ECON 3411 Lecture Notes - Lecture 9: Ad Valorem Tax, Excise
Get access
Related Documents
Related Questions
Considering the demand side of a market for a good, it is reasonable to expect that:
i. demand curves for a given good are identical between consumers
ii. demand curves for a given good differ between consumers
iii. an individual has identical demand curves for different goods
iv. an individual has different demand curves for different goods
i |
ii |
iii |
iv |
i and iii |
ii and iv |
Suppose the market demand curve for a good is represented by the linear equation Q = 60 - 0.75P. If the market price were to increase from P = $20 to P = $40, then holding all other factors constant:
the quantity demanded would decrease by 10 units and total expenditures on the good would decrease by $400 |
the quantity demanded would decrease by 15 units and total expenditures on the good would increase by $300 |
the quantity demanded would decrease by 30 units and total expenditures on the good would increase by $1200 |
the quantity demanded would increase by 20 units and total expenditures on the good would decrease by $800 |
the quantity demanded would increase by 10 units and total expenditures on the good would increase by $100 |
the quantity demanded would increase by 25 units and total expenditures on the good would increase by $1000 |
A perfectly competitive firms supply curve for a good identifies the:
i. minimum quantity supplied at each price, holding all other factors constant
ii. firms minimum willingness to accept for each incremental unit of the good (e.g., the first unit, second unit, etc.), holding all other factors constant
iii. maximum quantity supplied at each price, holding all other factors constant
iv. firms maximum willingness to accept for each incremental unit of the good (e.g., the first unit, second unit, etc.), holding all other factors constant
i and ii |
i and iv |
ii and iii |
iii and iv |
Considering the supply side of a market for a good, if a firms supply curve were vertical, then:
the law of supply holds, and quantity supplied is completely insensitive to changes in price |
the law of supply holds, and quantity supplied is highly sensitive to changes in price |
the law of supply fails to hold, and quantity supplied is completely insensitive to changes in price |
the law of supply fails to hold, and quantity supplied is highly sensitive to changes in price |
none of the above |
The determinants of supply are:
i. factors other than price that will affect the quantity of a good or service a firm is willing and able to purchase
ii. factors that affect a producers maximum willingness-to-accept to produce various quantities of a good
iii. factors that affect a producers minimum willingness-to-accept to produce various quantities of a good
i |
ii |
iii |
i and ii |
i and iii |
The market supply curve for a good is derived by:
i. horizontally summing the supply curves of the individual firms in the market
ii. vertically summing the supply curves of the individual firms in the market
iii. summing the quantity supplied by each firm at a given price and then repeating this over the range of prices
i |
ii |
iii |
i and ii |
i and iii |
If the level of technology used in the production of a good improves, and assuming the quality of the good does not change, then:
i. more output may be obtained with a given amount of inputs compared to before the technological improvement
ii. a given amount of output may be obtained with fewer inputs compared to before the technological improvement
iii. the firm will increase its use of other inputs, such as the number of workers it employs
iv. market demand for the good will increase
i |
ii |
iii |
iv |
i and ii |
i, ii, and iii |
i, ii, and iv |
i, ii, iii, and iv |
Considering the market for gasoline, which of the following would result in an increase in market supply?
i. a decrease in the price of gasoline
ii. an improvement in oil extraction and refining technologies
iii. an increase in the wage rates paid to gasoline refinery workers
iv. a decrease in the price of crude oil, a key input used to produce gasoline
v. the imposition of a federal gasoline tax aimed a decreasing the emission of greenhouse gases
i |
ii |
iii |
iv |
v |
ii and iv |
i, ii, and iv |
i, ii, iii, and iv |
i, ii, iii, iv and v |
Suppose a market has two identical sellers. If each sellers supply function is given by P = 20 + Q, then the market supply function is:
P = 20 + 0.5Q |
P = 20 + 2Q |
P = 40 + Q |
P = 40 + 2Q |
From the market framework discussed in class and the readings, it may be concluded that in order for a good to be exchanged between a seller and a buyer, it must be that:
buyer maximum willingness-to-pay is greater than seller minimum willingness-to-accept |
buyer maximum willingness-to-pay is greater than or equal to seller minimum willingness-to-accept |
buyer minimum willingness-to-pay is greater than or equal to seller maximum willingness-to-accept |
buyer minimum willingness-to-pay is greater than seller maximum willingness-to-accept |
If the market demand function is given by P = 80 - 0.3Q and the market supply is given by P = 20 + 0.1Q, then the equilibrium price and quantity are:
P = $35 and Q = 150 |
P = $65 and Q = 150 |
P = $26 and Q = 60 |
P = $28 and Q = 80 |
Of concern are the affects of sustained summer droughts on the domestic supply of wheat. Noting that wheat is a primary ingredient in the production of bread and that potatoes are a substitute for bread, if the supply of wheat declines then it is reasonable to expect:
the price of wheat to fall, the supply of bread to increase, and the demand for potatoes to increase |
the price of wheat to fall, the supply of bread to increase, and the demand for potatoes to decrease |
the price of wheat to rise, the supply of bread to decrease, and the demand for potatoes to decrease |
the price of wheat to rise, the supply of bread to decrease, and the demand for potatoes to increase |
the price of wheat to rise, the supply of bread to increase, and the demand for potatoes to increase |
the price of wheat to rise, the supply of bread to increase, and the demand for potatoes to decrease |
Suppose a perfectly competitive market is initially in equilibrium. If market demand and supply decrease simultaneously, then equilibrium:
price will rise, but the equilibrium quantity may either rise, fall, or remain unchanged |
quantity will rise, but the equilibrium price may either rise, fall, or remain unchanged |
price will fall, but the equilibrium quantity may either rise, fall, or remain unchanged |
quantity will fall, but the equilibrium price may either rise, fall, or remain unchanged |
Considering the demand side of a market for a good, the consumer surplus derived by an individual:
i. is the difference between the maximum amount the consumer is willing to pay on each unit and the minimum prices that producers are willing to accept
ii. is the difference between the minimum amount the consumer is willing to pay on each unit and the price he/she
actually pays
iii. is the difference between the maximum amount the consumer is willing to pay on each unit and the price he/she actually pays
iv. will decrease if price increases
i |
ii |
iii |
i and iv |
ii and iv |
iii and iv |
Suppose the market demand for a good is described by the equation P = 120 - 2Q. If a change in market supply results in price decreasing from P0 = $80 to P1 = $70, then the resulting change in consumer surplus is:
$225 |
$400 |
$575 |
$625 |
$750 |
QUESTION 1
The demand for oranges increases while the supply decreases. The equilibrium price of oranges ________, and the equilibrium quantity ________.
falls; increases | ||
falls; perhaps changes but we can't say if it increases, decreases, or stays the same | ||
rises; decreases | ||
rises; perhaps changes but we can't say if it increases, decreases, or stays the same |
1 points
QUESTION 2
Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result the equilibrium price ________, and the equilibrium quantity is ________.
rises; increases | ||
falls; decreases | ||
falls; does not change | ||
rises; does not change |
1 points
QUESTION 3
Bagels and cream cheese are complementary goods. Suppose that the price for flour, which is used to produce bagels, increases. The equilibrium price of cream cheese ________ and the equilibrium quantity of cream cheese ________.
does not change; does not change | ||
rises; increases | ||
falls; decreases | ||
rises; decreases |
1 points
QUESTION 4
If consumers buy a large number of plug-in electric cars, the equilibrium price of electricity will ________ and the equilibrium quantity of electricity will ________.
rise; increase | ||
rise; decrease | ||
fall; increase | ||
fall; decrease |
1 points
QUESTION 5
Which of the following shifts the supply curve for oranges?
an increase in income for all orange consumers if oranges are a normal good | ||
disastrous weather that destroys about half of this year's orange crop | ||
an increase in the price of bananas, a substitute in consumption for oranges | ||
a newly discovered increase in the nutritional value of oranges |
1 points
QUESTION 6
Which of the following shifts the supply curve of rutabagas rightward? (A rutabaga is a potato-like vegetable.)
normal goods in production. | ||
an exceptionally cold summer that killed much of the rutabaga crop. | ||
a fall in the price of fertilizer used to grow rutabagas. | ||
an increase in the price of a rutabaga |
1 points
QUESTION 7
Suppose over the next several years the productivity of firms producing electric cars improves dramatically. The advance in productivity leads to
an increase in the supply electric cars so that the supply curve shifts rightward. | ||
an increase in the supply of electric cars so that the supply curve shifts leftward. | ||
a decrease in the supply of electric cars so that the supply curve shifts rightward. | ||
a decrease in the supply of electric cars so that the supply curve shifts leftward. |
1 points
QUESTION 8
Hot dogs and hot dog buns are complements. If the price of a hot dog falls, then
the demand for hot dogs will increase. | ||
the demand for hot dog buns will decrease. | ||
the quantity demanded of hotdogs will decrease. | ||
the demand for hot dog buns will increase. |
1 points
QUESTION 9
Demand curves slope ________ because as the price increases and other things remain the same, the quantity demanded ________.
upward; increases | ||
downward; decreases | ||
upward; decreases | ||
downward; increases |
1 points
QUESTION 10
Water bottlers announce that next month the price of bottled water will rise by 25 percent. Which of the following occurs immediately?
The quantity of bottled water demanded increases. | ||
The demand for bottled water increases. | ||
The quantity of bottled water demanded decreases. | ||
The demand for bottled water decreases. |
1 points
QUESTION 11
If the price of carrots is below the equilibrium price, the
quantity supplied of carrots exceeds the quantity demanded and a shortage exists. | ||
quantity demanded of carrots exceeds the quantity supplied and a shortage exists. | ||
quantity supplied of carrots exceeds the quantity demanded and a surplus exists. | ||
quantity demanded of carrots exceeds the quantity supplied and a surplus exists. |
1 points
QUESTION 12
Which of the following is true regarding demand?
i. Demand is the relationship between quantity demanded and the price of a good when all other influences on buying plans remain the same.
ii. Demand refers to one quantity at one time.
iii. "Demand" and " quantity demanded" are the same thing.
both i and ii | ||
i only. | ||
ii only. | ||
iii only. |
1 points
QUESTION 13
Suppose the current price of a pound of steak is $6 per pound and the equilibrium price is $9 per pound. What takes place?
There is a shortage, so the price rises and quantity demanded decreases. | ||
There is a shortage, so the price rises and quantity demanded increases. | ||
There is a shortage, so the price falls and quantity demanded increases. | ||
There is a surplus, so the price falls and quantity demanded increases. |
1 points
QUESTION 14
The number of corn producers increases, so the supply of corn ________ and the supply curve of corn ________.
decreases; shifts leftward | ||
decrease; shifts rightward | ||
increases; shifts rightward | ||
increases; shifts leftward |
1 points
QUESTION 15
Market equilibrium
i. can never occur because there are always people who want a good but cannot afford it.
ii. occurs at the intersection of the supply and demand curves.
iii. is the point where the price equals the quantity.
iii only | ||
ii and iii | ||
ii only | ||
i only |
1 points
QUESTION 16
Milk can be used to produce cheese or butter. If the price of a pound of butter rises, what happens to the supply of cheese?
The supply of cheese stays the same and there is a decrease in the quantity supplied of cheese. | ||
The supply of cheese decreases. | ||
The supply of cheese stays the same and there is no change in the quantity supplied of cheese. | ||
The supply of cheese increases. |
1 points
QUESTION 17
Consumers regard Dell computers and Apple computers as substitutes. If the price of a Dell computer decreases, the
demand for Dell computers decreases. | ||
demand for Apple computers increases. | ||
demand for Apple computers decreases. | ||
demand for Dell computers increases. |
1 points
QUESTION 18
Suppose the current price of a pound of steak is $12 per pound and the equilibrium price is $9 per pound. In this case, there is a
surplus, so the price rises and quantity demanded increases. | ||
shortage, so the price rises and quantity demanded decreases. | ||
surplus, so the price falls and quantity demanded increases. | ||
shortage, so the price falls and quantity demanded increases. |
1 points
QUESTION 19
Plywood is used in the construction of houses. If the price of plywood rises, what happens to the supply of houses?
The supply increases so that the supply curve shifts rightward. | ||
The quantity supplied increases but there is no shift in the supply curve. | ||
The supply decreases so that the supply curve shifts leftward. | ||
The quantity supplied decreases but there is no shift in the supply curve. |
1 points
QUESTION 20
In stores, it is common to find seasonal products marked down when the season ends. What explains this behavior?
The store is trying to increase its customers' demand for the product. | ||
The law of demand is being used to increase the quantity demanded. | ||
The store manager must be trying to drive away customers by selling low quality products. | ||
The store is trying to increase its consumer's incomes by increasing their purchasing power. |
1 points
QUESTION 21
Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________ and the equilibrium quantity ________.
rises; increases | ||
rises; decreases | ||
falls; increases | ||
falls; decreases |
1 points
QUESTION 22
If both the supply and demand curves shift simultaneously, we can always predict what will happen to
either the price or the quantity, but not both. | ||
only the quantity. | ||
only the price. | ||
both the price and the quantity. |
1 points
QUESTION 23
If income increases and the demand for bus rides decreases,
bus rides are a substitute good. | ||
consumers are behaving irrationally. | ||
bus rides are an inferior good. | ||
bus rides are a normal good. |
1 points
QUESTION 24
A surplus of cardboard boxes means that
at the current price of a cardboard box, the quantity demanded equals the quantity supplied and the price will fall to restore the equilibrium.. | ||
the current price of a cardboard box is less than the equilibrium price. | ||
at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied. | ||
at the current price of a cardboard box, the quantity demanded is less than the quantity supplied. |
1 points
QUESTION 25
If a freeze destroys oranges before they are harvested, the equilibrium price of an orange ________ and the equilibrium quantity ________.
rises; increases | ||
rises; decreases | ||
falls; increases | ||
falls; decreases |
1 points
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
|