Economics /Microeconomics: Taxes, Costs, Market Structures
Let's suppose the market is in equilibrium (quantity demanded = quantity supplied). If the government puts a $2 tax on producers, which of the following is not true?
Since the government has levied tax on the producers, the producers will pay >50% of the tax
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Definition
Let's suppose the market is in equilibrium (quantity demanded = quantity supplied). If the government puts a $2 tax on producers, which of the following is not true?
Since the government has levied tax on the producers, the producers will pay >50% of the tax
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Suppose that after the tax of $2 was levied on the producers, the consumers paid $4.25 per unit. How much tax did sellers pay per unit?
.75
If the consumers paid $4.25 and the equilibrium price prior had been $3, then they paid $1.25 of the $2 in taxes. This means producers paid ...
If the consumers paid $4.25 and the equilibrium price prior had been $3, then they paid $1.25 of the $2 in taxes. This means producers paid $.75 in taxes.
Producers paid $.75 in taxes.
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Which of the following is not true?
If the price ceiling is above the equilibrium price, it is always biding.
Suppose the government decides to place a $10 per unit tax on cigarette cartons sold. Will the price paid by consumers rise by more or less than $5?
by more
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Which of the following about taxes is not true?
Tax incidence is solely dependent on the price elasticity of demand and not the price elasticity of supply.
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| Term | Definition |
|---|---|
Let's suppose the market is in equilibrium (quantity demanded = quantity supplied). If the government puts a $2 tax on producers, which of the following is not true? | Since the government has levied tax on the producers, the producers will pay >50% of the tax |
Suppose that after the tax of $2 was levied on the producers, the consumers paid $4.25 per unit. How much tax did sellers pay per unit? | .75 |
If the consumers paid $4.25 and the equilibrium price prior had been $3, then they paid $1.25 of the $2 in taxes. This means producers paid $.75 in taxes. | Producers paid $.75 in taxes. |
Which of the following is not true? | If the price ceiling is above the equilibrium price, it is always biding. |
Suppose the government decides to place a $10 per unit tax on cigarette cartons sold. Will the price paid by consumers rise by more or less than $5? | by more |
Which of the following about taxes is not true? | Tax incidence is solely dependent on the price elasticity of demand and not the price elasticity of supply. |
Amtrak's service from Miami to Charlotte costs $125. The route usually sells about 500 seats which is only 50% of full capacity. The average fixed cost of the route is $25 per passenger. If the profit is $25,000, what is the average variable cost? | 50 |
If average total cost is $100 when Q = 1, and average variable cost is $100 when Q = 1, what is the fixed cost? | 0 |
Which of the following does not belong? | (TC+VC)Q |
Which of the following is false? | Total cost divided by output is equal to marginal cost. |
After apocalyptic times, Rick and Negan open up a smoothie shop, which is a competitive market. The marginal revenue is $4. Rick & Negan sell 50 smoothies, have an average total cost of $4 and a fixed cost of $100. What is their current total revenue? | 200 |
What is their marginal cost? (at producing 50 smoothies vs 0 smoothies) | 2 |
What is their average variable cost? (at Q = 50) | 2 |
Is the situation described above in a long-run equilibrium? | yes |
If there are 50,000 smoothies sold in the market as a whole in an long-run equilibrium, how many producers are there? | There are 1,000 producers. |
Using the information from the previous question, what are each producer's profits? | $0 |
Suppose that AMC Movies & Coca Cola are monopolies in Raleigh NC. That is, AMC Movies is the only provider of movies and Coca Cola is the only provider of Coke in our city. If AMC Movies can perfectly price discriminate and Coca Cola cannot, which of the following is true about profits? | AMC Movies's profits are larger than Coca Cola's |
Using the same information from the previous question, which of the following is not true? | Coke's market is efficient |
Under which scenario would the consumer be better off (think about consumer surplus)? Under which scenario would the monopolist be better off (think about producer surplus)? | Under a monopolist market for the buyer, under a monopolist market with perfect price discrimination for the seller. |
Which of the following most closely resembles perfect price discrimination? | Financial aid, based on income |