Question 1

-Figure 6.7 shows the supply and demand curves for human kidneys.If the government set the price of a kidney at $5,000,then:

Accepted Answer

A) 50 kidneys would be purchased. 
B) 300 kidneys would be purchased. 
C) 5000 kidneys would be purchased. 
D) 0 kidneys would be purchased. 
A) 50 kidneys would be purchased. 
B) 300 kidneys would be purchased. 
C) 5000 kidneys would be purchased. 
D) 0 kidneys would be purchased.

Question 2

What is consumer surplus?

Accepted Answer

Consumer surplus is the amount

Question 3

Suppose that the market equilibrium price of TVs is $250 but manufacturers are not allowed to charge more than $200 due to a government regulation.Which of the following would be a definite result of imposing a maximum price?

Accepted Answer

A) Consumer surplus will increase. 
B) Producer surplus will decrease. 
C) Government revenue will increase. 
D) all of the above 
A) Consumer surplus will increase. 
B) Producer surplus will decrease. 
C) Government revenue will increase. 
D) all of the above

Question 4

Assuming that the supply for a product is stable,an increase in price will lead to an increase in producer surplus.

Accepted Answer

A) True 
 B)False

Question 5

A ban on imported avocados would result in:

Accepted Answer

A) an increase in total surplus because domestic production will increase. 
B) no change in total surplus because the reduction in consumer surplus will offset the increase in producer surplus. 
C) a reduction in total surplus because a deadweight loss is created. 
D) it is impossible to say what will happen to total surplus. 
A) an increase in total surplus because domestic production will increase. 
B) no change in total surplus because the reduction in consumer surplus will offset the increase in producer surplus. 
C) a reduction in total surplus because a deadweight loss is created. 
D) it is impossible to say what will happen to total surplus.

Question 6

Suppose that the equilibrium rent for a two-bedroom apartment in downtown Chicago is $900 per month.The city council decides to place a maximum price on apartment rents and will not allow landlords to charge more than $700 per month.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 excess demand of apartment

Question 7

Assume that the supply of smartphones remains constant,but the price of smartphones increases.Producer surplus:

Accepted Answer

A) will decrease. 
B) will increase. 
C) will remain constant. 
D) may increase or decrease depending on the amount of the price increase. 
A) will decrease. 
B) will increase. 
C) will remain constant. 
D) may increase or decrease depending on the amount of the price increase.

Question 8

Recall the application about the response to lower taxes in French restaurants.If the demand for restaurant meals is elastic,we could predict the tax cut will:

Accepted Answer

A) decrease the sales of restaurant meals. 
B) increase the sales of restaurant meals. 
C) benefit only sellers. 
D) none of the above 
A) decrease the sales of restaurant meals. 
B) increase the sales of restaurant meals. 
C) benefit only sellers. 
D) none of the above

Question 9

Assume that Crystal's demand for hand bags remains constant,but the price of hand bags increases.Crystal's consumer surplus:

Accepted Answer

A) decreases. 
B) increases. 
C) remains constant. 
D) may increase or decrease depending on the amount of the price decrease. 
A) decreases. 
B) increases. 
C) remains constant. 
D) may increase or decrease depending on the amount of the price decrease.

Question 10

Comment on the following statement: "Individual consumers and producers acting in their own self-interest will lead a perfectly competitive market to the efficient level of output."

Accepted Answer

The statement is true.When individuals a

Question 11

If the government sets a minimum price below the market equilibrium price.This will have no economic impact on the market.

Accepted Answer

A) True 
 B)False

Question 12

When a tax is levied on a good or service:

Accepted Answer

A) buyers are worse off,but sellers are unaffected. 
B) both buyers and sellers are worse off. 
C) both buyers and sellers are unaffected. 
D) sellers are worse off,but buyers are better off. 
A) buyers are worse off,but sellers are unaffected. 
B) both buyers and sellers are worse off. 
C) both buyers and sellers are unaffected. 
D) sellers are worse off,but buyers are better off.

Question 13

All else equal,if demand is relatively elastic and supply is relatively inelastic,a tax on a product will cause:

Accepted Answer

A) buyers to bear a larger portion of the tax burden. 
B) sellers to bear a larger portion of the tax burden. 
C) buyers and sellers to share the tax burden equally. 
D) It is impossible to tell from this information who will bear the greater tax burden. 
A) buyers to bear a larger portion of the tax burden. 
B) sellers to bear a larger portion of the tax burden. 
C) buyers and sellers to share the tax burden equally. 
D) It is impossible to tell from this information who will bear the greater tax burden.

Question 14

-Refer to Figure 6.6.If the government will not allow landlords to charge more than $400 for an apartment,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 $400. 
B) Supply must eventually increase so that the market will come into equilibrium at a price of $400. 
C) There will be an excess demand for apartments. 
D) The market will be in equilibrium at a price of $400. 
A) Demand must eventually decrease so that the market will come into equilibrium at a price of $400. 
B) Supply must eventually increase so that the market will come into equilibrium at a price of $400. 
C) There will be an excess demand for apartments. 
D) The market will be in equilibrium at a price of $400.

Question 15

Assume that the demand for insulin is relatively more inelastic than the demand for aspirin.All else equal,a tax on aspirin:

Accepted Answer

A) will lead to a larger deadweight loss than a tax on insulin. 
B) will have the same deadweight loss as a tax on insulin. 
C) will lead to a smaller change in quantity demanded than a tax on insulin. 
D) both A and C 
A) will lead to a larger deadweight loss than a tax on insulin. 
B) will have the same deadweight loss as a tax on insulin. 
C) will lead to a smaller change in quantity demanded than a tax on insulin. 
D) both A and C

Question 16

The conclusion that the level of output is efficient at the market equilibrium rests on all of the following assumptions EXCEPT that:

Accepted Answer

A) buyers and sellers are well-informed. 
B) there are no external costs or benefits. 
C) the government regulates price and output. 
D) the market is perfectly competitive. 
A) buyers and sellers are well-informed. 
B) there are no external costs or benefits. 
C) the government regulates price and output. 
D) the market is perfectly competitive.

Question 17

What determines the size of the deadweight loss of a tax?

Accepted Answer

The larger the distortion that

Question 18

If the government imposes a maximum price for milk that is above the equilibrium price:

Accepted Answer

A) this maximum price for milk will have no economic impact. 
B) quantity demanded of milk will be less than quantity supplied. 
C) demand for milk will be greater than supply. 
D) the available milk supply will have to be rationed. 
A) this maximum price for milk will have no economic impact. 
B) quantity demanded of milk will be less than quantity supplied. 
C) demand for milk will be greater than supply. 
D) the available milk supply will have to be rationed.

Question 19

-Refer to Figure 6.1.If the price of a donut is $1.25,consumer surplus is:

Accepted Answer

A) $1.75. 
B) $1.25. 
C) $ .75. 
D) $ .50. 
A) $1.75. 
B) $1.25. 
C) $ .75. 
D) $ .50.

Question 20

-Refer to Figure 6.3.If the price of one hour of tutoring is $20,then producer surplus is:

Accepted Answer

A) $40. 
B) $30. 
C) $20. 
D) $10. 
A) $40. 
B) $30. 
C) $20. 
D) $10.

-Figure 6.7 shows the supply and demand curves for human kidneys.If the government set the price of a kidney at $5,000,then:

What is consumer surplus?

Suppose that the market equilibrium price of TVs is $250 but manufacturers are not allowed to charge more than $200 due to a government regulation.Which of the following would be a definite result of imposing a maximum price?

Assuming that the supply for a product is stable,an increase in price will lead to an increase in producer surplus.

A ban on imported avocados would result in:

Assume that the supply of smartphones remains constant,but the price of smartphones increases.Producer surplus:

Recall the application about the response to lower taxes in French restaurants.If the demand for restaurant meals is elastic,we could predict the tax cut will:

Assume that Crystal's demand for hand bags remains constant,but the price of hand bags increases.Crystal's consumer surplus:

Comment on the following statement: "Individual consumers and producers acting in their own self-interest will lead a perfectly competitive market to the efficient level of output."

If the government sets a minimum price below the market equilibrium price.This will have no economic impact on the market.

When a tax is levied on a good or service:

All else equal,if demand is relatively elastic and supply is relatively inelastic,a tax on a product will cause:

-Refer to Figure 6.6.If the government will not allow landlords to charge more than $400 for an apartment,which of the following will happen?

Assume that the demand for insulin is relatively more inelastic than the demand for aspirin.All else equal,a tax on aspirin:

The conclusion that the level of output is efficient at the market equilibrium rests on all of the following assumptions EXCEPT that:

What determines the size of the deadweight loss of a tax?

If the government imposes a maximum price for milk that is above the equilibrium price:

-Refer to Figure 6.1.If the price of a donut is $1.25,consumer surplus is:

-Refer to Figure 6.3.If the price of one hour of tutoring is $20,then producer surplus is:

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

-Figure 6.7 shows the supply and demand curves for human kidneys.If the government set the price of a kidney at $5,000,then:

What is consumer surplus?

Suppose that the market equilibrium price of TVs is $250 but manufacturers are not allowed to charge more than $200 due to a government regulation.Which of the following would be a definite result of imposing a maximum price?

Assuming that the supply for a product is stable,an increase in price will lead to an increase in producer surplus.

A ban on imported avocados would result in:

Assume that the supply of smartphones remains constant,but the price of smartphones increases.Producer surplus:

Recall the application about the response to lower taxes in French restaurants.If the demand for restaurant meals is elastic,we could predict the tax cut will:

Assume that Crystal's demand for hand bags remains constant,but the price of hand bags increases.Crystal's consumer surplus:

Comment on the following statement: "Individual consumers and producers acting in their own self-interest will lead a perfectly competitive market to the efficient level of output."

If the government sets a minimum price below the market equilibrium price.This will have no economic impact on the market.

When a tax is levied on a good or service:

All else equal,if demand is relatively elastic and supply is relatively inelastic,a tax on a product will cause:

-Refer to Figure 6.6.If the government will not allow landlords to charge more than $400 for an apartment,which of the following will happen?

Assume that the demand for insulin is relatively more inelastic than the demand for aspirin.All else equal,a tax on aspirin:

The conclusion that the level of output is efficient at the market equilibrium rests on all of the following assumptions EXCEPT that:

What determines the size of the deadweight loss of a tax?

If the government imposes a maximum price for milk that is above the equilibrium price:

-Refer to Figure 6.1.If the price of a donut is $1.25,consumer surplus is:

-Refer to Figure 6.3.If the price of one hour of tutoring is $20,then producer surplus is:

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