Principle of Economic, practicle

Topics: Supply and demand, Economic surplus, Microeconomics Pages: 17 (2385 words) Published: November 18, 2013
Econ 202 Exam 2 Practice Problems
Principles of Microeconomics
Dr. Phillip Miller
Multiple Choice
Identify the choice that best completes the statement or answers the question.

Chapter 6
____

1. If a binding price ceiling is imposed on the computer market, then a. the quantity of computers demanded will increase.
b. the quantity of computers supplied will decrease.
c. a shortage of computers will develop.
d. All of the above are correct.

____

2. In response to a shortage caused by the imposition of a binding price ceiling on a market, a. price will no longer be the mechanism that rations scarce resources. b. long lines of buyers may develop.

c. sellers could ration the good or service according to their own personal biases. d. All of the above are correct.

____

3. As rationing mechanisms, prices
a. and long lines are efficient.
b. are efficient, but long lines are inefficient.
c. are inefficient, but long lines are efficient.
d. and long lines are inefficient.

____

4. A tax imposed on the sellers of a good will
a. raise both the price buyers pay and the effective price sellers receive. b. raise the price buyers pay and lower the effective price sellers receive. c. lower the price buyers pay and raise the effective price sellers receive. d. lower both the price buyers pay and the effective price sellers receive. Figure 6-9

10

price

9
S
8
7
6
5
4
3
2
D
1
D after tax
10

20

30

40

50

60

70

80

quantity

____

5. Refer to Figure 6-9. Suppose the same supply and demand curves apply and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. Now, relative to the case depicted in the figure, a. the burden on buyers will be larger and the burden on sellers will be smaller. b. the burden on buyers will be smaller and the burden on sellers will be larger. c. the burden on buyers will be the same and the burden on sellers will be the same. d. The relative burdens in the two cases cannot be determined without further information.

____

6. If a tax is imposed on a market with inelastic demand and elastic supply, then a. buyers will bear most of the burden of the tax.
b. sellers will bear most of the burden of the tax.
c. the burden of the tax will be shared equally between buyers and sellers. d. it is impossible to determine how the burden of the tax will be shared. Chapter 7
Table 7-1
Buyer
Mike
Sandy
Jonathan
Haley

Willingness To Pay
$50.00
$30.00
$20.00
$10.00

____

7. Refer to Table 7-1. If the price of the product is $51, then who would be willing to purchase the product? a. Mike
b. Mike and Sandy
c. Mike, Sandy, and Jonathan
d. no one

____

8. Refer to Table 7-1. If the price of the product is $18, then the total consumer surplus is a. $38.
b. $42.
c. $46.
d. $72.

Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.

Alex
Barb
Carlos
____

First Orange
$2.00
$1.50
$0.75

Second Orange
$1.50
$1.00
$0.25

Third Orange
$0.75
$0.80
$0

9. Refer to Table 7-5. If the market price of an orange is $0.40, a. 6 oranges are demanded per day, and total consumer surplus amounts to $4.45. b. 6 oranges are demanded per day, and total consumer surplus amounts to $5.10. c. 7 oranges are demanded per day, and total consumer surplus amounts to $5.35. d. 7 oranges are demanded per day, and total consumer surplus amounts to $5.50.

____ 10. Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be

a....
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