econ 211 2nd sample exam mistakes

producer surplus is ALWAYS a ____ ____ for sellers in competitive market

negative number

DWL increases as tax increases, and DWL increases

faster than tax

a cut in tax rate at the right side of the laffer curve

decreases tax revenue and decreases DWL

for private goods,

prices guide buyers and sellers, leading to efficient allocation of resources

when a country imports, consumer surplus

increases

producer surplus=

price received-cost of production

after tax is established, DWL will be

greater in 5th year because demand and supply will be less elastic in 1st year than in 5th year

negative externality means producing

greater than efficient levels

positive externality means producing

less than efficient levels

corrective tax moves

allocation of resources closer to social optimum

“tragedy of commons” occur because

social and private incentives differ

the more inelastic, the ____ tax incidence

larger

excludability

people can be prevented from using the good