Market Efficiency and the Policies That Reduce It.

The degree to which tax falls on a particular person or group is known as:

• 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

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

Reductions of combined consumer and producer surplus

• Deadweight loss
• Elasticity
• Tax incidence
• Surplus

Efficiency losses ____________________

• are not possible is suppliers are willing to produce and sell a product
• can only result from underproduction
• can only result from overproduction
• none of the above

If there is a tax of $60 and the consumer burden is $10 what is the burden on the producers?

• $50
• $60
• $10
• There is not enough information

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

If you pay a price exactly equal to your willingness to pay, then

• your consumer surplus is $0

• your willingness to pay is less than your consumer surplus

• your consumer surplus is negative

• you place little value on the good

When the price is P_1, consumer surplus is

• A

• A + B

• A + B + C

• A + B + D

Suppose that the demand for soft drinks is price elastic and the supply is price inelastic. If the government imposes a sales tax on soft drinks, which of the following will occur in the short run? 

• The tax burden will fall equally on producers & consumers
• The tax burden will fall more on producers
• The tax burden will fall more on consumers
• The government will collect $0 in tax revenue