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G-202 EXAM BUNDLE DEAL
The supply curve represents... - .....ANSWER ...✔✔
Productive Costs (willingness to produce based on the
current prices)
The demand curve represents... - .....ANSWER ...✔✔
Consumer Value (willingness to buy based on the current
price)
Rule 1 of the supply and demand graph - .....ANSWER
...✔✔ Produce and sell product that has consumer
value greater than or equal to costs (If demand is higher
than supply you produce)
Rule 2 of the supply and demand graph - .....ANSWER
...✔✔ Avoid producing and selling the product that
has consumer value less than production cost (If supply is
higher than demand do not produce)
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Consumer Surplus is... - .....ANSWER ...✔✔ the area
below demand and above price (difference between
what we are willing to pay and way we actually pay)
Producer Surplus is... - .....ANSWER ...✔✔ area above
supply but below price (difference between costs and
the selling price)
Output below Qe - .....ANSWER ...✔✔ Net benefit is
given up by society (producing too little)
Output above Qe - .....ANSWER ...✔✔ Net cost
incurred by society (producing too much)
Taxes imposed on sellers cause... - .....ANSWER ...✔✔
an inward shift of the supply curve (decreased supply)
by increasing production costs
The tax will not be... - .....ANSWER ...✔✔ Entire tax
will never be passed on to customer because nothing is
perfectly inelastic
The more inelastic demand is... - .....ANSWER ...✔✔
the more you can pass onto the customer
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Result of Taxes - .....ANSWER ...✔✔ - Government
revenue is collected
- Increased prices to buyers (consumer surplus
decreases)
- Decreased prices to sellers (producer surplus
decreases)
- Reduced quantity bought and sold
Taxes are efficiency enhancing in markets that are... -
.....ANSWER ...✔✔ over-producing
What effect do subsidies given to sellers have on the
supply curve? - .....ANSWER ...✔✔ They cause an
outward shift of the supply curve by decreasing
production costs.
Results of Subsidies - .....ANSWER ...✔✔ - Decreased
price to buyers (consumer surplus increases)
- Increased price to sellers (producer surplus increases)
- Increased quantities bought and sold
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Subsidies are efficiency enhancing in markets that are -
.....ANSWER ...✔✔ under producing
Productive regulations imposed on sellers cause -
.....ANSWER ...✔✔ an inward shift of the supply curve
(decreased supply) by forcing the seller to incur
compliance costs
Result of a productive regulation - .....ANSWER ...✔✔
- Revenue is collected by the supply chain
- Increased price to buyers (consumer surplus decreases)
- Decreased price to sellers (producer surplus decreases)
- Reduced quantity bought and sold
Productive regulations are efficiency enhancing in
markets that are - .....ANSWER ...✔✔ over producing
lobbying - .....ANSWER ...✔✔ devoting resources to
influence public policy formation in order to bring ore
income/support to your group
function of lobbyists - .....ANSWER ...✔✔ - Find
political opportunities and threats
G-202 EXAM BUNDLE DEAL
The supply curve represents... - .....ANSWER ...✔✔
Productive Costs (willingness to produce based on the
current prices)
The demand curve represents... - .....ANSWER ...✔✔
Consumer Value (willingness to buy based on the current
price)
Rule 1 of the supply and demand graph - .....ANSWER
...✔✔ Produce and sell product that has consumer
value greater than or equal to costs (If demand is higher
than supply you produce)
Rule 2 of the supply and demand graph - .....ANSWER
...✔✔ Avoid producing and selling the product that
has consumer value less than production cost (If supply is
higher than demand do not produce)
,2|Page
Consumer Surplus is... - .....ANSWER ...✔✔ the area
below demand and above price (difference between
what we are willing to pay and way we actually pay)
Producer Surplus is... - .....ANSWER ...✔✔ area above
supply but below price (difference between costs and
the selling price)
Output below Qe - .....ANSWER ...✔✔ Net benefit is
given up by society (producing too little)
Output above Qe - .....ANSWER ...✔✔ Net cost
incurred by society (producing too much)
Taxes imposed on sellers cause... - .....ANSWER ...✔✔
an inward shift of the supply curve (decreased supply)
by increasing production costs
The tax will not be... - .....ANSWER ...✔✔ Entire tax
will never be passed on to customer because nothing is
perfectly inelastic
The more inelastic demand is... - .....ANSWER ...✔✔
the more you can pass onto the customer
,3|Page
Result of Taxes - .....ANSWER ...✔✔ - Government
revenue is collected
- Increased prices to buyers (consumer surplus
decreases)
- Decreased prices to sellers (producer surplus
decreases)
- Reduced quantity bought and sold
Taxes are efficiency enhancing in markets that are... -
.....ANSWER ...✔✔ over-producing
What effect do subsidies given to sellers have on the
supply curve? - .....ANSWER ...✔✔ They cause an
outward shift of the supply curve by decreasing
production costs.
Results of Subsidies - .....ANSWER ...✔✔ - Decreased
price to buyers (consumer surplus increases)
- Increased price to sellers (producer surplus increases)
- Increased quantities bought and sold
, 4|Page
Subsidies are efficiency enhancing in markets that are -
.....ANSWER ...✔✔ under producing
Productive regulations imposed on sellers cause -
.....ANSWER ...✔✔ an inward shift of the supply curve
(decreased supply) by forcing the seller to incur
compliance costs
Result of a productive regulation - .....ANSWER ...✔✔
- Revenue is collected by the supply chain
- Increased price to buyers (consumer surplus decreases)
- Decreased price to sellers (producer surplus decreases)
- Reduced quantity bought and sold
Productive regulations are efficiency enhancing in
markets that are - .....ANSWER ...✔✔ over producing
lobbying - .....ANSWER ...✔✔ devoting resources to
influence public policy formation in order to bring ore
income/support to your group
function of lobbyists - .....ANSWER ...✔✔ - Find
political opportunities and threats
