1. Cameron visits a sporting goods store to buy a new set of golf clubs. He is willing to pay $750 for the clubs but buys them on sale for $575. Cameron's consumer surplus from the purchase is a. $175.. 1). $575. C. $750. d. $1,325. 2. Tom walks Bethany's dog once a day for $50 per week. Bethany values this service at $60 per week, while the opportunity cost of Tom's time is $30 per week. The government places a tax of $35 per week on dog walkers. Before the tax, what is the total surplus? a. $60 b. $50 0. $30 (I. $25 3. Jeff decides that he would pay as much as $2,000 for a new laptop computer. He buys the computer and realizes a consumer surplus of $300. How much did Jeff pay for his computer? a. $3 00. b. $1,700. c. $2,000. d. $2,300. 4. The Tragedy of the Commons a. occurs most often with public goods. b. is only applicable to shared grazing rights among sheep herders. c. is eliminated when property rights are assigned to individuals. d. occurs when social incentives are in line with private incentives. Page 1 of 14 Table 1 $xternal Benefit 12. Refer to Table 1. The private equilibrium quantity of output is a. 3 units. b. 4 units. c. 5 units. d. 6 units. 13. Refer to Table 1. The social equilibrium quantity of output is a. 3 units. b. 4 units. 0. 5 units. d. 6 units. 14. Refer to Table 1. This table is depicting a market with a... a. Negative externality. b. Positive externality. c. No externality. d. None of the above. 15. Total surplus in a market is equal to a. Willingness to pay by buyers - amount paid by buyers. b. amount received by sellers - costs to sellers. 0. Willingness to pay by buyers - costs to sellers. d. amount received by sellers - amount paid by buyers. 16. Because it is a. excludable but not rival in consumption, a sweatshirt is a club good. b. rival in consumption but not excludable, a sweatshirt is a club good. c. both excludable and rival in consumption, a sweatshirt is a private good. d. neither excludable nor rival in consumption, a sweatshirt is a public good. Page 4 of 14 Figure 3 TP S' 36 7. S 32 -.. 28 24 20 16- 12 -. 10 20 30 40 50 60 70 80 90 Q 17. Refer to Figure 3. If the demand curve is D and the supply curve shifts left from S to S' as a result of the tax, what is the change in producer surplus when comparing the new equilibrium with the original equilibrium? a. Producer surplus increases by $225. b. Producer surplus increases by $675. c. Producer surplus decreases by $225. d. Producer surplus decreases by $675. Table 2 Buyer Willingness To Pay Calvin $150.00 Sam $135.00 Andrew $120.00 Lori $100.00 18. Refer to Table 2. If the price of the product is $110, then who would be willing to purchase the product? a. Calvin b. Calvin and Sam c. Calvin, Sam, and Andrew d. Calvin, Sam, Andrew, and Lori Page 5 of 14Figure 4 Price Supply P K DI JuT N Demand Quantity 19. Refer to Figure 4. Suppose the government imposes a tax of P' - P". The area measured by I+J+K+L+M+Y represents a. total surplus before the tax. b. total surplus after the tax. c. consumer surplus before the tax. d. deadweight loss from the tax. 20. Refer to Figure 4. Suppose the government imposes a tax of P' - P". Which is the area of the deadweight loss of taxation a. K +L b. I+ Y C. J d. J +K +I 21. Refer to Figure 4. Suppose the government imposes a tax of P' - P". What is area M? a. Producer surplus before the tax b. Consumer surplus before the tax c. Consumer surplus after the tax d. Producer surplus after the tax 22. The deadweight loss from a tax will be smallest in a market with a. Perfectly inelastic demand. b. Perfectly elastic demand c. Unit-elastic demand d. Impossible to answer without more information Page 6 of 14F igure 5 Demand 1234-56 TS5|1011121314-15161?1819202122232425 Q' 23. Refer to Figure 5. At the equilibrium price, consumer surplus in this market is a. $125. b. $100. c. $75. (1. $150. 24. Refer to Figure 5. At the equilibrium price, total surplus in this market is a. $125. b. $450. c. $250. d. $500. 25. Refer to Figure 5. Without tax, equilibrium price in this market is Q* : 10. What is the amount of tax that would change equilibrium quantity in this market to Q* = 5? a. $10. b. $25. 0. $15. d. $45. Page 7 of 14 Figure 6 Price Domestic per Supply Saddle C Tariff World P. - Price G Domestic Demand Q1 Q2 Q3 Q4 Quantity of Saddles 26. Refer to Figure 6. Producer surplus with the tariff is a. G. b. C + G. C. A + C +G. d. A + B + C +G. 27. Refer to Figure 6. Total surplus with the tariff is a. B +D +E +F. b. C + G. C. A + B + C + E +G. d. A + B + C +D + E + F+G 28. Refer to Figure 6. Government revenue is: a. G. b. D + F. C. B. d. E. 29. Refer to Figure 6. Consumer surplus without the tariff is a. A + B b. A + B + C +D + E +F. C. B + D +E +F. d. A + B + C +G. Page 8 of 14Figure 7 The vertical distance between points A and B represents a tax in the market. T Price 15 14 - 13 . 12 +- Supply 11 10 9 - Demand 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 Quantity 30. Refer to Figure 7. The amount of the tax is a. $5. b. $7. c. $8. d. $12. 31. Refer to Figure 7. The amount of revenue the government earns from the tax is a. $455. b. $105. c. $140. d. None of the above. Page 9 of 14Figure 8 The figure illustrates the market for rice in Vietnam. T Price 16 Domestic supply 10 World Price 4 Domestic demand 1,500 2,000 3,000 Quantity 32. Refer to Figure 8. Given that Vietnam is a small country, it is apparent from the figure that a. Vietnam will export rice if trade is allowed. b. Vietnam will import rice if trade is allowed c. Vietnam has nothing to gain either by importing or exporting rice. d. the world price will fall if Vietnam begins to allow its citizens to trade with other countries. 33. Refer to Figure 8. What is the exact quantity of trade? a. Vietnam will export 1,500 rice b. Vietnam will import 1,500 rice c. Vietnam will export 3,000 rice d. Vietnam will import 1,000 rice 34. Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's willingness to pay is a. $500 b. $3,000. c. $3,500. d. $6,500. Page 10 of 1435. A negative externality a. is a cost to a bystander. b. is a cost to the buyer. 0. is a cost to the seller. d. exists with all market transactions. 36. A Netix account is a a. private good. b. club good. 0. common resource. d. public good. 37. When negative externalities are present in a market, a. producers will be affected but consumers Will not. b. producers will supply too much of the product. 0. demand will be too high. d. the market will still maximize total benets. 38. People cannot be prevented from using a good if the good is a. a private good or a public good. b. a private good or a common resource. 0. a public good or a common resource. d. a public good or a club good. 39. A positive externality will cause a market to produce a. more than is socially desirable. b. less than is socially desirable. c. the socially optimal equilibrium amount. d. more than the same market would produce in the presence of a negative externality. 40. The free-rider problem a. forces the supply of a public good to exceed its demand. b. results in common resources becoming club goods. 0. explains why governments supply public goods. d. results in public goods becoming private goods. 41. Goods that are rival in consumption excludable would be considered a. club goods. b. common resources. 0. public goods. d. private goods. Page 11 of 14 Table 2 The following table represents the costs of ve possible sellers. 42. Refer to Table 2. If the market price is $1,200, the producer surplus in the market is a. $100. l). $800. c. $400. (1. $500. 43. Corrective (Pigovian) taxes that are imposed upon the producer of a nasty smell can be successful in reducing that smell because the tax makes the producer a. externalize the positive externality. b. externalize the negative externality. c. internalize the positive externality. d. internalize the negative externality. Page 12 of 14 Figure 9 Price 63 Supply (private cost) 36 Social value (private value and external benefit 14 15 Demand private value) 240 420 Quantity 44. Refer to Figure 9. Please answer all of the following: (a) Please identify the type of externality that this market has. (b) Please identify the dollar amount of the externality. (c) Is there too much or too little of a good in this market? By how much? (d) What can the government specifically do to eliminate this externality? Provide dollar amount. (e) Shade and label the deadweight loss region in this graph. Page 13 of 14Figure 10 1000 900 800 700 600 500 400 300 200 100 1000 2000 3000 4000 5000 6000 7000 8000 quantity 45. Refer to Figure 10. Please impose a tax on sellers in the amount $400. Then, identify all of the following: (a) Post-tax quantity equilibrium quantity (b) Post-tax sellers' price (0) Post-tax buyers\" price (d) Shade and label government revenue area (c) Shade and label deadweight loss area Page 14 of 14 Figure 1 Price Social cost (private cost and external cost) 24 22 Supply (private cost) 18 16 Demand private value) 120 160 Quantity 5. Refer to Figure 1. The graph represents a market in which a. there is no externality. b. there is a positive externality. c. there is a negative externality. d. The answer cannot be determined from inspection of the graph. 6. What is the size of this externality? a. $6 b. $4 c. $2 d. $10 7. When the size of the tax increases, the deadweight loss of taxation... a. Also increases b. decreases c. Stays the same d. Becomes equal to the size of the tax 8. In the context of international trade, a tariff on a product makes a. domestic sellers better off and domestic buyers worse off. b. domestic sellers worse off and domestic buyers worse off. c. domestic sellers better off and domestic buyers better off. d. domestic sellers worse off and domestic buyers better off. Page 2 of 14Figure 2 Price 76 - Domestic Supply 72 68 - 64 - 60 56 - 52 - 48 - 40 +- 36 - 32 + 28 World price + tariff 24 + 20 World Price 16 Domestic Demand 12 - 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96 100 Quantity 9. Refer to Figure 2. With fully free trade (no tariff), the country imports a. 16 units of the good. b. 24 units of the good. c. 60 units of the good. d. 64 units of the good. 10. Refer to Figure 2. When the tariff is imposed, the country's imports decrease by: a. 36 units of the good. b. 24 units of the good. c. 8 units of the good. d. 16 units of the good. 11. When a country allows trade and becomes an exporter of a good, a. consumer surplus and producer surplus both increase. b. consumer surplus and producer surplus both decrease. c. consumer surplus increases and producer surplus decreases. d. consumer surplus decreases and producer surplus increases. Page 3 of 14