Question 1

Figure 4-3
   
Figure 4-3 shows Kendra's demand curve for ice-cream cones.
-Refer to Figure 4-3.If the market price is $3.00,what is Kendra's consumer surplus?

Accepted Answer

A) $6.50 
B) $5.50 
C) $2.50 
D) $0.50 
A) $6.50 
B) $5.50 
C) $2.50 
D) $0.50

Question 2

________ is maximized in a competitive market when marginal benefit equals marginal cost.

Accepted Answer

A) Deadweight loss 
B) Marginal profit 
C) Economic surplus 
D) Selling price 
A) Deadweight loss 
B) Marginal profit 
C) Economic surplus 
D) Selling price

Question 3

________ 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 4

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 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 5

If equilibrium is achieved in a competitive market

Accepted Answer

A) there is no deadweight loss. 
B) the deadweight loss will be maximized. 
C) the deadweight loss will equal the sum of consumer surplus and producer surplus. 
D) the deadweight loss will be the same as the opportunity cost of the last unit of output sold. 
A) there is no deadweight loss. 
B) the deadweight loss will be maximized. 
C) the deadweight loss will equal the sum of consumer surplus and producer surplus. 
D) the deadweight loss will be the same as the opportunity cost of the last unit of output sold.

Question 6

When negative externalities exist,the competitive market supply curve does not include all of the costs borne by members of society.

Accepted Answer

A) True 
 B)False

Question 7

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximized,then

Accepted Answer

A) maximum deadweight loss occurs. 
B) economic efficiency is achieved. 
C) profits are maximized. 
D) costs are minimized. 
A) maximum deadweight loss occurs. 
B) economic efficiency is achieved. 
C) profits are maximized. 
D) costs are minimized.

Question 8

Figure 4-20
   
Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities.
-Refer to Figure 4-20.What does D₂ represent?

Accepted Answer

A) the social welfare curve 
B) the demand curve reflecting social benefit 
C) the demand curve reflecting private benefit 
D) the positive externalities curve 
A) the social welfare curve 
B) the demand curve reflecting social benefit 
C) the demand curve reflecting private benefit 
D) the positive externalities curve

Question 9

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 the portion of consumer surplus that has been transferred to producer surplus as a result of the price floor?

Accepted Answer

A) $1,200 
B) $1,500 
C) $1,800 
D) $3,000 
A) $1,200 
B) $1,500 
C) $1,800 
D) $3,000

Question 10

Some policymakers have argue that products like cigarettes,alcohol,and sweetened soda generate negative externalities in consumption.If the government decided to impose a tax on soda,the government will cause

Accepted Answer

A) consumers to internalize the externality. 
B) producers to internalize the externality. 
C) the external cost to drinking soda to become a private cost paid by the government. 
D) the external cost to drinking soda to become a private cost paid by producers. 
A) consumers to internalize the externality. 
B) producers to internalize the externality. 
C) the external cost to drinking soda to become a private cost paid by the government. 
D) the external cost to drinking soda to become a private cost paid by producers.

Question 11

Price ceilings are illegal in the United States.

Accepted Answer

A) True 
 B)False

Question 12

Two economists from Northwestern University estimated the benefit households received from subscribing to broadband Internet service.They found that in the year they analyzed,47 million consumers paid an average of $36 per month to subscribe to a broadband Internet service,and estimated the value of total consumer surplus for these subscribers was equal to $890.5 million.Based on these numbers,what was the average monthly consumer surplus per subscriber for broadband Internet service?

Accepted Answer

A) $0.05 
B) $0.77 
C) $13.06 
D) $18.95 
A) $0.05 
B) $0.77 
C) $13.06 
D) $18.95

Question 13

Table 4-2
 $$\begin{array} { | l | c | } 
\hline \text { Bonsumer } & \text { Willingness to Pay } \
\hline \text { Arlya } & \$ 24 \
\hline \text { Basil } & 20 \
\hline \text { Celeste } & 15 \
\hline \text { Dralor } & 12 \
\hline \text { Esther } & 7 \
\hline
\end{array}$$
-Refer to Table 4-2.The table above lists the highest prices five consumers are willing to pay for a theater ticket.If the price of one ticket falls from $25 to $10

Accepted Answer

A) only three tickets will be sold. 
B) consumer surplus decreases from $24 to $12. 
C) consumer surplus increases from $0 to $31. 
D) everyone will buy a ticket. 
A) only three tickets will be sold. 
B) consumer surplus decreases from $24 to $12. 
C) consumer surplus increases from $0 to $31. 
D) everyone will buy a ticket.

Question 14

Economists are reluctant to state that price controls are desirable or undesirable because

Accepted Answer

A) it is impossible to evaluate the impact on quantity demanded and quantity supplied as a result of price controls. 
B) whether the gains from the winners exceed the losses from the losers is not strictly an economic question. 
C) sometimes price controls result in increases in economic efficiency and sometimes they result in decreases in economic efficiency. 
D) economists are reluctant to conduct positive analysis of price controls. 
A) it is impossible to evaluate the impact on quantity demanded and quantity supplied as a result of price controls. 
B) whether the gains from the winners exceed the losses from the losers is not strictly an economic question. 
C) sometimes price controls result in increases in economic efficiency and sometimes they result in decreases in economic efficiency. 
D) economists are reluctant to conduct positive analysis of price controls.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia.What will be the likely effect on the market for sparkling wine in Vinyardia?

Accepted Answer

A) Quantity demanded will decrease, quantity supplied will increase, and a surplus will result. 
B) Quantity demanded will increase, quantity supplied will decrease, and a surplus will result. 
C) Quantity demanded will decrease, quantity supplied will increase, and a shortage will result. 
D) Quantity demanded will increase, quantity supplied will decrease, and a shortage will result. 
A) Quantity demanded will decrease, quantity supplied will increase, and a surplus will result. 
B) Quantity demanded will increase, quantity supplied will decrease, and a surplus will result. 
C) Quantity demanded will decrease, quantity supplied will increase, and a shortage will result. 
D) Quantity demanded will increase, quantity supplied will decrease, and a shortage will result.

Question 17

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 40 in 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 18

Deadweight loss refers to

Accepted Answer

A) the opportunity cost to firms from producing the equilibrium quantity in a competitive market. 
B) the sum of consumer and producer surplus. 
C) the loss of economic surplus when the marginal benefit equals the marginal cost of the last unit produced. 
D) the reduction in economic surplus resulting from not being in competitive equilibrium. 
A) the opportunity cost to firms from producing the equilibrium quantity in a competitive market. 
B) the sum of consumer and producer surplus. 
C) the loss of economic surplus when the marginal benefit equals the marginal cost of the last unit produced. 
D) the reduction in economic surplus resulting from not being in competitive equilibrium.

Question 19

If the market price is at equilibrium,the deadweight loss is zero.

Accepted Answer

A) True 
 B)False

Question 20

Equilibrium in a competitive market results in the greatest amount of economic surplus from the production of a good or service.

Accepted Answer

A) True 
 B)False

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-3.If the market price is $3.00,what is Kendra's consumer surplus?

________ is maximized in a competitive market when marginal benefit equals marginal cost.

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

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 is $50

If equilibrium is achieved in a competitive market

When negative externalities exist,the competitive market supply curve does not include all of the costs borne by members of society.

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximized,then

Figure 4-20 Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to Figure 4-20.What does D₂ represent?

Some policymakers have argue that products like cigarettes,alcohol,and sweetened soda generate negative externalities in consumption.If the government decided to impose a tax on soda,the government will cause

Price ceilings are illegal in the United States.

Table 4-2 Bonsumer Willingness to Pay Arlya \ 24 Basil 20 Celeste 15 Dralor 12 Esther 7 -Refer to Table 4-2.The table above lists the highest prices five consumers are willing to pay for a theater ticket.If the price of one ticket falls from $25 to $10

Economists are reluctant to state that price controls are desirable or undesirable because

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

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia.What will be the likely effect on the market for sparkling wine in Vinyardia?

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 40 in 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?

Deadweight loss refers to

If the market price is at equilibrium,the deadweight loss is zero.

Equilibrium in a competitive market results in the greatest amount of economic surplus from the production of a good or service.

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

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-3.If the market price is $3.00,what is Kendra's consumer surplus?

________ is maximized in a competitive market when marginal benefit equals marginal cost.

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

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 is $50

If equilibrium is achieved in a competitive market

When negative externalities exist,the competitive market supply curve does not include all of the costs borne by members of society.

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximized,then

Figure 4-20 Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to Figure 4-20.What does D₂ represent?

Some policymakers have argue that products like cigarettes,alcohol,and sweetened soda generate negative externalities in consumption.If the government decided to impose a tax on soda,the government will cause

Price ceilings are illegal in the United States.

Table 4-2 Bonsumer Willingness to Pay Arlya \ 24 Basil 20 Celeste 15 Dralor 12 Esther 7 -Refer to Table 4-2.The table above lists the highest prices five consumers are willing to pay for a theater ticket.If the price of one ticket falls from $25 to $10

Economists are reluctant to state that price controls are desirable or undesirable because

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

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia.What will be the likely effect on the market for sparkling wine in Vinyardia?

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 40 in 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?

Deadweight loss refers to

If the market price is at equilibrium,the deadweight loss is zero.

Equilibrium in a competitive market results in the greatest amount of economic surplus from the production of a good or service.

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