Marx Exam 2

If the demand curve is downward-sloping and supply is perfectly elastic, then the burden of an excise tax is:

• borne entirely by consumers.

• borne entirely by producers.

• shared by consumers and producers, with the burden falling mainly on consumers.

• shared by consumers and producers, with the burden falling mainly on producers.

Luis is willing to sell his pool table for $600, but if he gets $840, the producer surplus Luis receives is ________.

• $600

• $840

• $240

• $1,440

Maria wants to get rid of her bookshelf. She is willing to give it away for free but her neighbor offers to pay $30 for it. Maria experiences a:

• consumer surplus gain.

• consumer surplus loss.

• producer surplus gain.

• producer surplus loss.

Along a given supply curve, an increase in the price of a good will:

• increase producer surplus.

• decrease producer surplus.

• increase consumer surplus.

• decrease producer surplus and increase consumer surplus

(Figure: Consumer Surplus III) Look at the figure Consumer Surplus III. In the figure, when the price falls from $30 to $25, consumer surplus ________ for a total consumer surplus of ________.

• increases by $25; $74

• decreases by $15; $34

• increases by $15; $64

• increases by $5; $54

(Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the price of the good is $2, consumer surplus will equal:

• $30.

• $45.

• $60.

• $90

(Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the price of the good decreases from $2 to $1, consumer surplus will increase by:

• $30.

• $45.

• $60.

• $90

(Figure: The Market for Sandwiches) Look at the figure The Market for Sandwiches. At the competitive price of $5, 10 sandwiches are sold. At this competitive price, consumer surplus equals _______ and producer surplus equals _______.

• B) $100; $50

• A) $50; $50

• C) $50; $25

• D) $100; $25

• E) $75; $50

Along a given supply curve, a decrease in price will cause producer surplus to:

• A) increase.

• B) decrease.

• C) stay the same.

• D) We cannot determine what producer surplus will do without information about the demand curve.

(Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the price of the good increases from $3 to $4, consumer surplus will decrease by:

• A) $5.

• B) $10.

• C) $15.

• D) $20.