Question 1

Figure 4-1
   
Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.What is the total amount that Arnold is willing to pay for 4 burritos?

Accepted Answer

A) $1.00 
B) $4.00 
C) $7.00 
D) $10.00 
A) $1.00 
B) $4.00 
C) $7.00 
D) $10.00

Question 2

When there is a positive externality

Accepted Answer

A) the private benefit received by consumers is greater than the external benefit. 
B) the social benefit received by consumers is greater than the private benefit. 
C) the private benefit received by consumers is greater than the private cost. 
D) the private benefit received by consumers is greater than the social benefit. 
A) the private benefit received by consumers is greater than the external benefit. 
B) the social benefit received by consumers is greater than the private benefit. 
C) the private benefit received by consumers is greater than the private cost. 
D) the private benefit received by consumers is greater than the social benefit.

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 the portion of consumer surplus transferred to producers as a result of the price floor?

Accepted Answer

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

Question 4

Economists working at federal government agencies have estimated that the marginal social cost of carbon is about

Accepted Answer

A) $2 per ton. 
B) $9 per ton. 
C) $21 per ton. 
D) $47 per ton. 
A) $2 per ton. 
B) $9 per ton. 
C) $21 per ton. 
D) $47 per ton.

Question 5

All renters benefit from rent control and all landlords lose.

Accepted Answer

A) True 
 B)False

Question 6

Shortage means the same thing as scarcity.

Accepted Answer

A) True 
 B)False

Question 7

Figure 4-7
  
-Refer to Figure 4-7.The figure above represents the market for iced tea.Assume that this is a competitive market.Which of the following is true?

Accepted Answer

A) If the price of iced tea is $3 the output will be economically efficient but there will be a deadweight loss. 
B) If the price of iced tea is $3 consumers will purchase more than the economically efficient output. 
C) Both 10,000 and 30,000 are economically inefficient rates of output. 
D) If the price of iced tea is $3 producers will sell 30,000 units of iced tea but this output will be economically inefficient. 
A) If the price of iced tea is $3 the output will be economically efficient but there will be a deadweight loss. 
B) If the price of iced tea is $3 consumers will purchase more than the economically efficient output. 
C) Both 10,000 and 30,000 are economically inefficient rates of output. 
D) If the price of iced tea is $3 producers will sell 30,000 units of iced tea but this output will be economically inefficient.

Question 8

Congress passed the ________ in 1996,the purpose of which was to phase out price floors and return to a free market in agriculture

Accepted Answer

A) Rice and Beans Act 
B) Smoot-Hawley Act 
C) Agribusiness Act 
D) Freedom to Farm Act 
A) Rice and Beans Act 
B) Smoot-Hawley Act 
C) Agribusiness Act 
D) Freedom to Farm Act

Question 9

Figure 4-5
  
-Refer to Figure 4-5.The figure above represents the market for pecans.Assume that this is a competitive market.If 4,000 pounds of pecans are sold

Accepted Answer

A) the deadweight loss is equal to $12,000. 
B) consumer surplus equals zero. 
C) the marginal benefit of each of the 4,000 pounds of pecans equals $3. 
D) marginal benefit is equal to marginal cost. 
A) the deadweight loss is equal to $12,000. 
B) consumer surplus equals zero. 
C) the marginal benefit of each of the 4,000 pounds of pecans equals $3. 
D) marginal benefit is equal to marginal cost.

Question 10

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 actual price of gasoline paid by consumers after the tax is implemented 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 11

In cities with rent controls,the actual rents paid can be ________ than the legal maximum.One explanation for this is because there is a ________ of apartments,tenants are ________.

Accepted Answer

A) higher; shortage; often willing to pay rents higher than the law allows 
B) higher; surplus; often forced to pay rents higher than the law allows 
C) lower; surplus; never willing to pay rents below the legal maximum 
D) lower; shortage; rarely willing to pay rents lower than the law allows 
A) higher; shortage; often willing to pay rents higher than the law allows 
B) higher; surplus; often forced to pay rents higher than the law allows 
C) lower; surplus; never willing to pay rents below the legal maximum 
D) lower; shortage; rarely willing to pay rents lower than the law allows

Question 12

Price ceilings result in shortages.

Accepted Answer

A) True 
 B)False

Question 13

The additional benefit to a consumer from consuming one more unit of a good or service

Accepted Answer

A) is equal to consumer surplus. 
B) is equal to the opportunity cost of consuming the good or service. 
C) is equal to marginal benefit. 
D) is equal to economic surplus. 
A) is equal to consumer surplus. 
B) is equal to the opportunity cost of consuming the good or service. 
C) is equal to marginal benefit. 
D) is equal to economic surplus.

Question 14

An externality is

Accepted Answer

A) a benefit realized by the purchaser of a good or service. 
B) a cost paid for by the producer of a good or service. 
C) a benefit or cost experienced by someone who is not a producer or consumer of a good or service. 
D) anything that is external or not relevant to the production of a good or service. 
A) a benefit realized by the purchaser of a good or service. 
B) a cost paid for by the producer of a good or service. 
C) a benefit or cost experienced by someone who is not a producer or consumer of a good or service. 
D) anything that is external or not relevant to the production of a good or service.

Question 15

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 $2.50,what is Kendra's consumer surplus?

Accepted Answer

A) $9.00 
B) $7.50 
C) $1.50 
D) $0 
A) $9.00 
B) $7.50 
C) $1.50 
D) $0

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 the maximum number of burritos that Arnold will buy?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 18

Figure 4-22
   
Chicken pox vaccinations for toddlers benefit society by protecting young children and by preventing an epidemic of the disease. Thus, the social benefits of chicken pox vaccinations exceed the private benefit for any quantity of vaccinations as illustrated in Figure 4-22.
-Refer to Figure 4-22.One way to obtain the economically efficient amount of chicken pox vaccinations is for governments to subsidize these vaccinations.What is the size of the per-vaccination Pigovian subsidy that the government must provide to internalize the external benefits?

Accepted Answer

A) PE 
B) (PE - PG) 
C) (PE - PF) 
D) (PF - PG) 
A) PE 
B) (PE - PG) 
C) (PE - PF) 
D) (PF - PG)

Question 19

Table 4-10
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price Per } \
\text { Bushel } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Demanded } \
\text { (bushels) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Supplied } \
\text { (bushels) }
\end{array} \
\hline \$ 3 & 36,000 & 0 \
\hline 6 & 30,000 & 2,000 \
\hline 9 & 25,000 & 5,000 \
\hline 12 & 20,000 & 10,000 \
\hline 15 & 16,000 & 16,000 \
\hline 18 & 13,000 & 23,000 \
\hline 21 & 8,000 & 30,000 \
\hline 24 & 3,000 & 36,000 \
\hline
\end{array}$$ 
Table 4-10 above contains information about the wheat market.Answer the following questions based on this table.
-Refer to Table 4-10.An agricultural price floor is a price that the government guarantees farmers will receive for a particular crop.Suppose the federal government sets a price floor for wheat at $21 per bushel.
a.What is the amount of shortage or surplus in the wheat market as result of the price floor?
b.If the government agrees to purchase any surplus output at $21,how much will it cost the government?
c.If the government buys all of the farmers' output at the floor price,how many bushels of wheat will it have to purchase and how much will it cost the government?
d.Suppose the government buys up all of the farmers' output at the floor price and then sells the output to consumers at whatever price it can get.Under this scheme,what is the price at which the government will be able to sell off all of the output it had purchased from farmers? What is the revenue received from the government's sale?
e.In this problem we have considered two government schemes: (1)a price floor is established and the government purchases any excess output and (2)the government buys all the farmers' output at the floor price and resells at whatever price it can get.Which scheme will taxpayers prefer?
f.Consider again the two schemes.Which scheme will the farmers prefer?
g.Consider again the two schemes.Which scheme will wheat buyers prefer?

Accepted Answer

a. 22,000 surplus.
b. $21 × 22,000 = $46

Question 20

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 the consumer surplus on the first ice cream cone?

Accepted Answer

A) $0.50 
B) $1.00 
C) $5.50 
D) $9.00 
A) $0.50 
B) $1.00 
C) $5.50 
D) $9.00

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.What is the total amount that Arnold is willing to pay for 4 burritos?

When there is a positive externality

Economists working at federal government agencies have estimated that the marginal social cost of carbon is about

All renters benefit from rent control and all landlords lose.

Shortage means the same thing as scarcity.

Figure 4-7 -Refer to Figure 4-7.The figure above represents the market for iced tea.Assume that this is a competitive market.Which of the following is true?

Congress passed the ________ in 1996,the purpose of which was to phase out price floors and return to a free market in agriculture

Figure 4-5 -Refer to Figure 4-5.The figure above represents the market for pecans.Assume that this is a competitive market.If 4,000 pounds of pecans 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 actual price of gasoline paid by consumers after the tax is implemented is ________ per gallon.

In cities with rent controls,the actual rents paid can be than the legal maximum.One explanation for this is because there is a of apartments,tenants are .

Price ceilings result in shortages.

The additional benefit to a consumer from consuming one more unit of a good or service

An externality is

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 $2.50,what is Kendra's consumer surplus?

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

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 the maximum number of burritos that Arnold will buy?

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 the consumer surplus on the first ice cream cone?

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 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.What is the total amount that Arnold is willing to pay for 4 burritos?

When there is a positive externality

Economists working at federal government agencies have estimated that the marginal social cost of carbon is about

All renters benefit from rent control and all landlords lose.

Shortage means the same thing as scarcity.

Figure 4-7 -Refer to Figure 4-7.The figure above represents the market for iced tea.Assume that this is a competitive market.Which of the following is true?

Congress passed the ________ in 1996,the purpose of which was to phase out price floors and return to a free market in agriculture

Figure 4-5 -Refer to Figure 4-5.The figure above represents the market for pecans.Assume that this is a competitive market.If 4,000 pounds of pecans 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 actual price of gasoline paid by consumers after the tax is implemented is ________ per gallon.

In cities with rent controls,the actual rents paid can be ________ than the legal maximum.One explanation for this is because there is a ________ of apartments,tenants are ________.

Price ceilings result in shortages.

The additional benefit to a consumer from consuming one more unit of a good or service

An externality is

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 $2.50,what is Kendra's consumer surplus?

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

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 the maximum number of burritos that Arnold will buy?

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 the consumer surplus on the first ice cream cone?

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

In cities with rent controls,the actual rents paid can be than the legal maximum.One explanation for this is because there is a of apartments,tenants are .