1. Which of the following statement(s) is correct?

(x) Deadweight loss measures the loss in a market to buyers and sellers that is not offset by an increase in government revenue.

(y) The imposition of a tax on a good raises the price that buyers effectively pay, but lowers the price that sellers effectively keep.

(z) When the government places a tax on a good, the loss of consumer surplus and producer surplus to buyers and sellers is more than the tax revenue raised from the imposition of the tax.

A.

(x), (y) and (z)

B.

(x) and (y) only

C.

(x) and (z) only

D.

(y) and (z) only

E.

(z) only

2. Which of the following statements is (are) correct?

(x) Producer surplus measures the amount sellers receive above the minimum they would accept.

(y) Suppose that the market equilibrium price for widgets is $30. If the cost of production for a particular firm exceeds $24, but is less than $28, then the firm will experience a producer surplus.

(z) Out-of-pocket expenses plus the value of the seller's own resources used in production equals the cost of production for the seller.

A.

(x), (y) and (z)

B.

(x) and (y) only

C.

(x) and (z) only

D.

(y) and (z) only

E.

(z) only

3. George is willing to pay $22 and Martha is willing to pay $25 for a steak dinner at a fine restaurant. When the price of the steak dinner increases from $20 to $22,

Select one:

A.

George experiences a decrease in consumer surplus, but Martha does not.

B.

Martha experiences a decrease in consumer surplus, but George does not.

C.

both George and Martha experience a decrease in consumer surplus.

D.

neither Martha nor George experiences a decrease in consumer surplus.

E.

Either C or D