Rent seeking in the form of lobbying for an increase in import tariffs by domestic producers A) increases consumer surplus. B) increases total welfare. C) increases the deadweight loss. D) None of the above. ANSWER C
Date: September 9th, 2020
When firms price discriminate they turn ________ into ________. A) producer surplus; revenue B) consumer surplus; profit C) total cost; profit D) producer surplus; consumer surplus ANSWER B
Date: September 9th, 2020
A per unit subsidy increases both consumer and producer surplus, but results in a deadweight loss. Indicate whether the statement is true or false ANSWER True . The government expenditure more than offset the gains to consumer and producer surplus resulting in a deadweight loss.
Date: September 9th, 2020
Suppose a consumer advocacy group has convinced legislators that vitamin pills should be free to consumers. Such a policy would enhance the health of the citizenry, they argue. Assuming a downward-sloping linear demand curve and a horizontal long-run supply curve, determine the resulting output and social welfare from such a policy. Compare this result to […]
Date: September 9th, 2020
Policies that restrict supply could generate an increase in social welfare because the increase in producer surplus could exceed the decrease in consumer surplus. Indicate whether the statement is true or false ANSWER False. One impact of a supply restriction is an exchange from consumers to producers. The net effect on social welfare is […]
Date: September 9th, 2020
The services of real estate brokers are provided in a competitive market. If the state Board of Realtors enacts several requirements that limit the number of real estate brokers, then social welfare will most likely A) not change, but there will be a transfer from consumer to producer. B) not change, but there will be […]
Date: September 9th, 2020
Suppose an industry trade group has convinced legislators that a price floor should be used so that producer surplus is maximized in the market for milk. The group argues that such a policy would save the “family farm.” Assuming a downward-sloping linear demand curve and a horizontal long-run supply curve, determine the resulting price, output […]
Date: September 9th, 2020
If a city decides to restrict the number of pizza parlors, A) the price of pizza will increase. B) pizza parlors will make higher profits. C) total welfare will decrease. D) All of the above. ANSWER D
Date: September 9th, 2020
Deadweight loss occurs when A) producer surplus is greater than consumer surplus. B) the maximum level of total welfare is not achieved. C) consumer surplus is reduced. D) an inferior good is consumed. ANSWER B
Date: September 9th, 2020
Economists claim that measuring society’s welfare as CS + PS A) is inappropriate since ultimately everyone is a consumer. B) is valid only when the same person could be either a consumer or a producer. C) treats the gains to consumers and producers equally. D) is not commonly accepted. ANSWER C
Date: September 9th, 2020
