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Flashcards in Test 2 Agricultural Economics Deck (81)
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1

t/f a price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded

False

2

t/f not all sellers benefit from a binding price floor

true

3

t/f a binding minimum wage may not help all workers, but it doesn't hurt any workers

false

4

t/f advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off

True

5

t/f a tax of $1 on buyers shifts the demand curve downward by exactly $1

True

6

t/f price controls can generate inequities

true

7

t/f if the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets then fewer airline tickets will be sold than at the market equilibrium

True

8

t/f taxes levied on sellers and taxes levied on buyers are equivalent

True

9

t/f if a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers

False

10

when a tax is placed on the sellers of energy drinks, the...

burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal

11

Suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the...

supply is more inelastic than the demand

12

price control are usually enacted when...

policymakers believe that the market price of a good or service is unfair to buyers or sellers

13

why do policymakers use taxes

to raise revenue for public purposes and to influence market outcomes

14

what happens to market price and quantity sold if a price celling is non binding

there is no effect

15

when a tax is placed on the sellers of a product, buyers pay...

more, and sellers receive less than they did before the tax

16

t/f a buyer is willing to buy a product at a price greater than or equal to his willingness to pay, but would refuse to buy a product at a price less than his willingness to pay

false

17

t/f consumer surplus can be measured as the area between the demand curve and the equilibrium price

true

18

t/f producer surplus is the cost of production minus the amount a seller is paid

false

19

t/f if producing a soccer ball costs jake $5 and he sells it for $40 his producer surplus is $45

false $35

20

t/f if the government imposes a binding price ceiling in a market, then the producer surplus in that market will increase

false

21

t/f the equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market

true

22

t/f ticket scalping can increase total surplus in the market for tickets to sporting events

true

23

t/f suppose you sell a kayak for $600, but you were willing to sell it for $450. the buyer was willing to pay $650. The total surplus is $200

true

24

t/f unless markets are perfectly competitive, they may fail to maximize the total benefits to buyers and sellers

true

25

market power and externalities are examples of market failures

true

26

what is welfare economics

the study of how the allocation of resources affects economic well-being

27

suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in a mind and maximum amount that he will bid. this maximum is called...

willingness to pay

28

what is consumer surplus

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays

29

on a graph what does the area below a demand curve and above the price measure

consumer surplus

30

a seller is willing to sell a product only if the seller receives a price that is at least as great as the...

sellers cost of production