EfficiencyTest

EfficiencyTest - PRINCIPLES OF MICROECONOMICS 0511-211...

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PRINCIPLES OF MICROECONOMICS 0511-211 Department of Economics Rochester Institute of Technology Sample Examination # 2 SOLUTIONS Instructor: Dr. Bríd Gleeson Hanna 32 Multiple choice questions relating to Efficiency. There will be 50 multiple choice questions in your actual exam. Figure 6 49. Refer to Figure 6 . When the market is in equilibrium, consumer surplus is represented by area a. A. b. B. c. C. d. D. ANS: B 50. Refer to Figure 6 . When the market is in equilibrium, producer surplus is represented by area a. A. b. B. c. C. d. D. ANS: C
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51. Refer to Figure 6 . When the market is in equilibrium, total surplus is represented by area a. A + B. b. B + C. c. C + D. d. A + D. ANS: B 52. Suppose a tax of $4 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units. The tax decreases consumer surplus by $3,000 and it decreases producer surplus by $4,400. The supply curve and the demand curve are straight lines. The deadweight loss of the tax is a. $200. b. $400. c. $600. d. $1,200. ANS: C 53. Suppose a tax of $3 per unit is imposed on a good. The supply curve and the demand curve are straight lines. The tax decreases consumer surplus by $3,900 and it decreases producer surplus by $3,000. The tax generates tax revenue of $6,000. From this information it follows that the tax decreased the equilibrium quantity of the good a. from 2,000 to 1,500. b. from 2,400 to 2,000. c. from 2,600 to 2,000. d. from 3,000 to 2,400. ANS: C 54. Deadweight loss measures the a. loss in a market to buyers and sellers that is not offset by an increase in government revenue. b. loss in revenue to the government when buyers choose to buy less of the product because of the tax. c. loss of equity in a market due to government intervention. d. loss of total revenue to business firms due to the price wedge caused by the tax. ANS: A 55. The supply curve and the demand curve for widgets are straight lines. Suppose the equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. The price paid by buyers increases by $2 and the after-tax price received by sellers falls
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EfficiencyTest - PRINCIPLES OF MICROECONOMICS 0511-211...

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