Econ B-251 IU Exam 2 Questions With Correct Answers.

Econ B-251 IU Exam 2 Questions With
Correct Answers
when |demand |is |more |inelastic, |______________ |pay |more |of |the |tax |- |CORRECT |
ANSWER✔✔-consumers



when |demand |is |more |elastic, |______________ |pay |more |of |the |tax |- |CORRECT |ANSWER✔✔-
producers



when |demand |is |unit |elastic, |consumers |and |producers |pay |_____________ |of |the |tax |- |
CORRECT |ANSWER✔✔-the |same |amount



protectionism |- |CORRECT |ANSWER✔✔-regulations |that |burdens |foreign |producers |but |not |
domestic |producers



tariff |- |CORRECT |ANSWER✔✔-tax |on |imports



trade |quota |- |CORRECT |ANSWER✔✔-restriction |on |the |quantity |of |foreign |goods |that |can |be |
imported



tariffs |raise |______________ |for |_______________ |- |CORRECT |ANSWER✔✔-tax |revenue, |the |
government



tariffs |increase |_____________________ |and |decrease |_____________________ |- |CORRECT |
ANSWER✔✔-domestic |production, |domestic |consumption



a |restriction |on |trade |wastes |__________________ |and |creates |___________________ |from |
trade |- |CORRECT |ANSWER✔✔-resources, |lost |gains

, 3 |conditions |why |a |free |market |is |efficient |- |CORRECT |ANSWER✔✔-1) |supply |of |goods |is |
bought |by |buyers |with |the |highest |willingness |to |pay

2) |supply |of |goods |is |sold |by |the |sellers |with |the |lowest |costs

3) |between |buyers |and |sellers, |there |are |no |unexploited |gains |from |trade |or |any |wasteful |
trades



tariffs |reduce |_________ |because |the |supply |of |goods |is |no |longer |sold |by |the |sellers |with |the
|___________________________ |- |CORRECT |ANSWER✔✔-efficiency, |lowest |costs




the |more |__________ |the |market, |the |more |they |can |escape |taxes |- |CORRECT |ANSWER✔✔-
elastic



the |more |______________ |the |market, |the |more |they |are |burdened |by |taxes |- |CORRECT |
ANSWER✔✔-inelastic



the |optimal |tariff |balances |increase |in |______________ |with |increase |in |____________ |- |
CORRECT |ANSWER✔✔-deadweight |loss, |revenues



social |cost |- |CORRECT |ANSWER✔✔-private |cost |+ |external |cost



external |cost |- |CORRECT |ANSWER✔✔-a |cost |that |is |paid |not |by |consumers |or |producers, |but

| by |bystanders |to |the |transaction



when |externalities |are |significant, |- |CORRECT |ANSWER✔✔-markets |work |less



social |surplus |- |CORRECT |ANSWER✔✔-consumer |surplus |+ |producer |surplus |+ |everyone |else's |
surplus