11. The government wants to increase taxes on selected products to increase tax revenues. This higher tax would only increase tax revenues if the price elasticity of demand for the products are:

A. Unit elastic

B. Elastic

C. Inelastic

D. Perfectly elastic

12. The benefit of an increase in a government subsidy to milk producers will go mainly to consumers in the form of a lower price when:

A. Demand for milk is price elastic

B. Supply of milk is perfectly inelastic

C. Demand for milk is price inelastic

D. Demand for milk is income elastic

13. Which of the following is True about the effect of a government-imposed price floor when the price floor being set is above the market equilibrium price?

A. Consumer surplus will increase

B. All firms will gain

C. There will be a product shortage

D. Consumer surplus will decrease

14. A consumer is making purchases of products A and B such that MUa / Pa=1.5 and MUb / Pb=3. The utility-maximizing rule suggests that this consumer should:

A. buy more of product A and less of product B.

B. buy more of product B and less of product A.

C. not make any change in the purchase decision.

D. None of the above

15. Information about a firm's production costs at a particular output level are given below:

Total variable costs $ 7200

Average fixed costs $ 20

Average total costs $ 100

What is the firm's output?

A. 60 units

B. 72 units

C. 90 units

D. It cannot be computed based on the information provided

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