Question

Suppose we know that the price elasticity of demand for sandals is -1.2.  A shoe store normally sells 100 pairs of sandals each month.  If it decides to raise the price of its sandals by 10%, how many sandals would it then sell per month?

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Question 21 pts

Suppose we know that the price elasticity of demand for sandals is -1.2. If a shoe store decides to reduce the price of its sandals by 10%, will its revenue increase, decrease, or stay the same?

Group of answer choices

decrease

There is not enough information given to answer the question.

increase

stay the same

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Question 32 pts

Suppose we know that the price elasticity of demand for sandals is -1.2.  A shoe store normally sells 100 pairs of sandals each month for a price of $20 per pair.  If it decides to reduce the price of its sandals by 10%, by how many dollars will the store’s revenue change?

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Question 41 pts

The estimated price elasticity of demand for cigarettes is -0.4 in high-income countries and -0.8 in lower-income countries. If a country’s government raises taxes on cigarettes, the price to consumers goes up. The extra revenue collected from the higher price goes to the government.

Would imposing a new tax on cigarettes stop more people from smoking in a high or lower-income country?

Group of answer choices

The tax would be very effective at reducing smoking in both countries, but it would be more effective in a higher-income country.

The tax would not reduce smoking in either country.

There is not enough information available to answer the question.

The tax would not be very effective at reducing smoking in either country, but it would be more effective in a lower-income country.

The tax would be very effective at reducing smoking in both countries, but it would be more effective in a lower-income country.

The tax would not be very effective at reducing smoking in either country, but it would be more effective in a higher-income country.

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Question 51 pts

The estimated price elasticity of demand for cigarettes is -0.4 in high-income countries and -0.8 in lower-income countries. If a country’s government raises taxes on cigarettes, the price to consumers goes up. The extra revenue collected from the higher price goes to the government.

Would imposing a new tax on cigarettes be a more effective way of raising revenue in a high or low income country?

Group of answer choices

A new tax on cigarettes would be an effective way to raise revenues in both countries, but the ability to raise revenues would be greater in higher-income countries.

A new tax on cigarettes would be an effective way to raise revenues in both countries, but the ability to raise revenues would be greater in lower-income countries.

There is not enough information available to answer the question.

The tax would not raise revenues in either country.

A new tax on cigarettes would not be very effective way to raise revenues in either country, but the ability to raise revenues would be greater in lower-income countries.

A new tax on cigarettes would not be very effective way to raise revenues in either country, but the ability to raise revenues would be greater in higher-income countries.

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Question 61 pts

Suppose the maximum willingness to pay for a new iPhone by different consumers in a market is given in the table below. If the price of iPhones is $440, how many iPhones will be sold?

ConsumerMaximum Willingness to Pay
#1$550
#2$530
#3$490
#4$440
#5$420
#6$370
#7$350
#8$310

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Question 72 pts

Suppose the maximum willingness to pay for a new iPhone by different consumers in a market is given in the table below.   If the price of iPhones is $440, what is the total consumer surplus in the market?

ConsumerMaximum Willingness to Pay
#1$550
#2$530
#3$490
#4$440
#5$420
#6$370
#7$350
#8$310

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Question 81 pts

Suppose the maximum willingness to pay for a new iPhone by different consumers in a market is given in the table below.  

Suppose the price of iPhones decreases to $390. What is the consumer surplus at the new equilibrium quantity?

ConsumerMaximum Willingness to Pay
#1$550
#2$530
#3$490
#4$440
#5$420
#6$370
#7$350
#8$310

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Question 91 pts

Suppose that the market equilibrium price for a basic medical check-up is $50, in a market in which there is no health insurance. To encourage more people to get a check-up, the local government mandates that the price of a check-up cannot be more than $40.

Is this a price floor or a price ceiling?

Group of answer choices

This example describes a price floor

This example describes a price ceiling

There is not enough information given to answer the question.

This example describes neither a price floor nor a price ceiling, since it is set below the equilibrium price.

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Question 101 pts

Suppose that the market equilibrium price for a basic medical check-up is $50, in a market in which there is no health insurance. To encourage more people to get a check-up, the local government mandates that the price of a check-up cannot be more than $40.

What happens to the number of check-ups in this market, relative to the market equilibrium? 

Group of answer choices

The quantity of check-ups would initially increase, then decrease over time.

The quantity of check-ups would remain unchanged.

The quantity of check-ups would decrease.

There is not enough information given to answer the question.

The quantity of check-ups would increase.

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Question 112 pts

Suppose that the market equilibrium price for a basic medical check-up is $50, in a market in which there is no health insurance. To encourage more people to get a check-up, the local government mandates that the price of a check-up cannot be more than $40.

What happens to consumer surplus and producer surplus in this market?

Group of answer choices

Consumer surplus would definitely increase. Producer surplus might increase or decrease.

Consumer surplus would definitely decrease. Producer surplus might increase or decrease.

Consumer surplus would definitely increase. Producer surplus would definitely decrease.

Consumer surplus would definitely decrease. Producer surplus would definitely increase.

Consumer surplus might increase or decrease. Producer surplus would definitely increase.

Consumer surplus might increase or decrease. Producer surplus would definitely decrease.

Consumer surplus would definitely decrease. Producer surplus would definitely decrease.

Consumer surplus would definitely increase. Producer surplus would definitely increase.

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Question 122 pts

Suppose that the market equilibrium price for a basic medical check-up is $50, in a market in which there is no health insurance. To encourage more people to get a check-up, the local government mandates that the price of a check-up cannot be more than $40.

What happened to social welfare?

Group of answer choices

Social welfare decreased.

There is not enough information given to answer the question.

Social welfare may have increased or decreased.

Social welfare increased.

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Question 132 pts

In the graph above illustrating the impact of an excise tax, total tax revenues are equal to…

Group of answer choices

C + F

B + C + E + F + H + I

B + C + D + E + F + G

B + E

B + C + E + F

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Question 142 pts

In the graph above, the reduction in consumer surplus as a result of the excise tax is equal to…

Group of answer choices

B + C + E + F

B + E + H

H

0

B + E

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Question 152 pts

26. In the graph above, the excise tax creates a deadweight loss equal to…

Group of answer choices

A + B + C + D + E + F + G

0

B + C + E + F + H + I

A-J

H + I

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Question 162 pts

In the graph above, the reduction in producer surplus as a result of the excise tax is equal to…

Group of answer choices

C + F + I

C + D + F + G + I

I

0

C + F

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