1) A $2000 tax levied on the maker of MRIs cars will cause: Select one: a. an up
ID: 1202993 • Letter: 1
Question
1) A $2000 tax levied on the maker of MRIs cars will cause:
Select one:
a. an upward movement along the supply curve as the price of MRIs rises.
b. a downward movement along the supply curve as the after tax price received by the seller falls.
c. a leftward shift of the supply curve.
d. a rightward shift of the supply curve.
2) A tax imposed on the supplier of Blu Ray players shifts:
Select one:
a. the demand curve for Blu Ray players to the left.
b. the supply curve for Blu Ray players to the left.
c. the demand curve for Blu Ray players to the right.
3) At the market equilibrium, resources are allocated efficiently because:
Select one:
a. the marginal cost of producing another unit is equal to zero.
b. the price buyers pay accurately reflects the marginal cost of the resources used to produce the good.
c. the price buyers pay is greater than sellers' willingness to sell.
4) Consumer surplus is equal to:
Select one:
a. the area under the demand curve.
b. the area under the demand curve above the good's price.
c. the area under the demand curve below the good's price.
5) If the government sets a maximum price for gasoline above the equilibrium price:
Select one:
a. quantity demanded of gasoline will equal to quantity supplied of gasoline.
b. there will be excess demand for gasoline.
c. there will be excess supply for gasoline.
6) Refer to Figure 6.1. If the price of a donut is $1.25, consumer surplus is:
Select one:
a. $1.75.
c. $ .75.
d. $ .50.
7) Refer to Figure 6.3. If the price of one hour of tutoring is $20, then producer surplus is:
Select one:
a. $40.
b. $30.
c. $10
8) Which of the following would result from a quota imposed on the quantity of sweaters that can be imported into the U.S.?
Select one:
b. an increase in producer surplus
c. consumers will pay higher prices
d. an increase in consumer surplus
Explanation / Answer
1. Option C is correct.
When a tax is levied on the suppliers the supply curve of the good, shift to the left, supplying lower quantity at each price due to the tax imposition.
2. Option B is correct.
This is so because tax discourages the firms to increase their output and they have to pay a tax on the good produced, so they reduce the supply at each price by shifting the supply curve to the left.
3. Option B is correct.
At the market equilibrium, the buyers and sellers both agree to trade for the good at a given price. This price attained after bargaining, reflects the exact marginal cost of the good in question.
4. Option B is correct.
The area bounded by above the price line and below the demand curve represents the consumer surplus which in other words is the willingness to pay less the amount actually paid.
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