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Unformatted text preview: Name Test Form A Economics 1 Quiz 2 November 4, 2009 True-False Questions: Fill in Bubble A for True, Bubble B for False. 1. The excess burden of a sales tax on a good is another name for the increase in price of the good caused by the tax. 2. The number of units of a good that would be sold in competitive equilibrium if a $10 per unit sales tax is collected from sellers is the same as it would be if a $10 per unit subsidy were paid to buyers of this good. 3. Suppose that the supply curve for a good is perfectly elastic, that a sales tax of $20 per unit is collected from buyers of this good, and that the competitive equilibrium price sellers receive is $30. If the sales tax is removed, the competitive equilibrium price sellers receive will fall by $20. 4. If the suppliers of a good are paid a subsidy of $20 for each unit of the good they sell, the supply curve for the good is shifted downward by $20. 5. Assume the supply curve for a good shifts in (less supplied at every price) and the demand curve for the good does not change. If the total revenue of suppliers increases as a result of this shift, the demand for the good is inelastic. Multiple Choice Questions Economics 1 2 6. There are 50 vacant lots in Paradise, Idaho. The owner of each lot is willing to sell that lot if he or she receives a price of at least $10,000. There are 200 retirees from California who would like to buy a lot in Paradise on which they could build their retirement homes. Seventy-five of those retirees are willing to pay $15,000 for a lot, and 125 of those retirees are willing to pay $7,500 for a lot. If the town of Paradise imposes a tax of $1,000 on each person who buys a lot, how will the tax affect the competitive equilibrium price that sellers...
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- Spring '07