If demand for a good is perfectly elastic, how will the tax incidence be divided?

The producer will pay all of the tax

When the government collects an excise tax from the seller of a good,

The supply curve will shift to the left

Income elasticity of demand tells us

Whether goods are normal or inferior

If the price of chocolate goes up, we know that

the quantity demanded for chocolate will go down

If equilibrium quantity in a market has gone up and price is undetermined, then

demand and supply have both gone up

If demand is more inelastic than supply, how will tax incidence of an excise tax be divided?

The consumer will pay more than the supplier

If the government imposes a price floor on a good,

to be effective it must be above equilibrium

Which of the following is NOT a determinant of supply?

change in tastes and preferences

If the government imposes an effective price ceiling,

there will be a shortage of the good

If you eat both meat and potatoes, and if the price of meat goes up and you buy less potatoes,

then the two goods are complements

Rent controls result in

cheaper apartments for some renters

How the tax incidence from an excise tax is shared

depends on the relative elasticities of supply and demand

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AP Micro Unit 2 Review (Ch 3, 4, 5, 6)

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AP Micro Unit 2 Review Krugman Textbook

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Questions 26

Answers

1
If demand for a good is perfectly elastic, how will the tax incidence be divided?
The tax will be evenly divided
The producer will pay all of the tax
The consumer will pay all of the tax
You can't tell from this information
2
When the government collects an excise tax from the seller of a good,
Market price will always rise by the full amount of the tax
The seller will sell more of the good because price rises
The supply curve will shift to the right
The supply curve will shift to the left
3
Which of these would lower the equilibrium price of tea, if coffee and tea are subsitutes?
increase in incomes if tea is a normal good
increase in price of coffee
decrease in price of coffee
fungus wipes out tea crop
4
If you raise the price of pizza, and total revenue falls, that tells you
Demand is inelastic
Demand is elastic
Demand is unit-elastic
You can't tell from this information
5
If the income elasticity of demand is positive, then
The good will only be available to those with high incomes
The good is a normal good
You can't tell from this information
The good is an inferior good
6
Income elasticity of demand tells us
Whether goods are elastic or inelastic
Whether goods are normal or inferior
Whether goods are complements or substitutes
Whether income goes up or down with price changes
7
At the market clearing price
demand is greater than supply
supply is greater than demand
there is a shortage of the good
supply is equal to demand
8
If the price of chocolate goes up, we know that
the demand for chocolate will go up
the quantity demanded for chocolate will go up
the quantity demanded for chocolate will go down
the demand for chocolate will go down
9
If price elasticity of demand is greater than 1, then we know that
Demand is inelastic
Quantity Effect > Price Effect
Price Effect = Quantity Effect
Price Effect > Quantity Effect
10
A good being sold with inefficiently high quality would be caused by
price floor
quota limit
excise tax
price ceiling
11
If equilibrium quantity in a market has gone up and price is undetermined, then
supply has gone up and demand has gone down
demand and supply have both gone up
demand and supply have both gone down
supply has gone down and demand has gone up
12
If the price of a good goes down, and demand is price elastic, then
Total revenue should decrease
You can't tell from this information
Total revenue should increase
Total revenue should not change
13
If demand is more inelastic than supply, how will tax incidence of an excise tax be divided?
The tax will be split evenly
You can't tell from this information
The consumer will pay more than the supplier
The supplier will pay more than the consumer
14
If the government imposes a price floor on a good,
both buyers and sellers will benefit
to be effective it must be above equilibrium
a shortage of the good is created
to be effective it must be below equilibrium
15
Which of the following is NOT a determinant of supply?
change in prices of other goods
change in cost of an input
change in tastes and preferences
change in expectations
16
If the government imposes an effective price ceiling,
there will be a surplus of the good
there will be a shortage of the good
both buyers and sellers will benefit
the market will clear
17
If you eat both meat and potatoes, and if the price of meat goes up and you buy less potatoes,
then the two goods are substitutes
then the two goods are complements
then the two goods are not related
then the two goods are inferior
18
Rent controls result in
higher-quality apartments
cheaper apartments for all renters
a surplus of apartments
cheaper apartments for some renters
19
One of the main determinants of price elasticity of supply is
Time
Whether the good takes up a large portion of your income
Whether or not there are close substitutes
Whether the good is a luxury or not
20
If cross-price elasticity of demand is negative, then the two goods in question are
Complements
Unavailable
Unrelated
Substitutes
21
If equilibrium quantity and price have both gone up, then
supply must have risen
demand must have risen
supply must have gone down
demand must have gone down
22
If people eat peanut butter and jelly together, then cross price elasticity of demand
is negative
is infinite
is positive
is equal to 1
23
If the price of a good goes up, and the demand is price inelastic, then
Total revenue should decrease
You can't tell from this information
Total revenue should increase
Total revenue should stay the same
24
How the tax incidence from an excise tax is shared
is always higher for the seller than for the buyer
is always shared equally between buyer and seller
depends on the relative elasticities of supply and demand
is always higher for the buyer than for the seller
25
Insulin for diabetics is the closest example we have of a good that is
Perfectly price inelastic
Relatively price inelastic
Perfectly price elastic
Relatively price elastic
26
When the government imposes a quantity limit to the left of equilibrium,
consumer surplus will rise
consumer surplus will fall
there will be no effect on the market
producer surplus will stay the same

AP Micro Unit 2 Review (Ch 3, 4, 5, 6) Flashcards | StudBud