AP Micro Unit II: Review

The degree to which tax falls on a particular person or group

• Surplus
• Tax incidence
• Deadweight loss
• Elasticity

True or false: if a demand is inelastic, it is more likely to be taxed higher by the government

• True
• False

Efficiency loss is another term for...

• Deadweight loss
• Consumer surplus
• Producer surplus
• Elasticity

The maximum price a consumer is willing to pay for a product and the actual price that they do pay

• Consumer surplus
• Producer surplus
• Deadweight loss
• Allocative Efficiency

Jennifer buys a piece of costume jewelry for $33 for which she was willing to pay $42.  The minimum acceptable price to the seller, Nathan, was $30.  Jennifer experiences...

• A consumer surplus of $12 and Nathan experiences a producer surplus of $3
• A producer surplus of $9 and Nathan experiences a consumer surplus of $3
• A consumer surplus of $9 and Nathan experiences a producer surplus of $3
• A producer surplus of $9 and Nathan experiences a consumer surplus of $12

Graphically, if the supply and demand curves are linear, consumer surplus is measured as the triangle...

• under the demand curve and below the actual price
• under the demand curve and above the actual price
• above the supply curve and above the actual price
• above the supply curve and below the actual price

Allocative efficiency occurs only at that output where...

• marginal benefit exceeds marginal cost by the greatest amount
• consumer surplus exceeds producer surplus by the greatest amount
• the combined amounts of consumer surplus and producer surplus are maximized
• the areas of consumer and producer surplus are equal

When determining the consumer's purchasing choice based off of marginal utility you should first...

• Determine your own utility for that same product
• Calculate the marginal utility per dollar
• Determine the utils of each product
• Find the square root of happiness

Assume the image is showing the market for apples.  Which of the headlines could indicate the pictured shift is occurring in the market?

• Pesticides on apples linked to mouth cancer.
• The government taxes apples producers.
• An apple a day really does keep the doctor away.
• New genetic strain leads to apple trees that produce twice as many apples.

A government payment made to a business is a

• tax
• regulation
• subsidy
• resource