Question 1

Deadweight loss refers to a loss in revenue resulting from producers having to reduce their selling price to remain competitive.

Accepted Answer

A) True 
 B)False

Question 2

If policymakers use a pollution tax to control pollution,the tax per unit of pollution should be set

Accepted Answer

A) equal to the marginal external cost at the economically efficient level of pollution. 
B) equal to the marginal private cost of production at the economically efficient level of pollution. 
C) equal to the amount of the deadweight loss created in the absence of a pollution tax. 
D) at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product. 
A) equal to the marginal external cost at the economically efficient level of pollution. 
B) equal to the marginal private cost of production at the economically efficient level of pollution. 
C) equal to the amount of the deadweight loss created in the absence of a pollution tax. 
D) at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product.

Question 3

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 area representing consumer surplus after the imposition of the price floor?

Accepted Answer

A) A 
B) A+ B + D 
C) C + E 
D) B + C + D + E 
A) A 
B) A+ B + D 
C) C + E 
D) B + C + D + E

Question 4

Figure 4-1
   
Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $1.50,what is Arnold's consumer surplus?

Accepted Answer

A) $1.50 
B) $2.25 
C) $3.00 
D) $4.75 
A) $1.50 
B) $2.25 
C) $3.00 
D) $4.75

Question 5

Figure 4-17
  
-Refer to Figure 4-17.The efficient output level is

Accepted Answer

A) Qm. 
B) Qn. 
C) Qₒ. 
D) Qₒ - Qm. 
A) Qm. 
B) Qn. 
C) Qₒ. 
D) Qₒ - Qm.

Question 6

Table 4-8
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 8.00 & 350,000 & 390,000 \
\hline 8.50 & 360,000 & 380,000 \
\hline 9.00 & 370,000 & 370,000 \
\hline 9.50 & 380,000 & 360,000 \
\hline 10.00 & 390,000 & 350,000 \
\hline 10.50 & 400,000 & 340,000 \
\hline
\end{array}$$ 
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 decreases 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 = 330,000 
B) W = $9.50; Q = 370,000 
C) W = $10.00; Q = 350,000 
D) W = $8.00; Q = 390,000 
A) W = $9.00; Q = 330,000 
B) W = $9.50; Q = 370,000 
C) W = $10.00; Q = 350,000 
D) W = $8.00; Q = 390,000

Question 7

Rent control is an example of a price ceiling.

Accepted Answer

A) True 
 B)False

Question 8

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 9

In New York City,about 1 million apartments are subject to rent control by the local government.Rent control

Accepted Answer

A) puts a legal limit on the rent that landlords can charge for an apartment. 
B) is a price floor which sets a minimum rent for apartments. 
C) only applies to those apartments which are owned and rented out by the local government. 
D) is a government policy which limits apartment rental to those people whose incomes are less than $50,000 per year. 
A) puts a legal limit on the rent that landlords can charge for an apartment. 
B) is a price floor which sets a minimum rent for apartments. 
C) only applies to those apartments which are owned and rented out by the local government. 
D) is a government policy which limits apartment rental to those people whose incomes are less than $50,000 per year.

Question 10

Figure 4-12
  
-Refer to Figure 4-12 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 11

Table 4-5
 $$\begin{array} { | l | l | } 
\hline \text { Consumer } & \text { Willingness to Pay } \
\hline \text { Violet } & \$ 48 \
\hline \text { Walter } & 40 \
\hline \text { Xavier } & 30 \
\hline \text { Yolarada } & 24 \
\hline \text { Zachary } & 14 \
\hline
\end{array}$$
-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 falls from $50 to $20

Accepted Answer

A) only three tickets will be sold. 
B) consumer surplus decreases from $48 to $24. 
C) consumer surplus increases from $0 to $62. 
D) everyone will buy a ticket. 
A) only three tickets will be sold. 
B) consumer surplus decreases from $48 to $24. 
C) consumer surplus increases from $0 to $62. 
D) everyone will buy a ticket.

Question 12

Two economists from Northwestern University estimated the benefit households received from subscribing to broadband Internet service.The economists found that

Accepted Answer

A) the consumer surplus from dial-up Internet service exceeded the consumer surplus from broadband Internet service. 
B) the average consumer of broadband Internet service received a marginal benefit equal to $36. 
C) most consumers of broadband Internet service were not willing to pay more than $36 per month. 
D) one month's benefit to consumers who subscribe to broadband Internet service is about $890 million. 
A) the consumer surplus from dial-up Internet service exceeded the consumer surplus from broadband Internet service. 
B) the average consumer of broadband Internet service received a marginal benefit equal to $36. 
C) most consumers of broadband Internet service were not willing to pay more than $36 per month. 
D) one month's benefit to consumers who subscribe to broadband Internet service is about $890 million.

Question 13

Companies in the sharing economy,such as Airbnb and Uber,have the potential to increase consumer surplus and decrease deadweight loss.This would occur by ________ the equilibrium price in their market,and by doing so ________ efficiency.

Accepted Answer

A) lowering; decreasing 
B) lowering; increasing 
C) raising; decreasing 
D) raising; increasing 
A) lowering; decreasing 
B) lowering; increasing 
C) raising; decreasing 
D) raising; increasing

Question 14

The cost borne by a producer in the production of a good or service is called

Accepted Answer

A) private cost. 
B) public cost. 
C) social cost. 
D) internal cost. 
A) private cost. 
B) public cost. 
C) social cost. 
D) internal cost.

Question 15

Private costs

Accepted Answer

A) are borne by producers of a good while social costs are borne by government. 
B) are borne by consumers of a good while social costs are borne by government. 
C) are borne by producers of a good while social costs are borne by society at large. 
D) are borne by producers of a good while social costs are borne by those who cannot afford to purchase the good. 
A) are borne by producers of a good while social costs are borne by government. 
B) are borne by consumers of a good while social costs are borne by government. 
C) are borne by producers of a good while social costs are borne by society at large. 
D) are borne by producers of a good while social costs are borne by those who cannot afford to purchase the good.

Question 16

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.Suppose that instead of a rent ceiling,the government imposed a price floor of $2,000 per month for apartments.What is the value of producer surplus after the imposition of the price floor?

Accepted Answer

A) $40,000 
B) $240,000 
C) $270,000 
D) $290,000 
A) $40,000 
B) $240,000 
C) $270,000 
D) $290,000

Question 17

The additional cost to a firm of producing one more unit of a good or service is equal to producer surplus.

Accepted Answer

A) True 
 B)False

Question 18

Assume that emissions from electric utilities contribute to pollution in the form of acid rain.Which of the following describes how this affects the market for electricity?

Accepted Answer

A) The equilibrium in the market is not efficient; the marginal benefit from electricity is greater than the marginal social cost. 
B) A deadweight loss occurs; at equilibrium the additional social cost of production is greater than the additional benefit to consumers. 
C) The equilibrium in the market is not efficient; because of the cost of the acid rain, economic efficiency would be greater if more electricity were produced. 
D) The equilibrium in the market is not efficient; consumer surplus is equal to producer surplus. 
A) The equilibrium in the market is not efficient; the marginal benefit from electricity is greater than the marginal social cost. 
B) A deadweight loss occurs; at equilibrium the additional social cost of production is greater than the additional benefit to consumers. 
C) The equilibrium in the market is not efficient; because of the cost of the acid rain, economic efficiency would be greater if more electricity were produced. 
D) The equilibrium in the market is not efficient; consumer surplus is equal to producer surplus.

Question 19

Figure 4-11
   
Figure 4-11 shows the demand and supply curves for the coffee market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at $7.00.
-Refer to Figure 4-11.What is the value of producer surplus after the imposition of the price floor?

Accepted Answer

A) $3,000 
B) $3,600 
C) $4,200 
D) $4,500 
A) $3,000 
B) $3,600 
C) $4,200 
D) $4,500

Question 20

The additional cost to a firm of producing one more unit of a good or service is the

Accepted Answer

A) minimum cost. 
B) total cost. 
C) opportunity cost. 
D) marginal cost. 
A) minimum cost. 
B) total cost. 
C) opportunity cost. 
D) marginal cost.

Deadweight loss refers to a loss in revenue resulting from producers having to reduce their selling price to remain competitive.

If policymakers use a pollution tax to control pollution,the tax per unit of pollution should be set

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $1.50,what is Arnold's consumer surplus?

Figure 4-17 -Refer to Figure 4-17.The efficient output level is

Rent control is an example of a price ceiling.

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

In New York City,about 1 million apartments are subject to rent control by the local government.Rent control

Figure 4-12 -Refer to Figure 4-12 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?

Table 4-5 Consumer Willingness to Pay Violet \ 48 Walter 40 Xavier 30 Yolarada 24 Zachary 14 -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 falls from $50 to $20

Two economists from Northwestern University estimated the benefit households received from subscribing to broadband Internet service.The economists found that

Companies in the sharing economy,such as Airbnb and Uber,have the potential to increase consumer surplus and decrease deadweight loss.This would occur by the equilibrium price in their market,and by doing so efficiency.

The cost borne by a producer in the production of a good or service is called

Private costs

The additional cost to a firm of producing one more unit of a good or service is equal to producer surplus.

Assume that emissions from electric utilities contribute to pollution in the form of acid rain.Which of the following describes how this affects the market for electricity?

The additional cost to a firm of producing one more unit of a good or service is the

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 4: Market Efficiency and Market Failure

Deadweight loss refers to a loss in revenue resulting from producers having to reduce their selling price to remain competitive.

If policymakers use a pollution tax to control pollution,the tax per unit of pollution should be set

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $1.50,what is Arnold's consumer surplus?

Figure 4-17 -Refer to Figure 4-17.The efficient output level is

Rent control is an example of a price ceiling.

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

In New York City,about 1 million apartments are subject to rent control by the local government.Rent control

Figure 4-12 -Refer to Figure 4-12 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?

Table 4-5 Consumer Willingness to Pay Violet \ 48 Walter 40 Xavier 30 Yolarada 24 Zachary 14 -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 falls from $50 to $20

Two economists from Northwestern University estimated the benefit households received from subscribing to broadband Internet service.The economists found that

Companies in the sharing economy,such as Airbnb and Uber,have the potential to increase consumer surplus and decrease deadweight loss.This would occur by ________ the equilibrium price in their market,and by doing so ________ efficiency.

The cost borne by a producer in the production of a good or service is called

Private costs

The additional cost to a firm of producing one more unit of a good or service is equal to producer surplus.

Assume that emissions from electric utilities contribute to pollution in the form of acid rain.Which of the following describes how this affects the market for electricity?

The additional cost to a firm of producing one more unit of a good or service is the

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Companies in the sharing economy,such as Airbnb and Uber,have the potential to increase consumer surplus and decrease deadweight loss.This would occur by the equilibrium price in their market,and by doing so efficiency.