3. Excise Taxes; Competition Flashcards
Which of the following does not shift the supply curve for marble rye?
a. A change in the price of marble rye.
b. A change in the price of inputs.
c. A change in technology.
d. A change in the number of suppliers.
a. A change in the price of marble rye.
Explanation:
a. A change in the price of marble rye: Changes in the price of the good itself (marble rye, in this case) do not shift the supply curve. Movement along the supply curve occurs in response to changes in the quantity supplied due to a change in price, but the supply curve itself remains unchanged.
b. A change in the price of inputs: An increase in the price of inputs, such as flour or labor, can increase production costs, potentially reducing the supply of marble rye. This would shift the supply curve to the left.
c. A change in technology: Technological advancements that make the production process more efficient can lower costs and increase the supply of marble rye. This would shift the supply curve to the right.
d. A change in the number of suppliers: An increase in the number of suppliers can lead to an increase in the overall quantity supplied, shifting the supply curve to the right.
So, option (a) is the correct answer because changes in the price of the good itself do not shift the supply curve; they cause movement along the existing supply curve.
Which choice below provides the best definition of consumer welfare?
a. The redistribution of wealth following the receipt of taxes.
b. The total societal gain from the sale of goods and services.
c. The ability of a consumer to be better off following each purchase they make.
d. The sum of the differences between each individual’s willingnessto-
pay for a good or service they purchase and the price they pay for that good or service.
d. The sum of the differences between each individual’s willingnessto-
pay for a good or service they purchase and the price they pay
for that good or service.
Explanation:
Consumer welfare in economics is often measured using concepts such as consumer surplus. Consumer surplus is the difference between what a consumer is willing to pay for a good or service (their maximum willingness to pay) and what they actually pay. Mathematically, consumer surplus can be represented as the area between the demand curve and the market price.
