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Pre-test
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1

Refer to the graph below.
<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0070901651/60160/pretest71.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (9.0K)</a>
If a per unit tax, t, is paid by sellers, which of the following is true?
A)Tax revenue paid equals the tax, t, times the equilibrium quantity Q1, or areas B and D.
B)The total cost to consumers of the tax is less than the tax revenue to government.
C)Producers pay area B in tax revenue and also lose area C in producer surplus.
D)Consumers pay area D in tax revenue and lose are E in consumer surplus.
2

A per unit tax will result in a dead weight loss unless the tax causes no change in:
A)the price consumers pay.
B)the price producers keep after paying it.
C)equilibrium quantity sold.
D)either price or equilibrium.
3

Refer to the graph below.
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An effective price ceiling at Pc causes producer surplus to:
A)change from areas C + D + F to areas B + C + D.
B)change from areas A + B + E to areas A + B + C.
C)fall from areas C + D + F to area D.
D)fall from areas A + B + E to area A.
4

Refer to the graph below.
<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0070901651/60160/pretest74.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (9.0K)</a>
Assume the market is initially in equilibrium at point j in the graph, but the imposition of a per unit tax on this product shifts the supply curve up from S0 to S1. The lost consumer surplus of this tax is equal to the area:
A)cdjh.
B)deij.
C)hji.
D)khj.
5

Refer to the graph below.
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When the market is in equilibrium, consumer surplus is equal to:
A)500.
B)1000.
C)1500.
D)2000.
6

Activities designed to transfer surplus from one group to another are called:
A)government failure.
B)market failure.
C)externalities.
D)rent-seeking.
7

Refer to the graph below.
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If the government imposed a price floor of $6, producer's revenue would:
A)rise.
B)decline.
C)remain unchanged.
D)It cannot be determined.
8

Refer to the graph below.
<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0070901651/60160/pretest78.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (10.0K)</a>
Initially, the market is in equilibrium where the demand curve intersects S0. In the initial equilibrium, consumer surplus is equal to:
A)806.4.
B)1881.6.
C)1260.
D)2940.
9

If elasticity of demand is .7 and elasticity of supply is .7 and a 5% excise tax is levied on the good:
A)the tax burden on suppliers will be greater.
B)the tax burden on consumers will be greater.
C)the tax burden will be the same for both.
D)one cannot say who will bear the greater burden without knowing the tax.
10

Graphically, dead weight loss is shown by:
A)the welfare loss rectangle.
B)the welfare loss triangle.
C)the tax revenue rectangle.
D)the consumer surplus loss triangle.







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