30.D 31.B 32.C 33.A 34.B 35.A 36.D 37.B 38.C 39.A 40.B 41.C 42.A 43.C Source for all graphs and tables: MyEconLab https://www.mathxl.com/Student/PlayerHomework.aspx? homeworkId=328298549&questionId=1&flushed=true&cId=3458378&review=yes&back= %2fStudent%2fresults.aspx%3fmode%3dAllResults
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