ECON 303 In which case would producers (sellers)

1.In which case would producers (sellers) pay most of the tax?

A. ?d=0 and ?s=2

B. ?d=0.025 and ?s=3.5

C. ?d=-1 and ?s=1

D. ?d=-1 and ?s=0

E. There is not enough information since economic incidence depends on the legal code.

2.

In a competitive market, the demand is given by Q^d=40-6P and the supply is Q^s=4P. A price ceiling of $1.5 will result in

A. A shortage of 18 units.

B. A shortage of 25 units.

C. A surplus of 25 units.

D. A surplus of 12 units.

E. Neither a shortage nor a surplus, since this price is the free market equilibrium price

3.

Assume that the market demand curve for mangoes is given by the equation:

Q^d = 80,000 ? 20,000p,

while the short-run supply curve of these mangoes is given by the equation:

Q^s = 20,000.

Assume that the government imposes a tax of $0.25 per unit on the purchase of mangoes. Which of the following statements is false?

A. This tax generates no deadweight loss.

B. The price received by the producer (seller) after the tax is ps=$2.75.

C. The price paid by the consumer (buyer) after the tax is pb=$3.

D. The government revenue is equal to $5,000.

E. None of the above.

4.

You are the manager of a price-taking firm that sells its product in a competitive market at a price of $50 per unit. You have the following information regarding costs in the firm: C(q)=10+5q². What are the profits for your firm?

A. $250

B. $135

C. $5

D. $115

E. None of the above.

5.

Consider a perfectly competitive industry, where the current equilibrium price is p*=16 and the current equilibrium market output is Q*=600. Quantity is measured in tons. If each firm has a marginal cost of 4q and an average cost of 2q+5/q. How many firms are in this market? Is this a short-run or a long-run equilibrium?

A. 100 firms and it is a short-run equilibrium.

B. 200 and it is a short-run equilibrium.

C. 150 firms and it is a short-run equilibrium.

D. 150 firms and it is a long-run equilibrium.

E. none of the above

6.

A sales tax of $.50 per unit of output is placed on a firm whose current free market equilibrium price is $3 and current equilibrium quantity is 1,000 units. If you know that ?^d=?1 and ?^s=0, then what are the equilibrium prices (price for the buyer and price for the seller) and equilibrium quantity after the tax?

A. pb = 3.25, ps = 2.75 and QT = unknown but less than 1,000

B. pb = 3, ps = 2.50 and QT = unknown but less than 1,000

C. pb = 3.5, ps = 3 and QT = 1,000

D. pb = 3, ps = 2.50 and QT = 1,000

E. Not enough information to determine prices

7.Which is a consequence of a price ceiling (i.e., a maximum price) in a competitive market?

A. producer surplus is lower than the surplus they would have in a free market.

B. producer surplus is higher than the surplus they would have in a free market.

C. consumer surplus is higher than the surplus they would have in a free market.

D. consumer surplus is lower than the surplus they would have in a free market.

E. none of the above.

8.

The widget market is a competitive industry. Each firm has long-run economic costs equal to

C_LR(q)=36+q². The long-run equilibrium price in this industry will be

A. 6
B. 12
C. 36
D. It cannot be calculated with the information given.
E. None of the above

9.

In a competitive market, the market demand is Q^d=60?6P and the market supply is Q^s = 4P. What is the black-market price under a price ceiling of $3?

A. $6

B. $7

C. $8

D. $9

E. None of the above.

10.

You are the manager of a firm that sells its product in a competitive market. You have the following information regarding costs in the firm: C(q)=64+4q². What is the level of output compatible with zero economic profits?

A. 4

B. 5

C. 10

D. 16

E. Not enough information since we are not given a price.