ECON EXAM 2

1.

1 point

If the united states begins importing more shampoo from other countries, what will be the welfare outcomes in the shampoo market in the U.S.

Consumer surplus increases

Producer surplus decreases

Total surplus increases

a and b

a b and c

2.

1 point

In the case of a negative externality, economists generally feel the most efficient form of intervention is

sitting around in a circle reading letter written to the person creating the negative externality

Corrective taxes

Subsidies

Regulation

3.

1 point

In the case where a price ceiling is binding, what generally determines who gets to purchase the good in the market

Market price- anyone that is willing to pay the price gets to buy

Buyers- they decide amongst themselves who values the good the most

Sellers- they ration the good to buyers based on their preferences

Any of the above are equally likely to determine who gets to purchase the good with the price ceiling

4.

1 point

Suppose Alison and Charlotte attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called

Deadweight loss

Consumer Surplus

Producer Surplus

Willingness to pay

5.

1 point

According to our discussion in class (and economic theory), which of the following should be the most efficient way to correct for a negative pollution externality

Regulations that place the same limit on each producer

subsidizing the pollution activities of producers

Providing producers with trade able pollution permits

All of the above are equally effective

6.

1 point

Goods with a negative externality will have a dead weight loss in a market without government intervention, but the goods with a positive externality will not

True

False

7.

1 point

Imposing regulations and licensing in a market are an informal way of creating which type of market intervention

Price Ceilings

Quantity restrictions

Price floors

Third party payer markets

8.

1 point

In a market with a positive externality, if the market is allowed to operative without any government interference, the equilibrium quantity will be

Greater than the socially optimal quantity

the socially optimal quantity

Less than the socially optimal quantity

Any of the above are possible

9.

1 point

Externalities are an example of

the efficiency of markey

individual incentives leading to efficient market outcome

the loss of efficiency caused by government intervention in the economy

Market failure

10.

1 point

According to our discussion in class, the government will most likely be able to improve efficiency in the market for common resource goods by

Letting the free market work without intervention(no government policy)

Monitoring use of the good

Tazing anyone that questions government intervention

Public provision of the good

11.

1 point

Compared to a person with no health insurance, we expect that an individual with health insurance will

Increase his or her quantity demanded for health care

Decrease his or her quantity demanded for health care

Increase his or her quantity supplied of health care

Decrease his or her quantity supplied of health care

12.

1 point

A supply curve can be used to measure producer surplus because it reflects

The actions of buyers

Willingness to pay

Seller's costs

All the hopes and dreams of the children of the world

13.

1 point

According to our discussion in class, which of the following would primarily be considered the "third-party-payer" in the market for for-profit higher education

Public institutions of higher education

Federal Government

Students

Parents of students

14.

1 point

Holding all else constant, when the price of a good decreases

Consumer surplus increases

Producer surplus increases

Both consumer surplus and producer surplus will increase

Neither consumer surplus nor producer surplus will increase

15.

1 point

According to our discussion in class, the minimum wage has increased consistently along with the prices of other goods over time

True

False

16.

1 point

The idea of using government policy to make individuals and business "internalize and externality" is meant to each what goal

Minimizing the size of government

Maximizing total surplus in the market

Maximizing tax revenue in the market

Minimizing the number of shortages in the market

17.

1 point

A binding price floor will likely cause what outcome in the market

shortage

surplus

No impact on the market outcomes

Anarchy

18.

1 point

The amount of money you are willing to pay for gasoline to fill up your car is an example of

Internal (private) costs

External costs

internal (private) benefits

External benefits

19.

1 point

Moving production from a low-cost producer to a high-cost producer will

Increase producer surplus

Decrease producer surplus but increase consumer surplus

Decrease total surplus

Increase total surplus

20.

1 point

A price ceiling will have a larger effect on the market when

supply and demand are both inelastic

supply and demand are both elastic

supply is inelastic, demand is elastic

supply is elastic, demand is inelastic

21.

1 point

According to the information we looked at regarding minimum wages in the U.S, which of the following statements is true

All states in the U.S. use the same minimum wage rate

The majority of workers that earn at or near the minimum wage in the U.S. are teenagers

The current minimum wage does not provide enough earnings for a family of four to be above the official poverty line with one adult working full time

All of the above

22.

1 point

When a country enters into trade, economic theory predicts that for a particular good

Both producer and consumer surplus will increase

Either producer or consumer surplus will increase, and the other will decrease

Either producer or consumer surplus will increase. and the other will not change

Both producer and consumer surplus will decrease

23.

1 point

The amount of harm you cause other people while your car pollutes as you drive is an example of:

External costs

External benefits

Internal (private) benefits

Internal (private) costs

24.

1 point

The discussion of taxi medallions in New York City is meant to provide a practical example of what type of market intervention

Price Ceiling

Price Floor

Quantity restriction

Third-party payer market

25.

1 point

Which of the following is the best example of a club good?

Cable television

A fireworks display

Fish in a river

A car (such as a Honda Civic or Pontiac Aztek)

26.

1 point

According to our discussion in class, which of the following is true in the U.S economy

the number of occupants that require licensing has increased over time

The number of occupations that require licensing has decreased over time

The number of occupations that require licensing has remained relatively constant over time

There is no formal licensing occupations in the U.S economy

27.

1 point

If a city imposes rent control for apartments, which of the following is not used by landlords to chose tenants

discrimination

Bribes

waiting lists

price

28.

1 point

When a binding price ceiling is imposed in the market

All buyers in the market benefit

The quantity supplied will increase

Some sellers will likely leave the market

All of the above

29.

1 point

In our discussion in class, the example of Florida cremation laws were meant to provide an example of which debate

The debate over whether or not Dan just makes up random number for the "real world" examples he uses in class

The debate over whether or not it should be legal to price-gouge customers after a natural disaster

The debate over whether or not increasing the minimum wage causes a significant rise in unemployment

The debate over whether the price savings from reducing regulations are worth the tradeoff of lower quality services

30.

1 point

If a negative externality is associated with burning firewood, then according to economic theory, for a market without government intervention

For the last unit of firewood purchased, the social costs of the purchase are less than the social benefits

For the last unit of firewood purchased, the social costs of the purchase are greater than the social benefits

For the last unit of firewood purchased, the social costs of the purchase are equal to the social benefits

All the above

31.

1 point

Public television(PBS, for example) stations occasionally run pledge drives to raise money. Only a small percentage of people who watch these stations usually pay. What is the economic term for people who do not pay?

Free Riders

Adverse selectors

Deadweight Losers

Hillbillies

32.

1 point

According to the economic theory, which of the following is ot generally correct about a market in equilibrium

All of the above are generally correct in equilibrium

Those sellers whose costs are less than the price will choose to produce and sell the good

Consumer surplus will be equal to producer surplus

The price determines which buyers and sellers will participate in the market

Those buyers who value the good more than the price will chose to buy the good

33.

1 point

What happens to tax revenue if the government continues to increase the sales tax rate on a particular good

Tax revenue will increase as the government increases the sales tax rate

Tax revenue will decrease as the government increases the sales tax rate

Tax revenue will initially increase, and then decrease as the government continues to increase the sales tax rate

Tax revenue will initially decrease, and then increase as the government continue to increase the sales tax rate

34.

1 point

Suppose the market for a good is in equilibrium, and then the supply in that market decreases significantly. In this case, consumer surplus will

Increase

Decrease

Remain unchanged

Might increase, decrease, or remain unchanged

35.

1 point

Welfare Economics is the study of

How technology is best out to use in the production of goods and services

Government programs for low income individuals

How the allocation of resources affects economic well being

Taxes and subsidies

36.

1 point

The incidence of the tax will fall more heavily on consumers when

The demand and supply of the good are both elastic

The demand for the good is inelastic and supply is elastic

The demand and supply of the good are both inelastic

The demand for the good is elastic and supply is inelastic

37.

1 point

If the government wants to create a price floor that has a binding impact on the market, they need to set the price floor

Above the market equilibrium price

Below the equilibrium price

Exactly at the market equilibrium price

Any of the above would set a binding price floor in the market