Question 1

What area on a supply and demand graph represents consumer surplus?

Accepted Answer

Consumer surplus is

Question 2

Figure 4-3
   
Figure 4-3 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 4-3.What is the value of producer surplus at the equilibrium price of $15?

Accepted Answer

A) $80 
B) $160 
C) $240 
D) $400 
A) $80 
B) $160 
C) $240 
D) $400

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 price of cowboy hats decreases from $38 to $30,

Accepted Answer

A) consumer surplus will rise by $6. 
B) the marginal cost of producing the third cowboy hat will fall to $30. 
C) producer surplus will fall from $22 to $6. 
D) producer surplus will rise from $8 to $24. 
A) consumer surplus will rise by $6. 
B) the marginal cost of producing the third cowboy hat will fall to $30. 
C) producer surplus will fall from $22 to $6. 
D) producer surplus will rise from $8 to $24.

Question 4

The graph below represents the market for lychee nuts.The equilibrium price is $7.00 per bushel, but the market price is $5.00 per bushel.Identify the areas representing consumer surplus, producer surplus, and deadweight loss at the equilibrium price of $7.00 and at the market price of $5.00.

Accepted Answer

At the equilibrium price of $7.00:
Consu

Question 5

Table 4-7
  
-Refer to Table 4-7.The equations above describe the demand and supply for Bubba's Fried Jellybeans.The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units.What is the value of consumer surplus?

Accepted Answer

A) $5 thousand 
B) $12.5 thousand 
C) $25 thousand 
D) $37.5 thousand 
A) $5 thousand 
B) $12.5 thousand 
C) $25 thousand 
D) $37.5 thousand

Question 6

Suppliers will be willing to supply a product only if

Accepted Answer

A) the price received is less than the additional cost of producing the product. 
B) the price received is at least equal to the additional cost of producing the product. 
C) the price is higher than the average cost of producing the product. 
D) the price received is at least double the additional cost of producing the product. 
A) the price received is less than the additional cost of producing the product. 
B) the price received is at least equal to the additional cost of producing the product. 
C) the price is higher than the average cost of producing the product. 
D) the price received is at least double the additional cost of producing the product.

Question 7

Figure 4-1
   
Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $2.00, what is the consumer surplus on the first burrito?

Accepted Answer

A) $0.50 
B) $1.00 
C) $2.00 
D) $7.50 
A) $0.50 
B) $1.00 
C) $2.00 
D) $7.50

Question 8

Figure 4-12
  
-Refer to Figure 4-12.The figure above represents demand and supply in the market for gasoline.Use the diagram to answer the following questions.
a.How much is the government tax on each gallon of gasoline?
b.What portion of the per-unit tax is paid by consumers?
c.What portion of the per-unit tax is paid by producers?
d.What is the quantity sold after the imposition of the tax?
e.What is the after-tax revenue per gallon received by producers?
f.What is the total tax revenue collected by the government?
g.What is the value of the excess burden of the tax?

Accepted Answer

a.Tax = $0.60 per gallon
b.Consumer burd

Question 9

If the price of hairspray is represented by P in the equation P = 10 - 0.2 Qᴰ, then the corresponding quantity of hairspray demanded is represented by the demand equation

Accepted Answer

A) Qᴰ = 5P - 2. 
B) Qᴰ = 0.5P + 2. 
C) Qᴰ = 50 -5P. 
D) Qᴰ = -10 + 0.2P. 
A) Qᴰ = 5P - 2. 
B) Qᴰ = 0.5P + 2. 
C) Qᴰ = 50 -5P. 
D) Qᴰ = -10 + 0.2P.

Question 10

Figure 4-8
   
Figure 4-8 shows the market for beer. The government plans to impose a per-unit tax in this market.
-Refer to Figure 4-8.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 11

Will equilibrium in a market always result in an outcome that is economically efficient? Explain.

Accepted Answer

An economically efficient outcome means

Question 12

Consumer surplus in a market for a product would be equal to ________ if the market price was zero.

Accepted Answer

A) zero 
B) the area between the supply curve and the demand curve 
C) the area above the supply curve 
D) the area under the demand curve 
A) zero 
B) the area between the supply curve and the demand curve 
C) the area above the supply curve 
D) the area under the demand curve

Question 13

Figure 4-3
   
Figure 4-3 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 4-3.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 14

The incidence of a tax depends on whether the government collects the tax from buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 15

You are given the following market data for Venus automobiles in Saturnia.
Demand is represented by: P = 200 - 0.25Q
Supply is represented by: P = 130 + 0.10Q
where P = Price and Q = Quantity.
a.Calculate the equilibrium price and quantity.
b.Calculate the consumer surplus in this market.
c.Calculate the producer surplus in this market.

Accepted Answer

a.Price = $150; Quan

Question 16

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 17

Rent control is an example of a price ceiling.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low. 
B) producers should raise the price to $9 in order to sell the quantity demanded of 4,000. 
C) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. 
D) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low. 
A) the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low. 
B) producers should raise the price to $9 in order to sell the quantity demanded of 4,000. 
C) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. 
D) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low.

Question 19

One result of a tax is an increase in economic efficiency.

Accepted Answer

A) True 
 B)False

Question 20

Willingness to pay measures

Accepted Answer

A) the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it. 
B) the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good. 
C) the maximum price that a buyer is willing to pay for a good or service. 
D) the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept. 
A) the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it. 
B) the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good. 
C) the maximum price that a buyer is willing to pay for a good or service. 
D) the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept.

What area on a supply and demand graph represents consumer surplus?

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 price of cowboy hats decreases from $38 to $30,

The graph below represents the market for lychee nuts.The equilibrium price is $7.00 per bushel, but the market price is $5.00 per bushel.Identify the areas representing consumer surplus, producer surplus, and deadweight loss at the equilibrium price of $7.00 and at the market price of $5.00.

Table 4-7 -Refer to Table 4-7.The equations above describe the demand and supply for Bubba's Fried Jellybeans.The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units.What is the value of consumer surplus?

Suppliers will be willing to supply a product only if

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $2.00, what is the consumer surplus on the first burrito?

If the price of hairspray is represented by P in the equation P = 10 - 0.2 Qᴰ, then the corresponding quantity of hairspray demanded is represented by the demand equation

Figure 4-8 Figure 4-8 shows the market for beer. The government plans to impose a per-unit tax in this market. -Refer to Figure 4-8.The price buyers pay after the tax is

Will equilibrium in a market always result in an outcome that is economically efficient? Explain.

Consumer surplus in a market for a product would be equal to ________ if the market price was zero.

The incidence of a tax depends on whether the government collects the tax from buyers or sellers.

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?

Rent control is an example of a price ceiling.

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

One result of a tax is an increase in economic efficiency.

Willingness to pay measures

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

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

Filters

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

What area on a supply and demand graph represents consumer surplus?

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 price of cowboy hats decreases from $38 to $30,

The graph below represents the market for lychee nuts.The equilibrium price is $7.00 per bushel, but the market price is $5.00 per bushel.Identify the areas representing consumer surplus, producer surplus, and deadweight loss at the equilibrium price of $7.00 and at the market price of $5.00.

Table 4-7 -Refer to Table 4-7.The equations above describe the demand and supply for Bubba's Fried Jellybeans.The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units.What is the value of consumer surplus?

Suppliers will be willing to supply a product only if

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $2.00, what is the consumer surplus on the first burrito?

If the price of hairspray is represented by P in the equation P = 10 - 0.2 Qᴰ, then the corresponding quantity of hairspray demanded is represented by the demand equation

Figure 4-8 Figure 4-8 shows the market for beer. The government plans to impose a per-unit tax in this market. -Refer to Figure 4-8.The price buyers pay after the tax is

Will equilibrium in a market always result in an outcome that is economically efficient? Explain.

Consumer surplus in a market for a product would be equal to ________ if the market price was zero.

The incidence of a tax depends on whether the government collects the tax from buyers or sellers.

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?

Rent control is an example of a price ceiling.

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

One result of a tax is an increase in economic efficiency.

Willingness to pay measures

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

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

Filters