Question 1

Taxes may cause deadweight losses because:

Accepted Answer

A) they transfer purchasing power from buyers to the government. 
B) they lower the surplus in the market. 
C) they increase consumer surplus at the expense of producer surplus. 
D) they transfer purchasing power from sellers to the government. 
A) they transfer purchasing power from buyers to the government. 
B) they lower the surplus in the market. 
C) they increase consumer surplus at the expense of producer surplus. 
D) they transfer purchasing power from sellers to the government.

Question 2

Suppose that the equilibrium price of a gallon of gas is $1.20 per gallon.The government decides to place a maximum price on gasoline and will not allow sellers to charge more than $1.40 per gallon.Draw this situation using a graph.Make sure that you show the original equilibrium and the effect of the maximum price on the market.What will happen in this market? What will happen to total surplus?

Accepted Answer

There will be no effect of this price ce

Question 3

-Figure 6.5 shows the market for bananas.Shade in the area of consumer surplus.Use the information provided to calculate consumer surplus.

Accepted Answer

Consumer surplus is

Question 4

The licensing of taxis through the use of medallions decreases the price of taxi service.

Accepted Answer

A) True 
 B)False

Question 5

Rent controls are always efficient in helping the poor and negatively impacting the wealthy.

Accepted Answer

A) True 
 B)False

Question 6

Consider a market with a downward sloping demand curve and an upward sloping supply curve.A $50 tax levied on the producer of the good will cause the market price to:

Accepted Answer

A) increase by $50. 
B) decrease by $50. 
C) increase by less than $50. 
D) increase by more than $50. 
A) increase by $50. 
B) decrease by $50. 
C) increase by less than $50. 
D) increase by more than $50.

Question 7

At the market equilibrium,resources are allocated efficiently because:

Accepted Answer

A) the marginal cost of producing another unit is equal to zero. 
B) the price buyers pay accurately reflects the marginal cost of the resources used to produce the good. 
C) the price buyers pay is greater than sellers' willingness to sell. 
D) all of the above 
A) the marginal cost of producing another unit is equal to zero. 
B) the price buyers pay accurately reflects the marginal cost of the resources used to produce the good. 
C) the price buyers pay is greater than sellers' willingness to sell. 
D) all of the above

Question 8

Consumer surplus is equal to:

Accepted Answer

A) the area under the demand curve. 
B) the area under the demand curve above the good's price. 
C) the area under the demand curve below the good's price. 
D) the good's price times the quantity purchased. 
A) the area under the demand curve. 
B) the area under the demand curve above the good's price. 
C) the area under the demand curve below the good's price. 
D) the good's price times the quantity purchased.

Question 9

Table 6.1
-Table 6.1 indicates the demand and supply schedules for oil in the United States.Suppose also that the world price of oil is $75 per barrel and that the United States can buy all the oil it wants at that price.Which of the following statements is TRUE about the impact of a law banning all oil imports?

Accepted Answer

A) Consumers would pay a lower price for oil than they would under free trade. 
B) Domestic producers benefit from the law because they can charge a higher price and sell more. 
C) Total surplus in the oil market rises. 
D) Consumer surplus increases. 
A) Consumers would pay a lower price for oil than they would under free trade. 
B) Domestic producers benefit from the law because they can charge a higher price and sell more. 
C) Total surplus in the oil market rises. 
D) Consumer surplus increases.

Question 10

Recall the application about price controls and the candy bars.During World War II,the U.S.government imposed price controls to set maximum prices on all different products,including candy bars.How did the candy bar producers respond it to maximum prices?

Accepted Answer

A) Producers increase the supply of candy bars. 
B) Producers shrank the weight of the candy bars. 
C) A lot of the producers dropped out of candy bar market. 
D) none of the above 
A) Producers increase the supply of candy bars. 
B) Producers shrank the weight of the candy bars. 
C) A lot of the producers dropped out of candy bar market. 
D) none of the above

Question 11

The deadweight loss from a taxation is:

Accepted Answer

A) the difference between total burden of tax and the amount of revenue collected by the government. 
B) affected by the size of the tax imposed by the government. 
C) extra money consumers must pay for the tax imposed by the government. 
D) B and C are correct 
A) the difference between total burden of tax and the amount of revenue collected by the government. 
B) affected by the size of the tax imposed by the government. 
C) extra money consumers must pay for the tax imposed by the government. 
D) B and C are correct

Question 12

If the equilibrium price of gasoline is $2.75 per gallon and the government will not allow oil companies to charge more than $2.00 per gallon of gasoline,which of the following will happen?

Accepted Answer

A) Demand must eventually decrease so that the market will come into equilibrium at a price of $2.00. 
B) Supply must eventually increase so that the market will come into equilibrium at a price of $2.00. 
C) Total surplus in the market will be lower than it would be if the price was $2.75 per gallon. 
D) The market will be in equilibrium at a price of $2.00. 
A) Demand must eventually decrease so that the market will come into equilibrium at a price of $2.00. 
B) Supply must eventually increase so that the market will come into equilibrium at a price of $2.00. 
C) Total surplus in the market will be lower than it would be if the price was $2.75 per gallon. 
D) The market will be in equilibrium at a price of $2.00.

Question 13

-Refer to Figure 6.11.If a tax is imposed on the market in Figure 6.11,________ will bear a smaller share of the tax.

Accepted Answer

A) the consumers 
B) the producers 
C) the government 
D) no one 
A) the consumers 
B) the producers 
C) the government 
D) no one

Question 14

Mary has an old house built in 1950 that she would be willing to sell for $100,000.If someone offers to buy her house for $110,000,Mary's producer surplus would be equal to:

Accepted Answer

A) $5,000. 
B) $10,000. 
C) $55,000. 
D) $100,000. 
A) $5,000. 
B) $10,000. 
C) $55,000. 
D) $100,000.

Question 15

Recall the application about the cost of protecting a luggage job,luggage and handbags are subject to import quotas and tariffs that decrease the supply of luggage and increase the price to consumers by 13 percent.These policies protect 226 jobs in the industry,which of the following statements is true about the impact of protecting these jobs?

Accepted Answer

A) Consumer surplus increases. 
B) Consumer surplus decreases. 
C) Producer surplus decreases. 
D) none of the above 
A) Consumer surplus increases. 
B) Consumer surplus decreases. 
C) Producer surplus decreases. 
D) none of the above

Question 16

What is consumer surplus?

Accepted Answer

Consumer surplus is the differ

Question 17

-Figure 6.9 shows the market for tobacco.If the government passes a law banning tobacco imports,what happens to the total surplus of the market? Who wins and who loses as a result of this policy?

Accepted Answer

If the government passes a law banning t

Question 18

If the market price of salmon is $8.99 per pound but the government will not allow salmon farmers to charge more than $4.99 per pound of salmon,which of the following will happen?

Accepted Answer

A) The supply curve for salmon will shift to the left. 
B) There will be an excess demand for salmon. 
C) There will be an excess supply of salmon. 
D) The market will be in equilibrium at a price of $4.99. 
A) The supply curve for salmon will shift to the left. 
B) There will be an excess demand for salmon. 
C) There will be an excess supply of salmon. 
D) The market will be in equilibrium at a price of $4.99.

Question 19

-Refer to Figure 6.6.Suppose that the equilibrium quantity is 100.Consumer surplus is equal to:

Accepted Answer

A) $20,000. 
B) $10,000. 
C) $200. 
D) $30,000. 
A) $20,000. 
B) $10,000. 
C) $200. 
D) $30,000.

Question 20

The proportion of the tax burden that falls on consumers depends on:

Accepted Answer

A) the price elasticity of demand. 
B) the size of the tax. 
C) the price elasticity of supply. 
D) both A and C 
A) the price elasticity of demand. 
B) the size of the tax. 
C) the price elasticity of supply. 
D) both A and C

Taxes may cause deadweight losses because:

-Figure 6.5 shows the market for bananas.Shade in the area of consumer surplus.Use the information provided to calculate consumer surplus.

The licensing of taxis through the use of medallions decreases the price of taxi service.

Rent controls are always efficient in helping the poor and negatively impacting the wealthy.

Consider a market with a downward sloping demand curve and an upward sloping supply curve.A $50 tax levied on the producer of the good will cause the market price to:

At the market equilibrium,resources are allocated efficiently because:

Consumer surplus is equal to:

Recall the application about price controls and the candy bars.During World War II,the U.S.government imposed price controls to set maximum prices on all different products,including candy bars.How did the candy bar producers respond it to maximum prices?

The deadweight loss from a taxation is:

If the equilibrium price of gasoline is $2.75 per gallon and the government will not allow oil companies to charge more than $2.00 per gallon of gasoline,which of the following will happen?

-Refer to Figure 6.11.If a tax is imposed on the market in Figure 6.11,________ will bear a smaller share of the tax.

Mary has an old house built in 1950 that she would be willing to sell for $100,000.If someone offers to buy her house for $110,000,Mary's producer surplus would be equal to:

What is consumer surplus?

-Figure 6.9 shows the market for tobacco.If the government passes a law banning tobacco imports,what happens to the total surplus of the market? Who wins and who loses as a result of this policy?

If the market price of salmon is $8.99 per pound but the government will not allow salmon farmers to charge more than $4.99 per pound of salmon,which of the following will happen?

-Refer to Figure 6.6.Suppose that the equilibrium quantity is 100.Consumer surplus is equal to:

The proportion of the tax burden that falls on consumers depends on:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 6: Market Efficiency and Government Intervention

Taxes may cause deadweight losses because:

-Figure 6.5 shows the market for bananas.Shade in the area of consumer surplus.Use the information provided to calculate consumer surplus.

The licensing of taxis through the use of medallions decreases the price of taxi service.

Rent controls are always efficient in helping the poor and negatively impacting the wealthy.

Consider a market with a downward sloping demand curve and an upward sloping supply curve.A $50 tax levied on the producer of the good will cause the market price to:

At the market equilibrium,resources are allocated efficiently because:

Consumer surplus is equal to:

Recall the application about price controls and the candy bars.During World War II,the U.S.government imposed price controls to set maximum prices on all different products,including candy bars.How did the candy bar producers respond it to maximum prices?

The deadweight loss from a taxation is:

If the equilibrium price of gasoline is $2.75 per gallon and the government will not allow oil companies to charge more than $2.00 per gallon of gasoline,which of the following will happen?

-Refer to Figure 6.11.If a tax is imposed on the market in Figure 6.11,________ will bear a smaller share of the tax.

Mary has an old house built in 1950 that she would be willing to sell for $100,000.If someone offers to buy her house for $110,000,Mary's producer surplus would be equal to:

What is consumer surplus?

-Figure 6.9 shows the market for tobacco.If the government passes a law banning tobacco imports,what happens to the total surplus of the market? Who wins and who loses as a result of this policy?

If the market price of salmon is $8.99 per pound but the government will not allow salmon farmers to charge more than $4.99 per pound of salmon,which of the following will happen?

-Refer to Figure 6.6.Suppose that the equilibrium quantity is 100.Consumer surplus is equal to:

The proportion of the tax burden that falls on consumers depends on:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters