Econ 302 Study Guide
A minimum wage policy induces an:
Select one:
a. elastic labor supply response.
b. excess supply of labor.
Correct
c. excess demand for labor.
d. efficient market outcome.
Suppose the demand and supply curve for good X are as follows: PD = 533 – 5Q
PS = 122 + 3Q where P is the price of X and Q is the quantity. Suppose an excise tax of $8 per unit of X is assessed on this market. What is the new equilibrium quantity of X? Answer
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The correct answer is: 50.375
Use the following statements to answer this question:
I. When the market price is held above the competitive price level, it is possible for the loss in consumer surplus to be fully captured by producers.
II. When the market price is held above the competitive level, there is no deadweight loss because producer gains exactly equal consumer losses.
Select one:
a. I and II are true.
Incorrect
b. I is true and II is false.
c. I and II are false.
d. II is true and I is false.
Use the following statements to answer this question:
I. For downward sloping demand and upward sloping supply curves, the government expenditure used to pay for a subsidy program exceeds the sum of the changes in producer and consumer surplus.
II. To model the price-quantity impacts of a subsidy, we can shift the demand curve upward by the amount of the per-unit subsidy payment.
Select one:
a. I is true and II is false.
b. I and II are true.
c. I and II are false.
d. II is true and I is false.
The burden of a tax per unit of output will fall heavily on consumers when demand is relatively ________ and supply is relatively ________.
Select one:
a. elastic; inelastic
b. inelastic; elastic
c. elastic; elastic
Incorrect
d. inelastic; inelastic
The benefit of a subsidy accrues mostly to consumers
Select one:
a. if Ed/Es is large.
b. in no instance.
c. if Ed and Es are equal.
d. in every instance.
Incorrect
e. if Ed/Es is small.
Having seen the quantity of drugs
Select one:
a. elastic labor supply response.
b. excess supply of labor.
Correct
c. excess demand for labor.
d. efficient market outcome.
Suppose the demand and supply curve for good X are as follows: PD = 533 – 5Q
PS = 122 + 3Q where P is the price of X and Q is the quantity. Suppose an excise tax of $8 per unit of X is assessed on this market. What is the new equilibrium quantity of X? Answer
Feedback
The correct answer is: 50.375
Use the following statements to answer this question:
I. When the market price is held above the competitive price level, it is possible for the loss in consumer surplus to be fully captured by producers.
II. When the market price is held above the competitive level, there is no deadweight loss because producer gains exactly equal consumer losses.
Select one:
a. I and II are true.
Incorrect
b. I is true and II is false.
c. I and II are false.
d. II is true and I is false.
Use the following statements to answer this question:
I. For downward sloping demand and upward sloping supply curves, the government expenditure used to pay for a subsidy program exceeds the sum of the changes in producer and consumer surplus.
II. To model the price-quantity impacts of a subsidy, we can shift the demand curve upward by the amount of the per-unit subsidy payment.
Select one:
a. I is true and II is false.
b. I and II are true.
c. I and II are false.
d. II is true and I is false.
The burden of a tax per unit of output will fall heavily on consumers when demand is relatively ________ and supply is relatively ________.
Select one:
a. elastic; inelastic
b. inelastic; elastic
c. elastic; elastic
Incorrect
d. inelastic; inelastic
The benefit of a subsidy accrues mostly to consumers
Select one:
a. if Ed/Es is large.
b. in no instance.
c. if Ed and Es are equal.
d. in every instance.
Incorrect
e. if Ed/Es is small.
Having seen the quantity of drugs