fall2010exam2B

fall2010exam2B - Name: ________________________ Class:...

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Unformatted text preview: Name: ________________________ Class: ___________________ Date: __________ ID: B 1 Introduction to Microeconomics - Exam 2 Multiple Choice Identify the choice that best completes the statement or answers the question. Figure 8-1 ____ 1. Refer to Figure 8-1. Suppose the government imposes a tax of P - P. The area measured by I+Y represents the a. total surplus before the tax. b. loss in consumer surplus due to the tax. c. deadweight loss due to the tax. d. loss in producer surplus due to the tax. ____ 2. When a factory is operating in the short run, a. total cost and variable cost are usually the same. b. it cannot adjust the quantity of fixed inputs. c. it cannot alter variable costs. d. average fixed cost rises as output increases. ____ 3. Suppose that for a particular business there are no implicit opportunity costs. Then a. the relationship between accounting profit and economic profit cannot be determined without more information. b. accounting profit will be the same as economic profit. c. accounting profit will be less than economic profit. d. accounting profit will be greater than economic profit. Name: ________________________ ID: B 2 Figure 8-2 The vertical distance between points A and B represents a tax in the market. ____ 4. Refer to Figure 8-2. The per-unit burden of the tax on sellers is a. $2. b. $4. c. $5. d. $3. Figure 7-7 ____ 5. Refer to Figure 7-7. Which area represents producer surplus when the price is P2? a. AHGB b. ACH c. BCG d. ABGD Name: ________________________ ID: B 3 ____ 6. Other things equal, the deadweight loss of a tax a. increases as the size of the tax increases, and the increase in the deadweight loss is more rapid than the increase in the size of the tax. b. increases as the size of the tax increases, but the increase in the deadweight loss is less rapid than the increase in the size of the tax. c. decreases as the size of the tax increases. d. increases as the price elasticities of demand and/or supply increase, but the deadweight loss does not change as the size of the tax increases. ____ 7. Corrective taxes that are imposed upon the producer of a nasty smell can be successful in reducing that smell because the tax makes the producer a. externalize the negative externality. b. internalize the negative externality. c. externalize the positive externality. d. internalize the positive externality. ____ 8. Economists disagree on whether labor taxes cause small or large deadweight losses. This disagreement arises primarily because economists hold different views about a. the importance of labor taxes imposed by the federal government relative to the importance of labor taxes imposed by the various states. b. the elasticity of labor demand....
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fall2010exam2B - Name: ________________________ Class:...

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