question

For the first five questions on the exam, consider the market for a type of equipment used by crafting enthusiasts to cut out die-cut shapes. It's a specialized market, so we'll just have to assume we have enough buyers and sellers to have our demand and supply curves be straight, smooth lines. The following information applies to the market before any tax is applied:

Vertical intercept, demand curve: 1120

Vertical intercept, supply curve: -80 (NEGATIVE 80)

P* = $160

Q* = 80

Later, a tax is put on the market. You'll have to calculate the per-unit tax. But you do know that it makes the price paid by buyers rise to $640 and the price received by sellers to fall to $40. With the tax, only 40 units are sold. (These numbers are not very realistic - but just go with it.)

Vertical intercept, demand curve: 1120

Vertical intercept, supply curve: -80 (NEGATIVE 80)

P* = $160

Q* = 80

Later, a tax is put on the market. You'll have to calculate the per-unit tax. But you do know that it makes the price paid by buyers rise to $640 and the price received by sellers to fall to $40. With the tax, only 40 units are sold. (These numbers are not very realistic - but just go with it.)

answer

600.0000

question

Consider again the market for a type of equipment used by fans of crafting.

As a reminder, before the tax:

Vertical intercept, demand curve: 1120

Vertical intercept, supply curve: -80 (NEGATIVE 80)

P* = $160

Q* = 80

And after:

The tax makes the price paid by buyers rise to $640 and the price received by sellers to fall to $40. With the tax, only 40 units are sold.

Calculate market total surplus AFTER the tax is applied. Be careful about what's included and what is not. Carefully follow all numeric instructions.

As a reminder, before the tax:

Vertical intercept, demand curve: 1120

Vertical intercept, supply curve: -80 (NEGATIVE 80)

P* = $160

Q* = 80

And after:

The tax makes the price paid by buyers rise to $640 and the price received by sellers to fall to $40. With the tax, only 40 units are sold.

Calculate market total surplus AFTER the tax is applied. Be careful about what's included and what is not. Carefully follow all numeric instructions.

answer

36000.0000

question

Consider again the market for a type of equipment used by fans of crafting.

As a reminder, before the tax:

Vertical intercept, demand curve: 1120

Vertical intercept, supply curve: -80 (NEGATIVE 80)

P* = $160

Q* = 80

And after:

The tax makes the price paid by buyers rise to $640 and the price received by sellers to fall to $40. With the tax, only 40 units are sold.

As a reminder, before the tax:

Vertical intercept, demand curve: 1120

Vertical intercept, supply curve: -80 (NEGATIVE 80)

P* = $160

Q* = 80

And after:

The tax makes the price paid by buyers rise to $640 and the price received by sellers to fall to $40. With the tax, only 40 units are sold.

answer

2400.0000

question

Consider again the market for a type of equipment used by fans of crafting.

As a reminder, before the tax:

Vertical intercept, demand curve: 1120

Vertical intercept, supply curve: -80 (NEGATIVE 80)

P* = $160

Q* = 80

And after:

The tax makes the price paid by buyers rise to $640 and the price received by sellers to fall to $40. With the tax, only 40 units are sold.

As a reminder, before the tax:

Vertical intercept, demand curve: 1120

Vertical intercept, supply curve: -80 (NEGATIVE 80)

P* = $160

Q* = 80

And after:

The tax makes the price paid by buyers rise to $640 and the price received by sellers to fall to $40. With the tax, only 40 units are sold.

answer

38400.0000

question

Consider again, for the last time, the market for a type of equipment used by fans of crafting.

As a reminder, before the tax:

Vertical intercept, demand curve: 1120

Vertical intercept, supply curve: -80 (NEGATIVE 80)

P* = $160

Q* = 80

And after:

The tax makes the price paid by buyers rise to $640 and the price received by sellers to fall to $40. With the tax, only 40 units are sold.

As a reminder, before the tax:

Vertical intercept, demand curve: 1120

Vertical intercept, supply curve: -80 (NEGATIVE 80)

P* = $160

Q* = 80

And after:

The tax makes the price paid by buyers rise to $640 and the price received by sellers to fall to $40. With the tax, only 40 units are sold.

answer

12000.0000

question

Consider a market with six potential sellers for a particular electronic good, which sells for $20 per unit. Each potential seller's costs is given in the table below:

Potential

Seller Cost

A $24

B $14

C $23

D $10

E $13

F $19

We'll assume that each potential seller can sell one unit each, as we've done up until now, should they choose to supply at all.

With the information given,____________ units will be sold, and total producer surplus will equal $____________

.

Potential

Seller Cost

A $24

B $14

C $23

D $10

E $13

F $19

We'll assume that each potential seller can sell one unit each, as we've done up until now, should they choose to supply at all.

With the information given,____________ units will be sold, and total producer surplus will equal $____________

.

answer

4 units

$24

.They'll supply if their cost (willingness to sell) is less than or equal to the price. That's true of Sellers B, D, E and F, so we'll have a total of four sellers. Total producer surplus will equal ($20 - $14 = $6) + ($20 - $10 = $10) + ($20 - $13 = $7) + ($20 - $19 = $1) = $24.

$24

.They'll supply if their cost (willingness to sell) is less than or equal to the price. That's true of Sellers B, D, E and F, so we'll have a total of four sellers. Total producer surplus will equal ($20 - $14 = $6) + ($20 - $10 = $10) + ($20 - $13 = $7) + ($20 - $19 = $1) = $24.

question

In the market for Good X, an externality related to the good may affect

answer

none of the listed options

By definition, an externality affects only those outside of the market - neither buyers nor sellers.

By definition, an externality affects only those outside of the market - neither buyers nor sellers.

question

For the next four questions, consider the market for a certain good.

The market is specialized and small, so we must simply assume there are enough buyers and sellers such that the demand and supply curves are smooth, straight lines. The vertical intercept for the demand curve is at 10 and the vertical intercept for the supply curve is at -2.5 (NEGATIVE 2.5). Initially, there is no tax on the market, and the good sells a quantity of 75 units at a price of $5 each.

But at some point, the government puts a tax on the market. The tax is $3 per unit, and with the tax the price paid by buyers becomes $6.20, with a quantity of 57 units sold.

Calculate producer surplus for this market before any tax is applied, carefully following all numeric instructions.

The market is specialized and small, so we must simply assume there are enough buyers and sellers such that the demand and supply curves are smooth, straight lines. The vertical intercept for the demand curve is at 10 and the vertical intercept for the supply curve is at -2.5 (NEGATIVE 2.5). Initially, there is no tax on the market, and the good sells a quantity of 75 units at a price of $5 each.

But at some point, the government puts a tax on the market. The tax is $3 per unit, and with the tax the price paid by buyers becomes $6.20, with a quantity of 57 units sold.

Calculate producer surplus for this market before any tax is applied, carefully following all numeric instructions.

answer

281.2500

question

Consider again the same market described in the previous question.

The market is specialized and small, so we must simply assume there are enough buyers and sellers such that the demand and supply curves are smooth, straight lines. The vertical intercept for the demand curve is at 10 and the vertical intercept for the supply curve is at -2.5 (NEGATIVE 2.5). Initially, there is no tax on the market, and the good sells a quantity of 75 units at a price of $5 each.

But at some point, the government puts a tax on the market. The tax is $3 per unit, and with the tax the price paid by buyers becomes $6.20, with a quantity of 57 units sold.

Calculate consumer surplus for this market AFTER the tax is applied, carefully following all numeric instructions.

The market is specialized and small, so we must simply assume there are enough buyers and sellers such that the demand and supply curves are smooth, straight lines. The vertical intercept for the demand curve is at 10 and the vertical intercept for the supply curve is at -2.5 (NEGATIVE 2.5). Initially, there is no tax on the market, and the good sells a quantity of 75 units at a price of $5 each.

But at some point, the government puts a tax on the market. The tax is $3 per unit, and with the tax the price paid by buyers becomes $6.20, with a quantity of 57 units sold.

Calculate consumer surplus for this market AFTER the tax is applied, carefully following all numeric instructions.

answer

108.3000

question

Consider again the same market described in the previous question.

The market is specialized and small, so we must simply assume there are enough buyers and sellers such that the demand and supply curves are smooth, straight lines. The vertical intercept for the demand curve is at 10 and the vertical intercept for the supply curve is at -2.5 (NEGATIVE 2.5). Initially, there is no tax on the market, and the good sells a quantity of 75 units at a price of $5 each.

But at some point, the government puts a tax on the market. The tax is $3 per unit, and with the tax the price paid by buyers becomes $6.20, with a quantity of 57 units sold.

Calculate tax revenue for the market (after the tax is applied, of course), carefully following all numeric instructions.

The market is specialized and small, so we must simply assume there are enough buyers and sellers such that the demand and supply curves are smooth, straight lines. The vertical intercept for the demand curve is at 10 and the vertical intercept for the supply curve is at -2.5 (NEGATIVE 2.5). Initially, there is no tax on the market, and the good sells a quantity of 75 units at a price of $5 each.

But at some point, the government puts a tax on the market. The tax is $3 per unit, and with the tax the price paid by buyers becomes $6.20, with a quantity of 57 units sold.

Calculate tax revenue for the market (after the tax is applied, of course), carefully following all numeric instructions.

answer

171.0000

question

Consider one last time the same market described in the previous question.

The market is specialized and small, so we must simply assume there are enough buyers and sellers such that the demand and supply curves are smooth, straight lines. The vertical intercept for the demand curve is at 10 and the vertical intercept for the supply curve is at -2.5 (NEGATIVE 2.5). Initially, there is no tax on the market, and the good sells a quantity of 75 units at a price of $5 each.

But at some point, the government puts a tax on the market. The tax is $3 per unit, and with the tax the price paid by buyers becomes $6.20, with a quantity of 57 units sold.

Calculate the loss of total market surplus that occurs because of the tax. (Please note - I'm not asking you to tell me total market surplus before or after the tax, but rather the LOSS in that surplus. Although it's a loss, please do not include a negative sign.) Carefully follow all other numeric instructions.

The market is specialized and small, so we must simply assume there are enough buyers and sellers such that the demand and supply curves are smooth, straight lines. The vertical intercept for the demand curve is at 10 and the vertical intercept for the supply curve is at -2.5 (NEGATIVE 2.5). Initially, there is no tax on the market, and the good sells a quantity of 75 units at a price of $5 each.

But at some point, the government puts a tax on the market. The tax is $3 per unit, and with the tax the price paid by buyers becomes $6.20, with a quantity of 57 units sold.

Calculate the loss of total market surplus that occurs because of the tax. (Please note - I'm not asking you to tell me total market surplus before or after the tax, but rather the LOSS in that surplus. Although it's a loss, please do not include a negative sign.) Carefully follow all other numeric instructions.

answer

27.0000

question

Select all of the following that are included when totaling market surplus after a tax. You must select ALL correct answers to get points on this question.

answer

consumer surplus

producer surplus

tax revenue

producer surplus

tax revenue

question

Goods that are rival in consumption include both

answer

common resources and private goods

Common resources (rival and not excludable) and private goods (rival and excludable) are both rival in consumption.

Common resources (rival and not excludable) and private goods (rival and excludable) are both rival in consumption.

question

Although we didn't come out and say it, up until our discussion of different good types, our graphs depicted

answer

private goods

question

We mentioned in lecture that free riders are an especially bad problem with

answer

public goods

question

Command and control was offered in the lecture as one method of reducing problems associated with

answer

common resources

question

With no government intervention, what price will the firm charge? Carefully follow all numeric instructions; enter only a number.

PRICES AXIS: 50 46 40 46

QUATITYS AXIS: 120 150

PRICES AXIS: 50 46 40 46

QUATITYS AXIS: 120 150

answer

40.0000

question

After the government successfully intervenes, what will be the firm's total revenue? Carefully follow all numeric instructions.

PRICES AXIS: 50 46 40 46

QUATITYS AXIS: 120 150

PRICES AXIS: 50 46 40 46

QUATITYS AXIS: 120 150

answer

5520.0000

question

The government can fix this negative externality with a per-unit tax in what amount? Carefully follow all numeric directions; enter only a number.

PRICES AXIS: 50 46 40 46

QUATITYS AXIS: 120 150

PRICES AXIS: 50 46 40 46

QUATITYS AXIS: 120 150

answer

10.0000