Question 1

In a competitive market equilibrium

Accepted Answer

A) total consumer surplus equals total producer surplus. 
B) marginal benefit and marginal cost are maximized. 
C) consumers and producers benefit equally. 
D) the marginal benefit equals the marginal cost of the last unit sold. 
A) total consumer surplus equals total producer surplus. 
B) marginal benefit and marginal cost are maximized. 
C) consumers and producers benefit equally. 
D) the marginal benefit equals the marginal cost of the last unit sold.

Question 2

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 market price of cowboy hats is $50, producer surplus is

Accepted Answer

A) $0. 
B) $4. 
C) $62. 
D) $138. 
A) $0. 
B) $4. 
C) $62. 
D) $138.

Question 3

Figure 4-9
  
-Refer to Figure 4-9.Suppose the market is initially in equilibrium at price P₁ and now the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax? For demand curve D₁

Accepted Answer

A) the producer bears a greater share of the tax burden if the supply curve is S₂. 
B) the producer bears a greater share of the tax burden if the supply curve is S₁. 
C) the producer's share of the tax burden is the same whether the supply curve is S₁ or S₂. 
D) the producer bears the entire burden of the tax if the supply curve is S₁ and the consumer bears the entire burden of the tax if the supply curve is S₂. 
A) the producer bears a greater share of the tax burden if the supply curve is S₂. 
B) the producer bears a greater share of the tax burden if the supply curve is S₁. 
C) the producer's share of the tax burden is the same whether the supply curve is S₁ or S₂. 
D) the producer bears the entire burden of the tax if the supply curve is S₁ and the consumer bears the entire burden of the tax if the supply curve is S₂.

Question 4

When Congress passed a law that imposed a tax designed to fund its Social Security and Medicare programs it wanted employers and workers to share the burden of the tax equally.Most economists who have studied the incidence of the tax have concluded

Accepted Answer

A) the tax is not high enough to cover the future costs of Social Security and Medicare. 
B) the tax on employers is too high because it reduces the employment of low-skilled workers. 
C) the burden of the tax falls almost entirely on workers. 
D) the tax rate should be greater for high-income workers than for low-income workers. 
A) the tax is not high enough to cover the future costs of Social Security and Medicare. 
B) the tax on employers is too high because it reduces the employment of low-skilled workers. 
C) the burden of the tax falls almost entirely on workers. 
D) the tax rate should be greater for high-income workers than for low-income workers.

Question 5

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 3 burritos?

Accepted Answer

A) $1.50 
B) $6.00 
C) $7.00 
D) $10.00 
A) $1.50 
B) $6.00 
C) $7.00 
D) $10.00

Question 6

Figure 4-10
  
-Refer to Figure 4-10.Suppose the market is initially in equilibrium at price P₁ and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

Accepted Answer

A) The consumer will bear a smaller share of the tax burden if the demand curve is D₁. 
B) The consumer's share of the tax burden is the same whether the demand curve is D₁ or D₂. 
C) The consumer will bear a smaller share of the tax burden if the demand curve is D₂. 
D) The consumer will bear the entire burden of the tax if the demand curve is D₂ and the producer will bear the entire burden of the tax if the demand curve is D₁. 
A) The consumer will bear a smaller share of the tax burden if the demand curve is D₁. 
B) The consumer's share of the tax burden is the same whether the demand curve is D₁ or D₂. 
C) The consumer will bear a smaller share of the tax burden if the demand curve is D₂. 
D) The consumer will bear the entire burden of the tax if the demand curve is D₂ and the producer will bear the entire burden of the tax if the demand curve is D₁.

Question 7

Figure 4-5
   
Figure 4-5 shows the market for apartments in Springfield.Recently, the government imposed a rent ceiling of $1,000 per month.
-Refer to Figure 4-5.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 consumer surplus after the imposition of the price floor?

Accepted Answer

A) $6,000 
B) $30,000 
C) $100,000 
D) $240,000 
A) $6,000 
B) $30,000 
C) $100,000 
D) $240,000

Question 8

Figure 4-5
   
Figure 4-5 shows the market for apartments in Springfield.Recently, the government imposed a rent ceiling of $1,000 per month.
-Refer to Figure 4-5.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 9

A tax is efficient if it imposes a large excess burden relative to the tax revenue it raises.

Accepted Answer

A) True 
 B)False

Question 10

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 consumer surplus at a price of $18?

Accepted Answer

A) $60 
B) $120 
C) $180 
D) $240 
A) $60 
B) $120 
C) $180 
D) $240

Question 11

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 12

Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

Accepted Answer

A) True 
 B)False

Question 13

Table 4-2
  
-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 14

Figure 4-1
   
Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.Arnold's marginal benefit from consuming the second burrito is

Accepted Answer

A) $1.00. 
B) $1.50. 
C) $2.00. 
D) $4.50. 
A) $1.00. 
B) $1.50. 
C) $2.00. 
D) $4.50.

Question 15

You are given the following market data for Venus automobiles in Saturnia.
Demand: P = 200 - 0.25Q
Supply: 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 $1.00, what is Arnold's consumer surplus?

Accepted Answer

A) $1.00 
B) $2.00 
C) $3.00 
D) $7.00 
A) $1.00 
B) $2.00 
C) $3.00 
D) $7.00

Question 17

A demand curve shows

Accepted Answer

A) the willingness of consumers to buy a product at different prices. 
B) the willingness of consumers to substitute one product for another product. 
C) the relationship between the price of a product and the demand for the product. 
D) the relationship between the price of a product and the total benefit consumers receive from the product. 
A) the willingness of consumers to buy a product at different prices. 
B) the willingness of consumers to substitute one product for another product. 
C) the relationship between the price of a product and the demand for the product. 
D) the relationship between the price of a product and the total benefit consumers receive from the product.

Question 18

When the government taxes a good or service, it

Accepted Answer

A) affects the market equilibrium for that good or service. 
B) eliminates the deadweight loss associated with the good or service. 
C) increases consumer surplus for the good or service. 
D) increases producer surplus for the good or service. 
A) affects the market equilibrium for that good or service. 
B) eliminates the deadweight loss associated with the good or service. 
C) increases consumer surplus for the good or service. 
D) increases producer surplus for the good or service.

Question 19

Marginal benefit is equal to the ________ benefit 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 20

Figure 4-2
  
-Refer to Figure 4-2.What area represents the increase in producer surplus when the market price rises from P₁ to P₂?

Accepted Answer

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

In a competitive market equilibrium

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 market price of cowboy hats is $50, producer surplus is

Figure 4-9 -Refer to Figure 4-9.Suppose the market is initially in equilibrium at price P₁ and now the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax? For demand curve D₁

When Congress passed a law that imposed a tax designed to fund its Social Security and Medicare programs it wanted employers and workers to share the burden of the tax equally.Most economists who have studied the incidence of the tax have concluded

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 3 burritos?

Figure 4-10 -Refer to Figure 4-10.Suppose the market is initially in equilibrium at price P₁ and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

A tax is efficient if it imposes a large excess burden relative to the tax revenue it raises.

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 consumer surplus at a price of $18?

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

Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

Table 4-2 -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,

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.Arnold's marginal benefit from consuming the second burrito is

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 Arnold's consumer surplus?

A demand curve shows

When the government taxes a good or service, it

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

Figure 4-2 -Refer to Figure 4-2.What area represents the increase in producer surplus when the market price rises from P₁ to P₂?

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 More Realistic Setting

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

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

In a competitive market equilibrium

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 market price of cowboy hats is $50, producer surplus is

Figure 4-9 -Refer to Figure 4-9.Suppose the market is initially in equilibrium at price P₁ and now the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax? For demand curve D₁

When Congress passed a law that imposed a tax designed to fund its Social Security and Medicare programs it wanted employers and workers to share the burden of the tax equally.Most economists who have studied the incidence of the tax have concluded

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 3 burritos?

Figure 4-10 -Refer to Figure 4-10.Suppose the market is initially in equilibrium at price P₁ and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

A tax is efficient if it imposes a large excess burden relative to the tax revenue it raises.

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 consumer surplus at a price of $18?

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

Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

Table 4-2 -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,

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.Arnold's marginal benefit from consuming the second burrito is

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 Arnold's consumer surplus?

A demand curve shows

When the government taxes a good or service, it

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

Figure 4-2 -Refer to Figure 4-2.What area represents the increase in producer surplus when the market price rises from P₁ to P₂?

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 More Realistic Setting

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