Question 113 pts

Which of the following will happen when a binding price floor is imposed on a market?

Group of answer choices

A smaller quantity of the good is exchanged after the price floor becomes effective.

A larger quantity of the good is demanded after the price floor becomes effective.

A smaller quantity of the good is supplied after the price floor becomes effective.

All of the choices are correct.

Flag question: Question 12

Question 123 pts

A flood in California destroys many avocados. As a result of the drought, the producer surplus in the market for avocados ____________________ (hint what will happen to the price?)

Group of answer choices

increases, and the consumer surplus in the market for guacamole increases.

increases, and the consumer surplus in the market for guacamole decreases.

decreases, and the consumer surplus in the market for guacamole increases.

decreases, and the consumer surplus in the market for guacamole decreases.

Flag question: Question 13

Question 133 pts

When a binding price ceiling is put in place

Group of answer choices

there will be a surplus in the market

the quality of the product is likely to increase

the quantity supplied will increase and the quantity demanded will decrease

the quantity supplied will decrease and the quantity demanded will increase

Flag question: Question 14

Question 143 pts

If a binding price ceiling is removed, then the price received by sellers will

Group of answer choices

increase and the quantity sold in the market will increase.

increase and the quantity sold in the market will decrease.

decrease and the quantity sold in the market will increase.

decrease and the quantity sold in the market will decrease.

Flag question: Question 15

Question 153 pts

Group of answer choices

A price floor set at $3 will be binding and will result in a shortage of 12 units.

A price floor set at $8 will be binding and will result in a shortage of 18 units.

A price floor set at $3 will be binding and will result in a surplus of 12 units.

A price floor set at $8 will be binding and will result in a surplus of 18 units.

Flag question: Question 16

Question 163 pts

The income elasticity of demand for avocados has been estimated to be 0.132. If income falls by 17 percent, what will happen to the demand for avocados?

Group of answer choices

demand will increase by 2.2%

the quantity demanded will increase by 17%

demand will decrease by 2.2%

demand will decrease by more than 17%

Flag question: Question 17

Question 173 pts

Which quantity is socially optimal?

Group of answer choices

Q1

Q2

Q3

Q4

Flag question: Question 18

Question 182 pts

To internalize the externality in this market, the government should

Group of answer choices

impose a tax on this product.

provide a subsidy for this product.

forbid production.

produce the product itself.

Flag question: Question 19

Question 198 pts

a. What is the external cost?

b. What is the external benefit?

c. Is the private market doing too much or too little in the first

graph?

d. Is the private market doing too much or too little in the second graph?

Flag question: Question 20

Question 202 pts

The difference between social cost and private cost is the

Group of answer choices

loss in profit to the seller as the result of a negative externality.

external cost of an externality.

cost reduction when the negative externality is eliminated.

cost incurred by the government when it intervenes in the market.

Flag question: Question 21

Question 212 pts

Why do corrective taxes avoid the inefficiencies of most other taxes?

Group of answer choices

Corrective taxes apply only to goods that are bad for people's health, such as cigarettes and alcohol.

Because corrective taxes take into consideration the costs to bystanders.

Corrective taxes provide incentives for the conservation of natural resources.

Corrective taxes do not affect deadweight loss.