Chapter 7 Microeconomics Exam 3

Question 1

What is an example of an Externalitie

Answer 1

A factory pollutes a lake
This is a negative externality for swimmers
because they have no control over the factory

Question 2

Cost

Answer 2

What the seller gives up to produce a good

Question 3

What 3 things does the amount of deadweight loss depend on?

Answer 3

Price elasticity of demand
Price elasticity of supply
Amount of tax per unit

Question 4

Equality

Answer 4

Spreading prosperity uniformly

Question 5

Consumer Surplus Calculation

Answer 5

buyers willingness to pay minus the market price

Question 6

Willingness to Pay

Answer 6

Maximum amount a buyer wants to pay

Question 7

What are 2 examples of market failure

Answer 7

Market Power

Externalities

Question 8

Consumer surplus

Answer 8

Benefits consumers gain from participating in the market

Question 9

Efficiency

Answer 9

Maximizing surplus

Question 10

Welfare Economics

Answer 10

The affects of allocating resources for others well being

Question 11

Dead Weight Loss

Answer 11

Total surplus that results from tax

Question 12

Producer Surplus Calculation

Answer 12

Market price minus the cost of production

Question 13

What is the tax revenue formula?

Answer 13

Tax per unit x Quantity

Question 14

Where is the market price on the graph?

Answer 14

The equilibrium (where supply and demand meet)

Question 15

Demand is the same as

Answer 15

Marginal Benieft

Question 16

What does producer surplus measures?

Answer 16

Benefits that sellers get when participating in a market

Question 17

When price falls consumer surplus…

Answer 17

Increases

Question 18

Willingness to sell is another word for —– —-.

Answer 18

Marginal cost

Question 19

Supply is the same as

Answer 19

Marginal cost

Question 20

Willingness to Pay is another word for —- —-.

Answer 20

Marginal benieft