# Government Policy, Efficiency, and Welfare

Size: px
Start display at page:

Transcription

1 Government Policy, Efficiency, and Welfare Econ 102: Introduction to Microeconomics Goals of today s class Goals of today s class Learn about consumer surplus and producer surplus, a convenient way for measuring welfare and efficiency. Learn about price ceilings and floors and impacts on welfare. Learn about taxes and impacts on welfare. 1.2 Reading Reading Consumer surplus - Chapter 5: pages Producer surplus - Chapter 5: pages Price ceilings and floors - Chapter 6: pages Taxes - Chapter 6: pages Measuring Welfare 2.1 Consumer Surplus Marginal Benefit Recall: Demand curve shows how much of a good consumers are willing and able to buy at different prices. Equivalently: Demand curve shows how much consumers are willing and able to pay at different quantities. Demand curves are marginal benefit curves. Marginal benefit: the additional benefit from consuming one additional unit of a good. 1

2 Example If the price is \$4, how many units will consumers purchase? How much did the consumer(s) value... the first item? the second item? the third item? Quantity Marginal Benefit 1 \$8 2 \$6 3 \$4 4 \$2 5 \$0 Consumer surplus: the difference between the value consumers place on a product (as measured by the marginal benefit) and the price actually paid for a product. Consumer Surplus Assuming goods are divisible or.. demand is for a large number of goods. The consumer surplus is the area between the demand curve and the price, up to the quantity of the good purchased. What is the area of the consumer surplus shown? 2

3 2.2 Producer Surplus Marginal Cost Recall: Supply curve shows how much of a good producers are willing and able to produce and sell at different prices. Equivalently: Supply curve shows prices producers are willing and able to charge for different production levels. Supply curves are marginal cost curves. Marginal cost: the additional cost from producing one additional unit of a good. Marginal Cost If the price is \$4, how many units will be produced? What was the marginal cost of the... the first item? the second item? the third item? Quantity Marginal Cost 1 \$ \$ \$ \$ \$6.67 Producer surplus: the difference between the marginal cost and the price actually received for a product. Producer Surplus Assuming goods are divisible or.. demand is for a large number of goods. The producer surplus is the area between the supply curve and the price, up to the quantity of the good produced. What is the area of the producer surplus shown? 3

4 2.3 Total Welfare Total Welfare Total Welfare, aka total surplus is the sum of consumer and producer surplus. One measure of the total well being of an economy/market. Difficult, perhaps not very practical, to measure. Provides useful framework for analyzing efficiencies of markets or government policies. Does not measure distribution/equity. 3 Ceilings and Floors 3.1 Price Ceilings Price Ceilings 4

5 Price ceiling: regulation that makes it illegal to charge a price above a specified level. Effective Price Ceiling Equilibrium Price: \$5 Price ceiling: \$3 Ineffective Price Ceiling Equilibrium Price: \$5 Price ceiling: \$7 Examples Rent Ceilings in New York City. Written into law during World War II, still remain. Price ceilings on gasoline during 1970s. Last year: ceilings placed on food staples in Russia and Venezuela. Do effective price ceilings result in shortages, surpluses, or neither? Do ineffective price ceilings result in shortages or surpluses? 3.2 Price Floors Price Floors Price floor: regulation that makes it illegal to charge a price below a specified level. 5

6 Effective Price Floor Equilibrium Price: \$5 Price floor: \$7 Examples Ineffective Price Floor Equilibrium Price: \$5 Price floor: \$3 Do effective price floors result in shortages, surpluses, or neither? Minimum wage What is another word for a labor surplus? What labor sector is most affected? Total income earned by minimum wage earners = total hours x wage. Unskilled labor demand is elastic. Do minimum wages increase or decrease the total wages in unskilled sector? About half of U.S. states have minimum prices for tobacco. Lots of federal regulations for agricultural products. 6

7 3.3 Impacts on Welfare Price Ceiling and Welfare Reallocate some surplus from producers to consumers. Creates deadweight loss: reduction in total welfare. Compute the size of the deadweight loss in this example. Price Floor and Welfare Reallocate some surplus from consumers to producers. Creates deadweight loss. Compute the size of the deadweight loss in this example. 7

8 4 Taxes 4.1 Tax on Sellers Taxes What is the effect of sales taxes on... how much consumers pay for a product? how much producers receive for a product? For simplicity - assume a fixed tax per unit. Example: \$1 tax per unit of a good sold. Many state gasoline taxes work this way. State sales tax does not. Tax on Sellers Suppose producers are taxes based on how much is produced. Tax acts like an increase in costs, therefore decreases supply. Price that producers are willing to accept is increased by tax rate. 8

9 Tax on Sellers What is the effect on equilibrium price and quantity? Original supply curve: price producers get to keep. 4.2 Tax on Consumers Tax on Consumers Suppose instead tax is collected from consumers. Having to pay tax reduces how much consumers are willing to pay, by the size of the tax. New equilibrium: shows quantity and how much producers receive. Original demand curve: price consumers pay including the tax. 9

10 Should we Tax Producers or Consumers? During the Democratic Presidential Nomination Race, Hillary Clinton suggested: Eliminating Federal gasoline tax to help struggling consumers paying very high prices for energy. Increasing tax on oil companies making record profits. What would be the impact of such change a policy? 4.3 Tax and Elasticity Inelastic Demand This picture shows a case when demand is relatively more inelastic than supply. Who has a higher tax incidence, i.e. tax burden? 10

11 Inelastic Supply This picture shows a case when supply is relatively more inelastic than demand. Who has a higher tax incidence, i.e. tax burden? Tax and Elasticity When demand is relatively more inelastic than supply, consumers have larger tax incidence. When supply is relatively more inelastic than demand, producers have larger tax incidence. When demand is perfectly inelastic, consumers have entire tax incidence. That is, price producers receive and keep is completely unaffected and price consumers pay is increased by the size of the tax. When supply is perfectly inelastic, producers have entire tax incidence. 4.4 Taxes and Welfare Taxes and Welfare Taxes cause a decrease in equilibrium quantity. Pink area = (quantity) x (tax rate) = Tax Revenue. Tax revenue steals some CS and PS. Decrease in quantity yields deadweight loss. 11

12 5 What We Have Learned Consumer surplus: area between demand curve and market price, measures the well-being of consumers. Producer surplus: area between supply curve and market price, measures the well-being of producers. Price ceilings - hurts total welfare, creates shortages. Price floors - hurts total welfare, creates surpluses. Minimum wage - creates unemployment, reduces total earnings among minimum wage sector. Taxes Hurts total welfare. Doesn t matter who you tax - producers or consumers. Tax incidence is shared - burden depends on elasticities. 12

### LECTURE NOTES ON MICROECONOMICS

LECTURE NOTES ON MICROECONOMICS ANALYZING MARKETS WITH BASIC CALCULUS William M. Boal Part 3: Firms and competition Chapter 12: Welfare analysis Problems (12.1) [Pareto improvement, economic efficiency]

### SOLUTIONS TO TEXT PROBLEMS 6

SOLUTIONS TO TEXT PROBLEMS 6 Quick Quizzes 1. A price ceiling is a legal maximum on the price at which a good can be sold. Examples of price ceilings include rent control, price controls on gasoline in

Econ 226 Principles of Microeconomics Fall, 24 Dr. Kathryn Wilson Due Date: Tuesday, September 28 th Homework 2 Answer Key 1. When the of movie admissions increases from \$7 to \$8, the demanded falls from

### Government Regulation

Government Regulation What do you think is the market price for renting an apartment in Plainfield? What happens to the quantity of demand and supply after the price change? List four outcomes that would

Micro Chapter 6 -price ceiling or price cap: government regulation that makes it illegal to charge a price higher then a specified level -effects of the price cap on the market depend on whether the ceiling

### Econ 200, Summer 2011, Dr. Alan and Prof. Crossley. Problem Set 2. (Reference: Mankiw and Taylor, Chapters 6, 7, 8, 13)

Multiple Choice Econ 200, Summer 2011, Dr. Alan and Prof. Crossley Problem Set 2 (Reference: Mankiw and Taylor, Chapters 6, 7, 8, 13) 1 Refer to the Figure below. Consider the impact of a tax on sellers,

### 2. If there is a minimum wage that is set below the equilibrium wage in the labor market, there will be:

Economics 101 Problem Set 3 Due: September 20, 2018 by 5 PM To receive credit for this problem set, you must submit your answers on-line at the class webpage. Neither hard copies nor e-mails will be accepted.

### ECON (ENT) COURSE LESSON THREE. Supply and Demand. CHAPTER 7 Supply and Demand. Lesson Three Supply and Demand 93

ECON (ENT) COURSE LESSON THREE Supply and Demand CHAPTER 7 Supply and Demand Lesson Three Supply and Demand 93 EXERCISES Matching (28 points) From the list below, select the term that matches each of the

### Introduction to Economic Institutions

Introduction to Economic Institutions ECON 1500 Week 3 Lecture 2 13 September 1 / 35 Recap 2 / 35 LAW OF SUPPLY AND DEMAND the price of any good adjusts to bring the quantity supplied and quantity demanded

### ECON 101 KONG Midterm 2 CMP Review Session. Presented by Benji Huang

ECON 101 KONG Midterm 2 CMP Review Session Presented by Benji Huang Chapter 5 Efficiency and Equity Benefit, Cost, Surplus Consumers (1) A consumer benefits from the consumption of a product this benefit

### Econ Test 2B Dr. Rupp Tuesday, March 3, 2009 Pledge: I have neither given or received aid on this exam Signature

Econ 2113 - Test 2B Dr. Rupp Tuesday, March 3, 2009 Name Pledge: I have neither given or received aid on this exam Signature Multiple Choice Identify the letter of the choice that best completes the statement

### Supply, Demand, and Government Policies. Copyright 2004 South-Western

Supply, Demand, and Government Policies Copyright 2004 South-Western Supply, Demand, and Government Policies In a free, unregulated market system, market forces establish equilibrium prices and exchange

### Econ 101, section 3, F06 Schroeter Exam #2, Red. Choose the single best answer for each question.

Econ 101, section 3, F06 Schroeter Exam #2, Red Choose the single best answer for each question. 1. Which of the following is consistent with elastic demand? a. A 10% increase in price results in a 5%

### Problem Set 3 Eco 112, Spring 2011 Chapters covered: Ch. 6 and Ch. 7 Due date: March 3, 2011

Problem Set 3 Eco 112, Spring 2011 Chapters covered: Ch. 6 and Ch. 7 Due date: March 3, 2011 There are 30 multiple choice questions in this problem set. Answer these questions by the beginning of the class

### Economic efficiency. Who gains and who loses when prices change?

Economic efficiency Who gains and who loses when prices change? 1 The Efficiency of Competitive Markets Economic Surplus and Economic Efficiency Economic efficiency A market outcome in which the marginal

### Chapter 4. Demand, Supply and Markets. These slides supplement the textbook, but should not replace reading the textbook

Chapter 4 Demand, Supply and Markets These slides supplement the textbook, but should not replace reading the textbook 1 What is a market? A group of buyers and sellers with the potential to trade 2 What

### 2. Demand and Supply

2. Demand and Supply The following materials are taken from Chap. 3 to Chap. 7 of Economics, 2 nd ed., Krugman and Wells(2009), Worth Palgrave MaCmillan. 1 of 42 2. Demand and Supply, and Market Equilibrium

### You will find more complete answers to some of these questions in the lecture notes.

You will find more complete answers to some of these questions in the lecture notes. 4 pt. 1. Draw and label a market with a perfectly elastic supply and a perfectly inelastic demand. P +------------------------------

### Microeconomics: MIE1102

TEXT CHAPTERS TOPICS 1, 2 ECONOMICS, ECONOMIC SYSTEMS, MARKET ECONOMY 3 DEMAND AND SUPPLY. MARKET EQUILIBRIUM 4 ELASTICITY OF DEMAND AND SUPPLY 5 DEMAND & CONSUMER BEHAVIOR 6 PRODUCTION FUNCTION 7 COSTS

### 1. Welfare economics is the study of a. the well-being of less fortunate people. b. welfare programs in the United States.

1. Welfare economics is the study of a. the well-being of less fortunate people. b. welfare programs in the United States. c. the effect of income redistribution on work effort. d. how the allocation of

### Econ 2113 Test #2 Dr. Rupp Fall 2008

D Econ 2113 Test #2 Dr. Rupp Fall 2008 Name Pledge: I have neither given nor received aid on this exam Version A Signature: Directions: Bubble in name: Last, First Bubble in 00 in Special Codes Sign the

### NAME: INTERMEDIATE MICROECONOMIC THEORY FALL 2006 ECONOMICS 300/012 Final Exam December 8, 2006

NAME: INTERMEDIATE MICROECONOMIC THEORY FALL 2006 ECONOMICS 300/012 Section I: Multiple Choice (4 points each) Identify the choice that best completes the statement or answers the question. 1. The slope

### HOMEWORK 2: Review of Microeconomics

HOMEWORK 2: Review of Microeconomics 30 Points Due: Wednesday, January 28 th, 2015 LEARNING OBJECTIVES Prices measure the trade-offs available in the market place and coordinate the independent decisions

### ECON 101 MIDTERM 1 REVIEW SESSION SOLUTIONS (WINTER 2015) BY BENJI HUANG

ECON 101 MIDTERM 1 REVIEW SESSION SOLUTIONS (WINTER 2015) BY BENJI HUANG TABLE OF CONTENT I. CHAPTER 1: WHAT IS ECONOMICS II. CHAPTER 2: THE ECONOMIC PROBLEM III. CHAPTER 3: DEMAND AND SUPPLY IV. CHAPTER

### Instructions: DUE: day of your unit exam Block Period 1/31 st or 2/1 st

----------------- AP MICROECONOMICS-2018 MICRO Unit #1 Study Guide Name: Instructions: UE: day of your unit exam Block Period 1/31 st or 2/1 st Section 1: SUPPLY & EMAN (review Section from Semester 1)

### Problem Set 5. The price will be higher than the equilibrium price. There will be a surplus of cheese.

Problem Set 5 I. 1. The government has decided that the free-market price of cheese is too low. a) Suppose the government imposes a binding price floor in the cheese market. Draw a supply-and-demand diagram

### Policy Evaluation Tools. Willingness to Pay and Demand. Consumer Surplus (CS) Evaluating Gov t Policy - Econ of NA - RIT - Dr.

Policy Evaluation Tools Evaluating Gov t Policy - Econ of NA - RIT - Dr. Jeffrey Burnette In economics we like to measure the impact government policies have on the economy and separate winners and losers.

### 1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price

1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price 2. Quantity demanded vs demand: quantity demanded is

### Economics, so far. Straight line Why? Transferable resources anything that can grow wheat can grow barley

Economics, so far I. Opportunity Cost a. What it is: what is given up b. Our first assumption is that resources money, time, land, etc are LIMITED. c. THUS we make choices. And every choice has an opportunity

### Choose the single best answer for each question. Do all of your scratch-work in the side and bottom margins of pages.

Econ 101, Sections 3 and 4, S11, Schroeter Exam #2, Special code = 0002 Choose the single best answer for each question. Do all of your scratch-work in the side and bottom margins of pages. 1. The cross-price

### Eastern Mediterranean University Faculty of Business and Economics Department of Economics Fall Semester

Duration: 50 minutes Eastern Mediterranean University Faculty of Business and Economics Department of Economics 2016-17 Fall Semester ECON101 - Introduction to Economics I Quiz 2 Answer Key 16 December

### Econ 200 Fall Opportunity Cost and the Gains from Trade Supply and Demand Firms and Industries

Econ 200 Fall 2012 Microeconomics Opportunity Cost and the Gains from Trade Supply and Demand Firms and Industries Macroeconomics The Data of Macroeconomics Growth Saving and Investment Money and Exchange

### Price = The Interaction of Supply and Demand WEDNESDAY, FEBRUARY 17 THURSDAY, FEBRUARY 18

Price = The Interaction of Supply and Demand WEDNESDAY, FEBRUARY 17 THURSDAY, FEBRUARY 18 Chapter 4: Section 1 Understanding Demand What Is Demand? Markets are where people come together to buy and sell

### 1 Applying the Competitive Model. 2 Consumer welfare. These notes essentially correspond to chapter 9 of the text.

These notes essentially correspond to chapter 9 of the text. 1 Applying the Competitive Model The focus of this chapter is welfare economics. Note that "welfare" has a much di erent meaning in economics

### Cosumnes River College Principles of Microeconomics Problem Set 4 Due March 3, 2015

pring 2015 Cosumnes River College rinciples of Microeconomics roblem et 4 ue March 3, 2015 Name: olutions rof. owell Instructions: Write the answers clearly and concisely on these sheets in the spaces

### Exam 1. ECON 101 Fall 2013 Vesselinov

Class: Date: Exam 1. ECON 101 Fall 2013 Vesselinov Multiple Choice Identify the choice that best completes the statement or answers the question. Figure 2-4 1. Refer to Figure 2-4. Efficient production

### Exam 1. ECON 101 Fall 2013 Vesselinov

Class: Date: Exam 1. ECON 101 Fall 2013 Vesselinov Multiple Choice Identify the choice that best completes the statement or answers the question. Figure 2-5 1. Refer to Figure 2-5. The opportunity cost

### Exam 1. ECON 101 Fall 2013 Vesselinov

Class: Date: Exam 1. ECON 101 Fall 2013 Vesselinov Multiple Choice Identify the choice that best completes the statement or answers the question. 1. When a tax is placed on the buyers of lemonade, the

### ECONOMICS. Chapter 4 The Market Strikes Back

Lesson 1 ECONOMICS Chapter 4 The Market Strikes Back Review: Supply and Demand The previous lesson focused on demand and supply, we studied the demand curve and the supply curve P P S D Quantity Quantity

### Midterm 2 Sample Questions. Use the demand curve diagram below to answer the following THREE questions.

! Midterm 2 Sample uestions Use the demand curve diagram below to answer the following THREE questions. 8 6 4 2 4 8 12 16 1. What is the own-price elasticity of demand as price decreases from 6 per unit

### Microeconomics: Principles, Applications, and Tools NINTH EDITION. Chapter 6

Microeconomics: Principles, Applications, and Tools NINTH EDITION Chapter 6 Market Efficiency and Government Intervention The housing market in New York City is highly regulated. The city issues a relatively

### Exam 01 - ECON Friday, October 1st

Name: Exam 01 - ECON 2301-05 - Friday, October 1st Figure 1 1. Refer to Figure 1. This economy has the ability to produce at which point(s)? a. A, B, D b. A, B c. C, F, G d. A, B, C, F, G 2. Any point

### ECON 2100 (Summer 2015 Sections 07 & 08) Exam #2C

ECON 21 (Summer 215 Sections 7 & 8) Exam #2C Multiple Choice Questions: (3 points each) 1. I am taking of the exam. C. Version C 2. A Price Control generally refers to A. who bears the burden of a tax,

### Exam 01 - ECON Friday, October 1st

Name: ID: A Exam 01 - ECON 2301-05 - Friday, October 1st 1. Demand is said to be inelastic if the a. quantity demanded changes proportionately the same as price. b. quantity demanded changes proportionately

### Department of Economics University of California, Davis ECONOMICS 1A. Second Midterm Exam Version B

Department of Economics University of California, Davis ECONOMICS 1A Spring 2010 L. Jay Helms Second Midterm Exam Version B Last Name: First Name: Your Student ID Number: Please check your registered section

### FIRST HOURLY EXAMINATION ECON 200 Spring 2009 Version A DAY AND TIME YOUR SECTION MEETS:

FIRST HOURLY EXAMINATION ECON 200 Spring 2009 Version A STUDENT'S NAME: STUDENT'S IDENTIFICATION NUMBER: DAY AND TIME YOUR SECTION MEETS: ENTER THE NUMBER 1555777 UNDER "SPECIAL CODES" ON THE SCANTRON

### MICROECONOMICS Midterm Test (sample)

Student Name:.. MICROECONOMICS Midterm Test (sample) Time: 60 minutes Student Number:. Total Mark:... /50 Class:. Converted Mark:../10 Section A: QUIZ 20 marks Show your answers on the ANSWER SHEET at

### ECON 251 Exam #1 Spring 2013

ECON 251 Exam #1 Spring 2013 1. A is an example of a labor resource, while is an example of a capital resource. a. Schoolteacher; a computer programmer b. Football player; tree c. Business owner; checking

### The Analysis of Competitive Markets

C H A P T E R 9 The Analysis of Competitive Markets Prepared by: Fernando & Yvonn Quijano CHAPTER 9 OUTLINE 9.1 Evaluating the Gains and Losses from Government Policies Consumer and Producer Surplus 9.2

### Problem Set #3 Answers Economics 2106H, John L. Turner

roblem et #3 Answers Economics 26H, John L. Turner 1. (a) upply (b) Equilibrium: *=5, *= emand 5 upply Curve given the tax (slope still Original upply Curve (d) New equilibrium: *=4, *=80 80 60 4 5 emand

### LECTURE February Thursday, February 21, 13

LECTURE 10 21 February 2013 1 ANNOUNCEMENTS HW 4 due Friday at 11:45 PM Midterm 1 next Monday February 25th 7:30 PM - 8:30 PM in Anderson 270 (not this room) 2 old midterms are on Moodle; they are very

### Queen s University Department of Economics ECON 111*S

Queen s University Department of Economics ECON 111*S Take-Home Midterm Examination May 24, 25 Instructor: Sharif F. Khan Suggested Solutions PART A TRUE/FALSE/UNCERTAIN QUESTIONS Explain why each of the

### Demand & Supply of Resources

Resource Markets 1 Demand & Supply of Resources Resource demand Firms demand resources As long as marginal revenue exceeds marginal cost To maximize profit Resource supply People supply resources To the

### Basics of Economics. Alvin Lin. Principles of Microeconomics: August December 2016

Basics of Economics Alvin Lin Principles of Microeconomics: August 2016 - December 2016 1 Markets and Efficiency How are goods allocated efficiently? How are goods allocated fairly? A normative statement

### Microeconomics. Lecture Outline. Claudia Vogel. Winter Term 2009/2010. Part II Producers, Consumers, and Competitive Markets

Microeconomics Claudia Vogel EUV Winter Term 2009/2010 Claudia Vogel (EUV) Microeconomics Winter Term 2009/2010 1 / 28 Lecture Outline Part II Producers, Consumers, and Competitive Markets 9 Evaluating

### Government Intervention

Government Intervention Taxes - Aim of imposing indirect taxes: the government does such spending in order to raise tax revenues and to internalize externalities, to achieve the optimum level of output.

### Econ Introduction to Microeconomics X3-B. Name:

Exam 3 Version B (White Version) Name: Each problem is worth 3 points unless otherwise indicated. This exam ends promptly at X:52. The late penalties for turning it in late are: 1 minute late: - 3 points

### Eco402 - Microeconomics Glossary By

Eco402 - Microeconomics Glossary By Break-even point : the point at which price equals the minimum of average total cost. Externalities : the spillover effects of production or consumption for which no

### Basic Economics Test #1 Study Guide

Basic Economics Test #1 Study Guide Note: Below is a list of study questions for the upcoming Test #1. The test covers Ch. 4, 5, 6, 7 and 8 of the (Mankiw) textbook and supplementary materials presented

### Homework 4 Economics

Homework 4 Economics 501.01 Manisha Goel Due: Tuesday, March 1, 011 (beginning of class). Draw and label all graphs clearly. Show all work. Explain. Question 1. Governments often regulate the price of

### 9.1 Zero Profit for Competitive Firms in the Long Run

9.1 Zero Profit for Competitive Firms in the Long Run Chapter 9 Applications of the Competitive Model With Free Entry into the Market Along with identical costs and constant input prices, implies firms

### Adam Smith Theorem. Lecture 4(ii) Announcements. Lecture. 0. Link between efficiency and the market allocation.

Lecture (ii) Announcements Experiment Thur am pm pm Friday pm (Only participate once!) Midterm Mon Oct, pm-pm Covers Lec(i) through Lec(ii) Deadline to register for the makeup without penalty is Mon Oct,

### Case: An Increase in the Demand for the Product

1 Appendix to Chapter 22 Connecting Product Markets and Labor Markets It should be obvious that what happens in the product market affects what happens in the labor market. The connection is that the seller

### AP Microeconomics Review With Answers

AP Microeconomics Review With Answers 1. Firm in Perfect Competition (Long-Run Equilibrium) 2. Monopoly Industry with comparison of price & output of a Perfectly Competitive Industry (which means show

### Midterm 1 60 minutes Econ 1101: Principles of Microeconomics October 7, Exam Form A

Midterm 1 60 minutes Econ 1101: Principles of Microeconomics October 7, 2013 Exam Form A Name Student ID number Signature Teaching Assistant Recitation # The answer form (the bubble sheet) and this question

### Midterm 1 60 minutes Econ 1101: Principles of Microeconomics October 8, Exam Form A

Midterm 1 60 minutes Econ 1101: Principles of Microeconomics October 8, 2012 Exam Form A Name Student ID number Signature Teaching Assistant Section The answer form (the bubble sheet) and this question

### 1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price

1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price 2. The two things needed for demand to exist are: willingness

### Chapter 16: Equilibrium

Econ Microeconomic Analysis Chapter : Equilibrium Instructor: Hiroki Watanabe Spring Watanabe Econ Equilibrium / Review Market Clearance Tax Who Pays the Tax? Tax Incidence First Theorem Summary Watanabe

### SAMPLE FINAL. Part I - Multiple Choice Questions:

Part I - Multiple Choice Questions: SAMPLE FINAL 1. Which of the following is not a characteristic of a perfectly competitive market? a. Firms are price takers. b. Firms have difficulty entering the market.

### Econ 1 Review Session 1. with Maggie aproberts-warren UCSC Fall 2012

Econ 1 Review Session 1 with Maggie aproberts-warren UCSC Fall 2012 Introduction What will be covered in the exam? Chs. 1-8 What will the exam look like? 20 multiple choice questions 4 short answer/graphing

### MIDTERM I. GROUP A Instructions: November 3, 2010

EC101 Sections 04 Fall 2010 NAME: ID #: SECTION: MIDTERM I November 3, 2010 GROUP A Instructions: You have 60 minutes to complete the exam. There will be no extensions. Students are not allowed to go out

### Unit 2 Supply and Demand

Unit 2 Supply and Demand Microeconomics - analyzes the Small Unit economic behavior of Individuals, Households and Firms to understand their decision-making process. -America s Free Enterprise- An economy

### Supply, demand and government policies. Dr. Anna Kowalska-Pyzalska

Supply, demand and government policies Dr. Anna Kowalska-Pyzalska Price ceiling Price floor Tax incidence In a free, unregulated market system, market forces establish equilibrium prices and exchange quantities.

### Econ 101, sections 2 and 6, S06 Schroeter Exam #2, Red. Choose the single best answer for each question.

Econ 101, sections 2 and 6, S06 Schroeter Exam #2, Red Choose the single best answer for each question. 1. If the own-price elasticity of demand for a good is -2.0, this implies that consumers would a.

### Class Agenda. Note: As you hand-in your quiz, pick-up graded HWK #1 and HWK #2 (due next Tuesday).

Class 7 Class Agenda 1. Finish discussion on consumer and producer surplus (welfare theory). 2. Elasticity problems (individual/group work to prep for quiz). 3. Quiz #1. Note: As you hand-in your quiz,

### Eastern Mediterranean University Faculty of Business and Economics Department of Economics Fall Semester

Eastern Mediterranean University Faculty of Business and Economics Department of Economics 2016-17 Fall Semester Duration: 110 minutes ECON101 - Introduction to Economics I Final Exam Type A 11 January

### !"#\$#%&"'()#*(+,'&\$-''(.#/-'((

Lecture 1 Basic Concerns of Economics What is Economics! Economics is the study of how society manages its scarce resources. o Economic Problem: How a society can satisfy unlimited wants with limited resources

### LECTURE February Tuesday, February 19, 13

LECTURE 9 19 February 2013 1 ANNOUNCEMENTS HW 4 due Friday at 11:45 PM Midterm 1 next Monday February 25th 7:30 PM - 8:30 PM in Anderson 270 (not this room) 2 MIDTERM 1: STUDY TOOLS 2 old midterms are

### FIRST MIDTERM EXAMINATION ECON 200 Spring 2007 DAY AND TIME YOUR SECTION MEETS:

FIRST MIDTERM EXAMINATION ECON 200 Spring 2007 STUDENT'S NAME: STUDENT'S IDENTIFICATION NUMBER: DAY AND TIME YOUR SECTION MEETS: BEFORE YOU BEGIN PLEASE MAKE SURE THAT YOUR EXAMINATION HAS BEEN DUPLICATED

### Microeconomics. Use the graph below to answer question number 3

More Tutorial at Microeconomics 1. Opportunity costs are the values of the: a. minimal budgets of families on welfare b. hidden charges passed on to consumers c. monetary costs of goods and services *

### Microeconomics. Use the graph below to answer question number 3

More Tutorial at Microeconomics 1. Opportunity costs are the values of the: a. minimal budgets of families on welfare b. hidden charges passed on to consumers c. monetary costs of goods and services *

### To produce more beach balls, you must give up ever increasing quantities of ice cream cones.

Unit 01: Basic Concepts (Macro/Micro) Scarcity The Economic Problem: Unlimited wants, limited economic resources Factors of Production: -Land -Labor -Capital -Entrepreneurship Big 3 Questions: -What to

### Lecture # 4 More on Supply and Demand

Lecture # 4 More on Supply and emand I. Consumer Surplus Consumer surplus is the difference between what a consumer is willing to pay for a good and what the consumer actually pays when buying it. o Graphically,

### Exam 1 Fall Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

Class: Date: Exam 1 Fall 2014 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Ch. 7. Consumer surplus a. is the amount of a good that a consumer can buy

### Exam 1 Fall Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

Class: Date: Exam 1 Fall 2015 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Ch. 5. A perfectly inelastic demand implies that buyers a. increase their

### Micro Semester Review Name:

Micro Semester Review Name: The following review is set up to emphasize certain concepts, graphs and terms. It is the responsibility of the individual teachers to emphasize and review the analysis aspects

### Introductory Microeconomics. Dr. Lisa Mohanty TUI University

Introductory Microeconomics Dr. Lisa Mohanty TUI University Supply and Demand Forces that make market economies function Determines the quantity of each good produced Demand and Supply in a competitive

### Government Price Setting, and Taxes

CHAPTER 4 Economic Efficiency, Government Price Setting, and Taxes Chapter Summary and Learning Objectives 4.1 Consumer Surplus and Producer Surplus (pages 98 102) Distinguish between the concepts of consumer

### Chapter 5: Price Controls: Multiple Choice Questions Chapter 6: Elasticity Multiple Choice Questions

Chapter 5: Price Controls: Multiple Choice Questions 1. ANSWER: d. ceiling. 2. ANSWER: a. a shortage, which cannot be eliminated through market adjustment. 3. ANSWER: b. the equilibrium price is below

### The Market Forces of Supply and Demand. Premium PowerPoint Slides by Ron Cronovich

C H A P T E R 4 The Market Forces of Supply and Demand Economics P R I N C I P L E S O F N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich 2009 South-Western, a part of Cengage Learning, all

### Econ*1050 Introductory Microeconomics Instructor: Vitali Alexeev. Quiz 6 (Chapter 8)

Econ*1050 Introductory Microeconomics Instructor: Vitali Alexeev Quiz 6 (Chapter 8) 1) A tax on a good a. raises the price buyers pay and lowers the price sellers receive. b. raises both the price buyers

### ECON 1001 A. Come to the PASS workshop with your mock exam complete. During the workshop you can work with other students to review your work.

It is most beneficial to you to write this mock midterm UNDER EXAM CONDITIONS. This means: Complete the midterm in 1.5 hour(s). Work on your own. Keep your notes and textbook closed. Attempt every question.

### Microeconomics. More Tutorial at

Microeconomics Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. A legal maximum price at which a good can be sold is a price a. floor. b.

### MICROECONOMICS SECTION I. Time - 70 minutes 60 Questions

MICROECONOMICS SECTION I Time - 70 minutes 60 Questions Directions: Each of the questions or incomplete statements below is followed by five suggested answers or completions. Select the one that is best

### Assessment Schedule 2015 Economics: Demonstrate understanding of the efficiency of market equilibrium (91399)

NCEA Level 3 Economics (91399) 2015 page 1 of 11 Assessment Schedule 2015 Economics: Demonstrate understanding of the efficiency of market equilibrium (91399) Assessment criteria with Merit with Demonstrate

### Choose the single best answer for each question. Do all of your scratch work in the margins or on the back of the last page.

Econ 101, Section 21, S10, Schroeter Final Exam, Special code = 2 Choose the single best answer for each question. Do all of your scratch work in the margins or on the back of the last page. 1. Which of

### IB Economics Competitive Markets: Demand and Supply 1.4: Price Signals and Market Efficiency

IB Economics: www.ibdeconomics.com 1.4 PRICE SIGNALS AND MARKET EFFICIENCY: STUDENT LEARNING ACTIVITY Answer the questions that follow. 1. DEFINITIONS Define the following terms: [10 marks] Allocative