Question 1

When the marginal benefit equals the marginal cost of the last unit sold in a competitive market,

Accepted Answer

A)  the net benefit of consumers is equal to the net benefit of producers. 
B)  an economically efficient level of output is produced. 
C)  producer surplus is equal to consumer surplus. 
D)  total benefit is equal to total cost. 
A)  the net benefit of consumers is equal to the net benefit of producers. 
B)  an economically efficient level of output is produced. 
C)  producer surplus is equal to consumer surplus. 
D)  total benefit is equal to total cost.

Question 2

If the price of garlic is represented by equation P = 25 - QD, then the corresponding quantity of garlic demanded is represented by the equation

Accepted Answer

A)  QD = P - 25.  
B)  QD = P + 25.  
C)  QD = 25 - P.  
D)  QD = -25 + P. 
A)  QD = P - 25.  
B)  QD = P + 25.  
C)  QD = 25 - P.  
D)  QD = -25 + P.

Question 3

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 market price of cowboy hats is $35, The Waco Kid will produce

Accepted Answer

A)  1 hat. 
B)  2 hats. 
C)  3 hats. 
D)  4 hats. 
A)  1 hat. 
B)  2 hats. 
C)  3 hats. 
D)  4 hats.

Question 4

The difference between the ________ for a good and the ________ is called consumer surplus.

Accepted Answer

A)  highest price a consumer is willing to pay; lowest price a consumer is willing to pay 
B)  lowest price a consumer is willing to pay; price the consumer actually pays 
C)  highest price a consumer is willing to pay; price the consumer actually pays 
D)  price the consumer actually pays; actual cost to the producer 
A)  highest price a consumer is willing to pay; lowest price a consumer is willing to pay 
B)  lowest price a consumer is willing to pay; price the consumer actually pays 
C)  highest price a consumer is willing to pay; price the consumer actually pays 
D)  price the consumer actually pays; actual cost to the producer

Question 5

Figure 4-15   Figure 4-15 shows the market for beer. The government plans to impose a per-unit tax in this market.
-Refer to Figure 4-15. The price buyers pay after the tax is

Accepted Answer

A)  $7. 
B)  $20. 
C)  $22. 
D)  $27. 
A)  $7. 
B)  $20. 
C)  $22. 
D)  $27.

Question 6

Figure 4-9   Figure 4-9 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at PS1U1B1fS1U1B0.
-Refer to Figure 4-9. What area represents the deadweight loss after the imposition of the price floor?

Accepted Answer

A)  C + D + G 
B)  F + G 
C)  C + D 
D)  C + D + F + G 
A)  C + D + G 
B)  F + G 
C)  C + D 
D)  C + D + F + G

Question 7

In a competitive market equilibrium the ________ equals the ________ of the last unit sold.

Accepted Answer

A)  total profit; marginal benefit 
B)  total cost; marginal cost 
C)  profit; selling price 
D)  marginal benefit; marginal cost 
A)  total profit; marginal benefit 
B)  total cost; marginal cost 
C)  profit; selling price 
D)  marginal benefit; marginal cost

Question 8

Which of the following is a consequence of minimum wage laws?

Accepted Answer

A)  Low-skilled workers benefit because minimum wage increases the number of jobs providing low-skilled workers with training. 
B)  Some employers will be reluctant to hire as many workers as they would without a minimum wage. 
C)  Producers have an incentive to offer workers non-wage benefits such as health care benefits and convenient working hours rather than a higher wage. 
D)  All workers benefit when the minimum wage is increased. 
A)  Low-skilled workers benefit because minimum wage increases the number of jobs providing low-skilled workers with training. 
B)  Some employers will be reluctant to hire as many workers as they would without a minimum wage. 
C)  Producers have an incentive to offer workers non-wage benefits such as health care benefits and convenient working hours rather than a higher wage. 
D)  All workers benefit when the minimum wage is increased.

Question 9

"Taxes are what we pay for a civilized society." This statement was made by

Accepted Answer

A)  Adam Smith. 
B)  Oliver Wendell Holmes. 
C)  Herbert Hoover. 
D)  Franklin Roosevelt. 
A)  Adam Smith. 
B)  Oliver Wendell Holmes. 
C)  Herbert Hoover. 
D)  Franklin Roosevelt.

Question 10

Figure 4-3   Figure 4-3 shows Kendra's demand curve for ice cream cones.
-Refer to Figure 4-3. Kendra's marginal benefit from consuming the third ice cream cone is

Accepted Answer

A)  $13.00. 
B)  $2.50. 
C)  $1.50. 
D)  $0.50. 
A)  $13.00. 
B)  $2.50. 
C)  $1.50. 
D)  $0.50.

Question 11

Figure 4-7  
-Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. If the price of iced tea is $1

Accepted Answer

A)  the quantity supplied is less than the economically efficient quantity. 
B)  the quantity supplied is economically efficient but the quantity demanded is economically inefficient. 
C)  economic surplus is maximized. 
D)  not enough consumers want to buy iced tea. 
A)  the quantity supplied is less than the economically efficient quantity. 
B)  the quantity supplied is economically efficient but the quantity demanded is economically inefficient. 
C)  economic surplus is maximized. 
D)  not enough consumers want to buy iced tea.

Question 12

Assume the market price for lemon grass is $4.00 per pound, but most buyers are willing to pay more than the market price. At the market price of $4.00, the quantity of lemon grass demanded is 1,500 pounds per month, and quantity demanded does not reach zero until the price reaches $30.00 per pound. Construct a graph showing this data, calculate the total consumer surplus in the market for lemon grass, and show the consumer surplus on the graph. Your demand curve should be a straight line.

Accepted Answer

@#IMG-DLM& The total consumer

Question 13

If the government implements a binding price ceiling on insulin, this will have all of the following effects on the market for insulin except

Accepted Answer

A)  a decrease in economic surplus. 
B)  a decrease in producer surplus. 
C)  an increase in deadweight loss. 
D)  a more efficient equilibrium. 
A)  a decrease in economic surplus. 
B)  a decrease in producer surplus. 
C)  an increase in deadweight loss. 
D)  a more efficient equilibrium.

Question 14

Figure 4-4   Figure 4-4 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40S1U1B1 S1U1B0in order to raise the price to $18.
-Refer to Figure 4-4. What is the value of the deadweight loss at a price of $18?

Accepted Answer

A)  $100 
B)  $180 
C)  $660 
D)  $1,040 
A)  $100 
B)  $180 
C)  $660 
D)  $1,040

Question 15

Table 4-5
  
-Refer to Table 4-5. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one ticket is $50,

Accepted Answer

A)  everyone will buy a ticket. 
B)  consumer surplus will be maximized. 
C)  Violet's consumer surplus is $2. 
D)  no one will buy a ticket. 
A)  everyone will buy a ticket. 
B)  consumer surplus will be maximized. 
C)  Violet's consumer surplus is $2. 
D)  no one will buy a ticket.

Question 16

A price ceiling is a legally determined maximum price that sellers may charge.

Accepted Answer

A) True 
 B)False

Question 17

Table 4-7
   Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7. If a minimum wage of $12.50 is mandated, there will be a

Accepted Answer

A)  shortage of 40,000 units of labor. 
B)  surplus of 40,000 units of labor. 
C)  shortage of 80,000 units of labor. 
D)  surplus of 80,000 units of labor. 
A)  shortage of 40,000 units of labor. 
B)  surplus of 40,000 units of labor. 
C)  shortage of 80,000 units of labor. 
D)  surplus of 80,000 units of labor.

Question 18

Figure 4-1   Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1. If the market price is $1.00, what is Arnold's consumer surplus?

Accepted Answer

A)  $1.00 
B)  $2.00 
C)  $3.00 
D)  $7.00 
A)  $1.00 
B)  $2.00 
C)  $3.00 
D)  $7.00

Question 19

Economists working for Uber, along with economists from the University of Oxford and the University of Chicago, estimated the consumer surplus attributed to Uber. For the entire United States, these economists estimated that the total consumer surplus from Uber in 2015 was

Accepted Answer

A)  almost $0. 
B)  $13.30 per customer. 
C)  $2.88 billion. 
D)  6.76 billion. 
A)  almost $0. 
B)  $13.30 per customer. 
C)  $2.88 billion. 
D)  6.76 billion.

Question 20

In a competitive market equilibrium

Accepted Answer

A)  total consumer surplus equals total producer surplus. 
B)  marginal benefit and marginal cost are maximized. 
C)  consumers and producers benefit equally. 
D)  the marginal benefit equals the marginal cost of the last unit sold. 
A)  total consumer surplus equals total producer surplus. 
B)  marginal benefit and marginal cost are maximized. 
C)  consumers and producers benefit equally. 
D)  the marginal benefit equals the marginal cost of the last unit sold.

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

When the marginal benefit equals the marginal cost of the last unit sold in a competitive market,

If the price of garlic is represented by equation P = 25 - QD, then the corresponding quantity of garlic demanded is represented by the equation

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 market price of cowboy hats is $35, The Waco Kid will produce

The difference between the ________ for a good and the ________ is called consumer surplus.

Figure 4-15 Figure 4-15 shows the market for beer. The government plans to impose a per-unit tax in this market. -Refer to Figure 4-15. The price buyers pay after the tax is

In a competitive market equilibrium the ________ equals the ________ of the last unit sold.

Which of the following is a consequence of minimum wage laws?

"Taxes are what we pay for a civilized society." This statement was made by

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-3. Kendra's marginal benefit from consuming the third ice cream cone is

Figure 4-7 -Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. If the price of iced tea is $1

If the government implements a binding price ceiling on insulin, this will have all of the following effects on the market for insulin except

Table 4-5 -Refer to Table 4-5. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one ticket is $50,

A price ceiling is a legally determined maximum price that sellers may charge.

Table 4-7 Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley. -Refer to Table 4-7. If a minimum wage of $12.50 is mandated, there will be a

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1. If the market price is $1.00, what is Arnold's consumer surplus?

Economists working for Uber, along with economists from the University of Oxford and the University of Chicago, estimated the consumer surplus attributed to Uber. For the entire United States, these economists estimated that the total consumer surplus from Uber in 2015 was

In a competitive market equilibrium

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

If the price of garlic is represented by equation P = 25 - Q_D, then the corresponding quantity of garlic demanded is represented by the equation

The difference between the for a good and the is called consumer surplus.

In a competitive market equilibrium the equals the of the last unit sold.