Micro Tough Questions 2

In the accompanying graph, producer surplus WITHOUT trade is equal to area ___.

• Y
• X+Y+Z
• W+X+Y
• X+Y

A subsidy is an amount of money given directly to firms by the government to encourage

• Production and consumption.
• Production
• Consumption

What is the price paid by consumers and the net price received by producers after the tax is paid, respectively?

• $11.00; $10.45
• $11.00; $10.00
• $10.45; $10.00
• $10.45; $9.45

In the graph shown, S is the original supply curve and S1 is the supply curve including an excise tax. What is the area that represents the tax revenue to the government?

• P1, P3, V, T
• P2, P4, R, Z
• P2, P4, X, U
• P3, V, Q2, 0

Suppose the government instituted a tax on this market and the equilibrium shifted to P2 and Q2.  What area of the graph represents the government revenues generated from the tax?

• A
• D, F
• B, D
• F

In the accompanying graph, consumer surplus WITHOUT trade is equal to area ___.

• W+X+Y
• W
• Y
• W+X

Assume the image is showing the market for apples.  Which of the headlines could indicate the pictured shift is occurring in the market?

• Pesticides on apples linked to mouth cancer.
• The government taxes apples producers.
• An apple a day really does keep the doctor away.
• New genetic strain leads to apple trees that produce twice as many apples.

Adam Smith thought that order

• required government planning

• would emerge as a consequence of the interactions of individuals

• was very difficult to achieve in a democracy

• was undesirable because it didn’t allow for change

The PES for wheat in a given country

• is less elastic the longer the time period in question.

• is more elastic the more substitutes there are for wheat.

• is greater the more wheat there is in storage.

• will be higher if there are restrictions on wheat imports.

The mining boom in created a shortage of labour in the hospitality industry in WA. This made the supply of restaurant meals in WA

• perfectly inelastic.

• more elastic.

• perfectly elastic.

• less elastic.