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Microeconomics Ch 5-8 Review

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165 Terms
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A+B
D1
B+D
D
1.5
equal to 1
inelastic, and raising price will increase total revenue
elastic, and lowering price will increase total revenue
inelastic, and total revenue will rise as price rises
elastic, and total revenue will fall as price rises
$14
causes a shortage of 85 units.
binding price floor that creates a surplus.
a surplus of 4 units.
$10
between $3 and $5
When the price is $6, there is a surplus of 8 units.
creates a shortage.
panel (b) only
binding price ceiling that creates a shortage.
$8
One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers.
between 50 units and 100 units.
not binding, and there will be no surplus or shortage of the good.
panel (a) only
makes it necessary for sellers to ration the good.
between $5 and $7
$6
$100 =20*10/2
BDF
greater than the cost to the marginal seller, so increasing the quantity increases total surplus.
$3.60 =(2-0.65)+(1.5-0.65)+(0.75-0.65)+(1.5-0.65)+(1-0.65)+(0.75-0.65)
AFG
$600 =(10*40/2)+(10*40)
$24 =12*4/2
$250 =(30*10/2)+(20*10/2)
$800 =80*20/2
A+B+C
7 oranges are demanded per day, and consumer surplus amounts to $5.30 7 people have a WTP higher than $0.40, find CS for those 7 people only
decreases by $0.45 =CS at $1.40 - CS at $1.60 =0.60-0.15
$72
$48
$150 =30*10/2
David only
ABDG
A+B+C+D+H+F
decreases by an amount equal to B+C
binding price floor that creates a surplus or can also be a non-binding price ceiling causes no change
d. All of the above are correct
AC
BCG
$50
Panel (a)
smaller than it would be at the equilibrium price
P3-P1
F
decrease by 1 unit
Consumer surplus falls by $2,700. 300*6=1800 (300*6)/2=900 1800+900=2700
P3, A, C, P1
A
Supply 1 and demand 1 When supply or demand are inelastic, the DWL is smaller
$5
tax revenue and is represented by area B+D.
For each unit of the good that is sold, buyers bear one-half of the tax burden, and sellers bear one-half of the tax burden.
$5
$80, and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers.
Total surplus decreases by $1,500. (300*6)/2=900 (300*4)/2=600 900+600=1500
Producer surplus falls by $1,800. 300*4=1200 (300*4)/2=600 1200+600=1800
P3
C+F
$170 35*4=140 (15*4)/2=30 140+30=170
When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic.
increase by $3
decrease by $2