Question 1

The sum of consumer surplus and producer surplus is called economic surplus.

Accepted Answer

A) True 
 B)False

Question 2

What is economic surplus? When is economic surplus at a maximum?

Accepted Answer

Economic surplus is the sum of

Question 3

Table 4-4
  
-Refer to Table 4-4. The table above lists the highest prices three consumers, Curly, Moe, and Larry, are willing to pay for a bottle of champagne. If the price of one of the bottles is $95 dollars, total consumer surplus will be

Accepted Answer

A)  $0. 
B)  $35. 
C)  $80. 
D)  $95. 
A)  $0. 
B)  $35. 
C)  $80. 
D)  $95.

Question 4

________ refers to the reduction in economic surplus resulting from not being in competitive equilibrium.

Accepted Answer

A)  Marginal cost 
B)  Producer atrophy 
C)  Deadweight loss 
D)  Economic shortage 
A)  Marginal cost 
B)  Producer atrophy 
C)  Deadweight loss 
D)  Economic shortage

Question 5

A supply curve shows

Accepted Answer

A)  the quantities sold at different prices. 
B)  the marginal cost of producing one more unit of a good or service. 
C)  the marginal benefit from buying one more unit of a good or service. 
D)  the total cost of producing different quantities of a good or service. 
A)  the quantities sold at different prices. 
B)  the marginal cost of producing one more unit of a good or service. 
C)  the marginal benefit from buying one more unit of a good or service. 
D)  the total cost of producing different quantities of a good or service.

Question 6

The total amount of consumer surplus in a market is equal to the area below the market demand curve and above the market price.

Accepted Answer

A) True 
 B)False

Question 7

A black market is a market where buying and selling take place

Accepted Answer

A)  at prices that violate government price regulations. 
B)  in non-licensed shops and warehouses. 
C)  after regular office hours. 
D)  on foreign soil. 
A)  at prices that violate government price regulations. 
B)  in non-licensed shops and warehouses. 
C)  after regular office hours. 
D)  on foreign soil.

Question 8

Figure 4-8   Figure 4-8 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.
-Refer to Figure 4-8. What is the value of the deadweight loss after the imposition of the ceiling?

Accepted Answer

A)  $50,000 
B)  $100,000 
C)  $150,000 
D)  $200,000 
A)  $50,000 
B)  $100,000 
C)  $150,000 
D)  $200,000

Question 9

Government intervention in agricultural markets in the U.S. began

Accepted Answer

A)  during World War II to ensure that enough food was available for domestic consumption. 
B)  after World War I in order to assist farmers to adjust from a war-time economy to a peace-time economy. 
C)  during the Great Depression. 
D)  during the Korean War. 
A)  during World War II to ensure that enough food was available for domestic consumption. 
B)  after World War I in order to assist farmers to adjust from a war-time economy to a peace-time economy. 
C)  during the Great Depression. 
D)  during the Korean War.

Question 10

Table 4-3
  
-Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the price of cowboy hats decreases from $38 to $30,

Accepted Answer

A)  consumer surplus will rise by $6. 
B)  the marginal cost of producing the third cowboy hat will fall to $30. 
C)  producer surplus will fall from $22 to $6. 
D)  producer surplus will rise from $8 to $24. 
A)  consumer surplus will rise by $6. 
B)  the marginal cost of producing the third cowboy hat will fall to $30. 
C)  producer surplus will fall from $22 to $6. 
D)  producer surplus will rise from $8 to $24.

Question 11

In a competitive market the ________ curve shows the marginal benefit received by consumers and the ________ curve shows the marginal cost to producers.

Accepted Answer

A)  demand; supply 
B)  supply; demand 
C)  demand; market demand 
D)  supply; market supply 
A)  demand; supply 
B)  supply; demand 
C)  demand; market demand 
D)  supply; market supply

Question 12

Economists have shown that the burden of a tax is the same whether the tax is collected from the buyer or the seller. Why, then, are gasoline and cigarette taxes imposed on sellers?

Accepted Answer

A)  Sellers are more honest than buyers. 
B)  The demand for both gasoline and cigarettes is very elastic. 
C)  The Equal Protection Clause of the U.S. Constitution prohibits the government from imposing taxes like these on buyers. 
D)  It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right of amount of tax revenue is collected. 
A)  Sellers are more honest than buyers. 
B)  The demand for both gasoline and cigarettes is very elastic. 
C)  The Equal Protection Clause of the U.S. Constitution prohibits the government from imposing taxes like these on buyers. 
D)  It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right of amount of tax revenue is collected.

Question 13

Table 4-8
   Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.
-Refer to Table 4-8. Suppose that the quantity of labor supplied increases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Accepted Answer

A)  W = $9.00; Q = 410,000 
B)  W = $9.50; Q = 420,000 
C)  W = $8.50; Q = 400,000 
D)  W = $8.00; Q = 390,000 
A)  W = $9.00; Q = 410,000 
B)  W = $9.50; Q = 420,000 
C)  W = $8.50; Q = 400,000 
D)  W = $8.00; Q = 390,000

Question 14

There is a shortage of every good that is scarce.

Accepted Answer

A) True 
 B)False

Question 15

Figure 4-1   Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1. Arnold's marginal benefit from consuming the fourth burrito is

Accepted Answer

A)  $0. 
B)  $1.00. 
C)  $2.50. 
D)  $3.00. 
A)  $0. 
B)  $1.00. 
C)  $2.50. 
D)  $3.00.

Question 16

Figure 4-13  
-Refer to Figure 4-13 which shows the market for watermelons. Suppose the government imposes a price floor of Pw. How will the price floor affect the quantity supplied, quantity demanded, and quantity exchanged?

Accepted Answer

The price floor will have no effect on t

Question 17

Figure 4-10   Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at RS1U1B10S1U1B0.
-Refer to Figure 4-10. With rent control, the quantity supplied is Q1. Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get. What is the highest rent they can get?

Accepted Answer

A)  R* 
B)  R1 
C)  R0 
D)  more than R1 
A)  R* 
B)  R1 
C)  R0 
D)  more than R1

Question 18

Figure 4-17  
-Refer to Figure 4-17. Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?

Accepted Answer

A)  The consumer will bear a greater share of the tax burden if the demand curve is D1. 
B)  The consumer's share of the tax burden is the same whether the demand curve is D1 or D2. 
C)  The consumer will bear a greater share of the tax burden if the demand curve is D2. 
D)  The consumer will bear the entire burden of the tax if the demand curve is D1 and the producer will bear the entire burden of the tax if the demand curve is D2. 
A)  The consumer will bear a greater share of the tax burden if the demand curve is D1. 
B)  The consumer's share of the tax burden is the same whether the demand curve is D1 or D2. 
C)  The consumer will bear a greater share of the tax burden if the demand curve is D2. 
D)  The consumer will bear the entire burden of the tax if the demand curve is D1 and the producer will bear the entire burden of the tax if the demand curve is D2.

Question 19

All renters benefit from rent control and all landlords lose.

Accepted Answer

A) True 
 B)False

Question 20

Figure 4-10   Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at RS1U1B10S1U1B0.
-Refer to Figure 4-10. Suppose that instead of a price ceiling, the government imposed a price floor of R1. What is the quantity of apartments demanded at the new price?

Accepted Answer

A)  0 
B)  Q1 
C)  Q* 
D)  Q0 
A)  0 
B)  Q1 
C)  Q* 
D)  Q0

Exam 4: Economic Efficiency, Government Price Setting, and Taxes

The sum of consumer surplus and producer surplus is called economic surplus.

What is economic surplus? When is economic surplus at a maximum?

Table 4-4 -Refer to Table 4-4. The table above lists the highest prices three consumers, Curly, Moe, and Larry, are willing to pay for a bottle of champagne. If the price of one of the bottles is $95 dollars, total consumer surplus will be

________ refers to the reduction in economic surplus resulting from not being in competitive equilibrium.

A supply curve shows

The total amount of consumer surplus in a market is equal to the area below the market demand curve and above the market price.

A black market is a market where buying and selling take place

Figure 4-8 Figure 4-8 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. -Refer to Figure 4-8. What is the value of the deadweight loss after the imposition of the ceiling?

Government intervention in agricultural markets in the U.S. began

Table 4-3 -Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the price of cowboy hats decreases from $38 to $30,

In a competitive market the ________ curve shows the marginal benefit received by consumers and the ________ curve shows the marginal cost to producers.

Economists have shown that the burden of a tax is the same whether the tax is collected from the buyer or the seller. Why, then, are gasoline and cigarette taxes imposed on sellers?

There is a shortage of every good that is scarce.

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1. Arnold's marginal benefit from consuming the fourth burrito is

Figure 4-13 -Refer to Figure 4-13 which shows the market for watermelons. Suppose the government imposes a price floor of Pw. How will the price floor affect the quantity supplied, quantity demanded, and quantity exchanged?

Figure 4-17 -Refer to Figure 4-17. Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?

All renters benefit from rent control and all landlords lose.

Figure 4-10 Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R0. -Refer to Figure 4-10. Suppose that instead of a price ceiling, the government imposed a price floor of R1. What is the quantity of apartments demanded at the new price?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

In a competitive market the curve shows the marginal benefit received by consumers and the curve shows the marginal cost to producers.

Figure 4-13 -Refer to Figure 4-13 which shows the market for watermelons. Suppose the government imposes a price floor of P_w. How will the price floor affect the quantity supplied, quantity demanded, and quantity exchanged?

Figure 4-17 -Refer to Figure 4-17. Suppose the market is initially in equilibrium at price P₁and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?

Figure 4-10 Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R₀. -Refer to Figure 4-10. Suppose that instead of a price ceiling, the government imposed a price floor of R₁. What is the quantity of apartments demanded at the new price?