Question 1

Figure 4-16
   
Figure 4-16 shows a market with a negative externality.
-Refer to Figure 4-16.The efficient output level is

Accepted Answer

A) Qd. 
B) Qb. 
C) Qₐ. 
D) Qb - Qd. 
A) Qd. 
B) Qb. 
C) Qₐ. 
D) Qb - Qd.

Question 2

The graph below represents the market for walnuts.Identify the values of the marginal benefit and the marginal cost at the output levels of 2,000 pounds,4,000 pounds and 6,000 pounds.At each of these output levels,state whether output is inefficiently high,inefficiently low,or economically efficient.

Accepted Answer

Output level = 2,000 lbs:: marginal bene

Question 3

How does a positive externality in consumption reduce economic efficiency?

Accepted Answer

If there is a positive externality in co

Question 4

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 producer surplus after the imposition of the price floor?

Accepted Answer

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

Question 5

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 $4.00,what is the maximum number of ice cream cones that Kendra will buy?

Accepted Answer

A) 0 
B) 2 
C) 3 
D) 4 
A) 0 
B) 2 
C) 3 
D) 4

Question 6

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 20,000 units of iced tea are sold

Accepted Answer

A) the deadweight loss is equal to economic surplus. 
B) producer surplus equals consumer surplus. 
C) the marginal benefit of each of the 20,000 units of iced tea equals $3. 
D) marginal benefit is equal to marginal cost. 
A) the deadweight loss is equal to economic surplus. 
B) producer surplus equals consumer surplus. 
C) the marginal benefit of each of the 20,000 units of iced tea equals $3. 
D) marginal benefit is equal to marginal cost.

Question 7

Figure 4-25
   
Figure 4-25 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production.
-Refer to Figure 4-25.The amount of the gasoline tax is ________ per gallon.

Accepted Answer

A) $0.75 
B) $1.25 
C) $1.75 
D) $2.00 
A) $0.75 
B) $1.25 
C) $1.75 
D) $2.00

Question 8

Economists ________ that price controls are desirable.

Accepted Answer

A) are in agreement 
B) are reluctant to state 
C) never believe 
D) only recently agree 
A) are in agreement 
B) are reluctant to state 
C) never believe 
D) only recently agree

Question 9

David Card and Alan Kruger conducted a study of fast-food restaurants in New Jersey and Pennsylvania.The study found that

Accepted Answer

A) there was a large reduction in employment of low-skilled workers when the minimum wage was raised in these states. 
B) the earned income tax credit is more effective in raising the incomes of low-skilled workers than increases in the minimum wage. 
C) increases in the minimum wage had a very small impact on employment. 
D) increases in the prices of food have a greater effect on wage increases in New Jersey than in Pennsylvania. 
A) there was a large reduction in employment of low-skilled workers when the minimum wage was raised in these states. 
B) the earned income tax credit is more effective in raising the incomes of low-skilled workers than increases in the minimum wage. 
C) increases in the minimum wage had a very small impact on employment. 
D) increases in the prices of food have a greater effect on wage increases in New Jersey than in Pennsylvania.

Question 10

When there is a positive externality in a free market,too much of the good is produced and consumed.

Accepted Answer

A) True 
 B)False

Question 11

Figure 4-3
   
Figure 4-3 shows Kendra's demand curve for ice-cream cones.
-Refer to Figure 4-3.What is the total amount that Kendra is willing to pay for 2 ice cream cones?

Accepted Answer

A) $1.50 
B) $3.00 
C) $5.50 
D) $6.50 
A) $1.50 
B) $3.00 
C) $5.50 
D) $6.50

Question 12

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 of the tickets is $10

Accepted Answer

A) everyone will buy a ticket except for Esther. 
B) only Anya and Basil will buy tickets. 
C) Celeste's consumer surplus is $25. 
D) the total consumer surplus from the purchase of tickets will be $61. 
A) everyone will buy a ticket except for Esther. 
B) only Anya and Basil will buy tickets. 
C) Celeste's consumer surplus is $25. 
D) the total consumer surplus from the purchase of tickets will be $61.

Question 13

What is the difference between scarcity and a shortage?

Accepted Answer

Scarcity is a situation in which unlimit

Question 14

There is a shortage of every good that is scarce.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities?

Accepted Answer

A) the private cost of production 
B) the social cost of production 
C) the external cost of production 
D) the explicit cost of production 
A) the private cost of production 
B) the social cost of production 
C) the external cost of production 
D) the explicit cost of production

Question 16

Figure 4-25
   
Figure 4-25 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production.
-Refer to Figure 4-25.The efficient equilibrium price of gasoline is ________ per gallon.

Accepted Answer

A) $3.00 
B) $3.75 
C) $4.25 
D) $5.00 
A) $3.00 
B) $3.75 
C) $4.25 
D) $5.00

Question 17

Marginal benefit is equal to the ________ benefit to a consumer receives from consuming one more unit of a good or service

Accepted Answer

A) total 
B) unintended 
C) additional 
D) surplus 
A) total 
B) unintended 
C) additional 
D) surplus

Question 18

Figure 4-21
   
Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage.Figure 4-21 illustrates the situation in the toilet paper market.
-Refer to Figure 4-21.An efficient way to get the firm to produce the socially optimal output level is

Accepted Answer

A) for government to set a quota on the quantity of toilet paper that the toilet paper industry can produce. 
B) to impose a tax to make the industry bear the external costs it creates. 
C) to grant a subsidy to enable the industry to internalize the external costs of production. 
D) to assign property rights to the firms in the industry. 
A) for government to set a quota on the quantity of toilet paper that the toilet paper industry can produce. 
B) to impose a tax to make the industry bear the external costs it creates. 
C) to grant a subsidy to enable the industry to internalize the external costs of production. 
D) to assign property rights to the firms in the industry.

Question 19

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.If a minimum wage of $10.50 an hour is mandated,what is the quantity of labor supplied?

Accepted Answer

A) 400,000 
B) 370,000 
C) 340,000 
D) 60,000 
A) 400,000 
B) 370,000 
C) 340,000 
D) 60,000

Question 20

If marginal benefit is greater than marginal cost,output is inefficiently high.

Accepted Answer

A) True 
 B)False

Figure 4-16 Figure 4-16 shows a market with a negative externality. -Refer to Figure 4-16.The efficient output level is

How does a positive externality in consumption reduce economic efficiency?

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 $4.00,what is the maximum number of ice cream cones that Kendra will buy?

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 20,000 units of iced tea are sold

Figure 4-25 Figure 4-25 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 4-25.The amount of the gasoline tax is ________ per gallon.

Economists ________ that price controls are desirable.

David Card and Alan Kruger conducted a study of fast-food restaurants in New Jersey and Pennsylvania.The study found that

When there is a positive externality in a free market,too much of the good is produced and consumed.

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-3.What is the total amount that Kendra is willing to pay for 2 ice cream cones?

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 of the tickets is $10

What is the difference between scarcity and a shortage?

There is a shortage of every good that is scarce.

Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities?

Figure 4-25 Figure 4-25 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 4-25.The efficient equilibrium price of gasoline is ________ per gallon.

Marginal benefit is equal to the ________ benefit to a consumer receives from consuming one more unit of a good or service

If marginal benefit is greater than marginal cost,output is inefficiently high.

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 4-16 Figure 4-16 shows a market with a negative externality. -Refer to Figure 4-16.The efficient output level is

How does a positive externality in consumption reduce economic efficiency?

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 $4.00,what is the maximum number of ice cream cones that Kendra will buy?

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 20,000 units of iced tea are sold

Figure 4-25 Figure 4-25 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 4-25.The amount of the gasoline tax is ________ per gallon.

Economists ________ that price controls are desirable.

David Card and Alan Kruger conducted a study of fast-food restaurants in New Jersey and Pennsylvania.The study found that

When there is a positive externality in a free market,too much of the good is produced and consumed.

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-3.What is the total amount that Kendra is willing to pay for 2 ice cream cones?

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 of the tickets is $10

What is the difference between scarcity and a shortage?

There is a shortage of every good that is scarce.

Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities?

Figure 4-25 Figure 4-25 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 4-25.The efficient equilibrium price of gasoline is ________ per gallon.

Marginal benefit is equal to the ________ benefit to a consumer receives from consuming one more unit of a good or service

If marginal benefit is greater than marginal cost,output is inefficiently high.

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