Econ1BLawrenceMidTrm2Review

Econ1BLawrenceMidTrm2Review - San Jose State University...

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San Jose State University Fall2fi)9 Economics 1B - Principles of Economics Christina Lawrence PRACTICE QUESTIONS FOR THE SECOND MIDTERM -WEDNESDAY, NOVEMBER 4,2OO9 INSTRUCTIONS FOR MONDAY'S EXAM: The exam will test your knowledge of Chapters 7-12. You will need to bring a Scantron sheet (Form No. 882), a #2 pencil and an eraser to the exam. You may also bring a 3x5 card with handwritten notes, and a calculator. No communication devices are allowed during the exam. This means that if your calculator is combined with your phone, text-messaging device etc. it may not be used during the exam. Chapter 7 Willingness to Pay Cost Consumer and Producer Surplus Efliciency of the Equilibrium Quantity 1. Willingness to pay 16] measures the value that a buyer places on a good. Y. is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. c. is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. d. is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 2. Marjorie is willing to pay $68 for a pair of shoes for a formal dance. She finds a pair at her favorite outlet shoe store for $48. Marjorie's consumer surplus is a. $10. @ szo. c. $48. d. $68. 3. Producer surplus measures (9 ttre benefits to sellers of participating in a market. b. the costs to sellers ofparticipating in a market. c. the price that buyers are willing to pay for sellers' output ofa good or seryice. d. the benefit to sellers of producing a greater quantity of a good or service than buyers demand. 4. A seller's willingness to sell is a. measured by the seller's cost ofproduction. b. to her supply curve as a buyer's willingness to buy is to his demand curve. c. less than the price received ifproducer surplus is a positive number. @ All ofthe above are correct. 5. Effrciency is attained when (d) total surplus is maximized. Y producer surplus is maximized. c. all resources are being used. d. consumer surplus is maximized and producer surplus is minimized. 6. The distinction between efficiency and equality can be described as follows: a. Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains fiom trade among buyers and sellers. b. Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers. c. Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost. Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.
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Chapter 8 Deadweight loss of taxation Loss in consumer and producer surplus from taxation Deadweight loss and elasticity Figure6-pg.168 The Laffer Curve Fisure I p.l -\A ,,1----r,'{iP--: U Quantity 7. Refer to Figure l. The amount oftax revenue received by the government is equal to the area
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Econ1BLawrenceMidTrm2Review - San Jose State University...

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