ECF1100 Mid-Semester Test (01) with Answer.docx

Positive so joan considers hamburger to be an

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positive, so Joan considers hamburger to be an inferior good B. positive, so Joan considers hamburger to be a normal good and a necessity C. negative, so Joan considers hamburger mince to be an inferior good D. negative, so Joan considers hamburger mince to be a normal good Graph 1 11. According to Graph 1, which panel(s) best represent(s) a binding rent control in the short run? A. panel a B. panel b C. neither panel D. both panels 12. According to Graph 1, which panel(s) best represent(s) a binding rent control in the long run? A. panel a B. panel b C. neither panel D. both panels 13. Suppose that the demand for coffee rises. This means that the producer surplus for coffee will: A. increase B. decrease C. increase or decrease because the effect is ambiguous D. neither increase nor decrease because the price hasn’t changed 14. To fund new green energy research, suppose the government requires every buyer of a new car to pay a $100 tax. When compared to the pre-tax equilibrium, such a tax will: Page 3 of 7
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A. make buyers $100 worse off without affecting sellers B. make buyers $100 worse off, but make sellers better off C. increase the price sellers receive for cars D. make both buyers and sellers worse off, but we cannot say by how much without more information 15. Australia exports cattle to Indonesia. If Australia puts an export subsidy on cattle and the Australian supply of cattle is elastic while the demand for cattle in Indonesia is inelastic then: A. Australian sellers of cattle will enjoy most of the subsidy’s benefit B. Indonesian buyers of cattle will enjoy most of the subsidy’s benefit C. the benefit of the subsidy will be shared equally D. it is impossible to determine how the burden of the tax will be shared Graph 2 16. According to Graph 2, producer surplus before the tax equals: A. $750 B. $3000 C. $1125 D. $1500 17. According to Graph 2, the reduction in consumer surplus caused by the tax is: A. $750 B. $1125 C. $375 D. $1000 18. According to Graph 2, the total surplus (consumer, producer and government) before the tax is: A. $6000 B. $3000 C. $1500 D. $750 Page 4 of 7
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19. Phil offers to do Don’s housework for $50 per week. Don’s opportunity cost of doing housework is $65 per week, and Phil’s opportunity cost of doing housework is $20 per week. According to the information provided, what will be Don’s gain in consumer surplus as a result of the proposed transaction? A. Don will gain $15 per week B. Don will gain $45 per week C. Don will gain $35 per week D. Don will gain not consumer surplus 20. Suppose the Government is looking to raise revenue by taxing a market and has hired you for advice on minimising the deadweight loss of taxation. In identifying which market to tax, you would advise the government to choose a market where: A.
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