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HBX Core Economics for Managers test with verified solutions.
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HBX Core Economics for Managers test with verified solutions.
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HBX Core:Economics for
Managers test
with verified
solutions
marginal cost - answer the increase in total
cost that arises from an extra unit of
production
When is consumer surplus + producer
surplus maximized? - answer At market
equilibrium. this is the property of efficiency-
there is no deadweight loss
deadweight loss - answer the total loss of
producer and consumer surplus from
, underproduction or overproduction. Loss in
value from trades that didn't occur.
Price ceiling effect when ceiling is lower than
market - answer Excess demand or shortage
price floor effects - answer Excess supply, eg.
Minimum wage and unemployment
Effect of tax on producer and consumer -
answer Producer- Shifts supply curve
upward/ to left
Consumer- shifts demand curve leftward
Impact on market equilibrium is same
regardless of who pays the tax. Like price
ceilings and floors, taxes decrease the total
surplus captured in a market (resulting in
deadweight loss)
Consumers bear more of tax cost when
demand curve is... - answer Steeper
(inelastic). Producers bear more of tax when
supply curve is steeper.
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