quiz three

on a graph, consumer surplus is represented by the area

below the demand curve and above the price.

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

$8

Suppose there is an early freeze in California that reduces the size of the lemon crop. As the price of lemons rises, what happens to consumer surplus in the market for lemons?

consumer surplus decreases.

All else equal, what happens to consumer surplus if the price of a good increases?

consumer surplus decreases

Producer surplus is

the amount a seller is paid minus the cost of production

a tax on a good

raises the price that buyers pay and lowers the price that sellers receive.

the decrease in total surplus that results from a market distortion, such as a tax, is called a

deadweight loss

the deadweight loss from a tax per unit of good will be smallest in a market with

inelastic supply and inelastic demand

if the size of a tax increases , tax revenue

may increase, decrease, or remain the same

part of the administrative burden of a tax is

the hassle and expense of filling out tax forms that is imposed on taxpayers who comply with the tax

which tax system requires higher-income taxpayers to have lower tax rates, even though they pay a larger amount of tax when compared to lower-income taxpayers?

a regressive tax