micro economia midterm 2😋

consumer surplus in a market for a product would be equal to _______ if the market price was zero.

The area under the demand curve

deadweight loss

is the difference between the total surplus occurring in a market and the maximum total surplus achievable.

If price is increased by law from a market equilibrium value of $5 to a higher value of $6:

consumer surplus will decrease and there will be some lost surplus.

What is a market failure?

It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost.

If, in a competitive market, marginal benefit is greater than marginal cost

the quantity sold is less than the equilibrium quantity.

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

consumer surplus

A per-unit tax in a competitive market will result in a deadweight loss unless the tax causes no change in:

equilibrium quantity sold.

Consumers may benefit more than sellers from a subsidy to sellers if:

the demand curve is relatively less elastic than the supply curve.

A price floor will create the largest surplus (quantity supplied greater than quantity demanded) when:

both supply and demand are elastic

The government is deciding where to put a $1 tax-either in a market with elastic supply and demand curves, or a market with inelastic supply and demand curves. If their aim is to raise the most revenue with the smallest deadweight loss, where should the tax be placed?

In the market with inelastic supply and demand curves

Taxes:

create a wedge between the price consumers pay and the price sellers receive.

If elasticity of demand is -0.7, elasticity of supply is 0.7, and a 5 percent sales tax is levied on the good:

consumers pay 50 percent of the tax.

The difference in the price the buyer pays and the price the sellers keep in the presence of a tax is called:

a tax wedge

A price ceiling that is set below the equilibrium price will cause:

producer surplus to fall

If the demand curve is less elastic than the supply curve, then

the buyers will bear a greater tax incidence

If elasticity of demand is 1 and elasticity of supply is 0, what percentage of a 10 percent tax will be borne by consumers?

0 percent.