Practice Test 2

# Practice Test 2 - Practice Test 2 Multiple Choice Identify...

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Practice Test 2 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Denise values a stainless steel dishwasher for her new house at \$500, but she succeeds in buying one for \$350. Denise's willingness to pay is a. \$150. b. \$350. c. \$500. d. \$850. Table 7-3 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three or- anges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day. First Orange Second Orange Third Orange Alex \$2.00 \$1.50 \$0.75 Barb \$1.50 \$1.00 \$0.80 Carlos \$0.75 \$0.25 \$0 ____ 2. Refer to Table 7-3. If the market price of an orange is \$1.20, the market quantity of oranges demanded per day is a. 1. b. 2. c. 3. d. 4. Figure 7-1 ____ 3. Refer to Figure 7-1 . When the price is P 1 , consumer surplus is a. A. b. A + B.

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c. A + B + C. d. A + B + D. ____ 4. Suppose the demand for nachos increases. What will happen to producer surplus in the market for nachos? a. It increases. b. It decreases. c. It remains unchanged. d. It may increase, decrease, or remain unchanged. Figure 7-9 ____ 5. Refer to Figure 7-9 . If the price decreases from \$22 to \$16, consumer surplus increases by a. \$120. b. \$360. c. \$480. d. \$600. Figure 7-11. On the graph below, Q represents the quantity of the good and P represents the good's price.
____ 6. Refer to Figure 7-11 . At the equilibrium, producer surplus amounts to a. \$32. b. \$48. c. \$72. d. \$144. Figure 8-4 ____ 7. Refer to Figure 8-4 . The tax is levied on a. buyers only. b. sellers only. c. both buyers and sellers. d. This is impossible to determine from the figure. ____ 8. Refer to Figure 8-4 . Producer surplus before the tax was levied is represented by area a. A. b. A + B + C. c. D + E + F. d. F.

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Figure 8-5 ____ 9. Refer to Figure 8-5 . The amount of the tax on each unit of the good is a. \$6. b. \$8. c. \$10. d. \$12. Figure 8-6 ____ 10. Refer to Figure 8-6 . Which of the following statements summarizes the incidence of the tax? a. For each unit of the good that is sold, buyers bear one-half of the tax burden and sellers bear one-half of the tax burden. b. For each unit of the good that is sold, buyers bear one-third of the tax burden and sellers
bear two-thirds of the tax burden. c. For each unit of the good that is sold, buyers bear one-fourth of the tax burden and sellers bear three-fourths of the tax burden. d. For each unit of the good that is sold, buyers bear three-fourths of the tax burden and sellers bear one-fourth of the tax burden. ____ 11. When the nation of Econoland allows trade and becomes an exporter of televisions, a. residents of Econoland who produce televisions become worse off; residents of Econoland who buy televisions become better off; and the economic well-being of Econoland rises. b.

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## This note was uploaded on 04/19/2008 for the course ECON 2304 taught by Professor Majumder during the Fall '07 term at University of Houston.

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Practice Test 2 - Practice Test 2 Multiple Choice Identify...

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