Question 1

Black markets only exist in developing nations.

Accepted Answer

A) True 
 B)False

Question 2

If the quantity of fishing poles demanded is represented by the demand equation Qᴰ = 60 - P, then to solve for the price of fishing poles, the equation would be rewritten as

Accepted Answer

A) P = 0.6Qᴰ + 10. 
B) P = 60 - Qᴰ. 
C) P = -60 + Qᴰ. 
D) P = Qᴰ + 60. 
A) P = 0.6Qᴰ + 10. 
B) P = 60 - Qᴰ. 
C) P = -60 + Qᴰ. 
D) P = Qᴰ + 60.

Question 3

Arthur buys a new cell phone for $150.He receives consumer surplus of $150 from the purchase.What value does Arthur place on his cell phone?

Accepted Answer

A) $0 
B) $150 
C) $225 
D) $300 
A) $0 
B) $150 
C) $225 
D) $300

Question 4

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 5

Figure 4-4
  
-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9

Accepted Answer

A) economic surplus is maximized. 
B) too many consumers want to buy pecans. 
C) the quantity supplied is greater than the economically efficient quantity. 
D) the quantity demanded is economically efficient but the quantity supplied is economically inefficient. 
A) economic surplus is maximized. 
B) too many consumers want to buy pecans. 
C) the quantity supplied is greater than the economically efficient quantity. 
D) the quantity demanded is economically efficient but the quantity supplied is economically inefficient.

Question 6

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 the consumer surplus on the second burrito?

Accepted Answer

A) $0.50 
B) $1.00 
C) $1.50 
D) $3.50 
A) $0.50 
B) $1.00 
C) $1.50 
D) $3.50

Question 7

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 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 4-3
   
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 the equilibrium price of $15?

Accepted Answer

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

Question 10

Rent control is an example of a price ceiling.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

If, in a competitive market, marginal benefit is less than marginal cost

Accepted Answer

A) the net benefit to consumers from participating in the market is less than the net benefit to producers. 
B) the government must force producers to raise prices in order to achieve economic efficiency. 
C) the output is greater than the equilibrium quantity. 
D) the output is less than the equilibrium quantity. 
A) the net benefit to consumers from participating in the market is less than the net benefit to producers. 
B) the government must force producers to raise prices in order to achieve economic efficiency. 
C) the output is greater than the equilibrium quantity. 
D) the output is less than the equilibrium quantity.

Question 13

The marginal cost for Java Joe's to produce its first cup of coffee is $0.75.Its marginal cost to produce its second cup of coffee is $1.25.Its marginal cost increases by $0.50 for each additional cup of coffee it produces.Suppose the market price for coffee is $2.25.Construct a graph showing the producer surplus for each cup of coffee Java Joe's will sell.How many cups of coffee will Java Joe's sell? What is the value of the producer surplus Java Joe's receives for each cup of coffee it sells?

Accepted Answer

@#IMG-DLM& Java Joe's will sell 3 cups of coffee,

Question 14

Figure 4-11
  
-Refer to Figure 4-11.The figure above illustrates the markets for two goods, Good X and Good Y.Suppose an identical dollar tax is imposed on sellers in each market.
a.Compare the consumer burden and producer burden in each market.Illustrate your answer graphically.
b.If the goal of the government is to raise revenue with minimum impact to quantity consumed, in which market should the tax be imposed?
c.If the goal of the government is to discourage consumption, in which market should the tax be imposed?

Accepted Answer

a.See the figure bel

Question 15

Rent control is an example of

Accepted Answer

A) a subsidy for low-skilled workers. 
B) a price floor. 
C) a price ceiling. 
D) a black market. 
A) a subsidy for low-skilled workers. 
B) a price floor. 
C) a price ceiling. 
D) a black market.

Question 16

Figure 4-6
   
Figure 4-6 shows the demand and supply curves for the almond market.The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf.
-Refer to Figure 4-6.What area represents the portion of consumer surplus that has been transferred to producer surplus as a result of the price floor?

Accepted Answer

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

Question 17

What is marginal benefit? Which curve is also referred to as a marginal benefit curve?

Accepted Answer

Marginal benefit is the additi

Question 18

Table 4-4
   
Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-4.What is the equilibrium hourly wage (W*)and the equilibrium quantity of labor (Q*)?

Accepted Answer

A) W* = $10.50; Q* = 590,000 
B) W* = $11.50; Q* = 570,000 
C) W* = $9.50; Q* = 570,000 
D) W* = $10.50; Q* = 1,180,000 
A) W* = $10.50; Q* = 590,000 
B) W* = $11.50; Q* = 570,000 
C) W* = $9.50; Q* = 570,000 
D) W* = $10.50; Q* = 1,180,000

Question 19

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 Arnold's consumer surplus?

Accepted Answer

A) $0.50 
B) $1.00 
C) $1.50 
D) $3.00 
A) $0.50 
B) $1.00 
C) $1.50 
D) $3.00

Question 20

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.At a price of $18 consumers are willing to buy 40 pounds of tiger shrimp.Is this an economically efficient quantity?

Accepted Answer

A) No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit. 
B) Yes, otherwise consumers would not buy 40 units. 
C) Yes, because $18 shows what consumers are willing to pay for the product. 
D) No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th unit. 
A) No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit. 
B) Yes, otherwise consumers would not buy 40 units. 
C) Yes, because $18 shows what consumers are willing to pay for the product. 
D) No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th unit.

Black markets only exist in developing nations.

If the quantity of fishing poles demanded is represented by the demand equation Qᴰ = 60 - P, then to solve for the price of fishing poles, the equation would be rewritten as

Arthur buys a new cell phone for $150.He receives consumer surplus of $150 from the purchase.What value does Arthur place on his cell phone?

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?

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9

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 the consumer surplus on the second burrito?

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

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

Rent control is an example of a price ceiling.

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

If, in a competitive market, marginal benefit is less than marginal cost

Rent control is an example of

What is marginal benefit? Which curve is also referred to as a marginal benefit curve?

Table 4-4 Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley. -Refer to Table 4-4.What is the equilibrium hourly wage (W)and the equilibrium quantity of labor (Q)?

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 Arnold's consumer surplus?

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

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

Black markets only exist in developing nations.

If the quantity of fishing poles demanded is represented by the demand equation Qᴰ = 60 - P, then to solve for the price of fishing poles, the equation would be rewritten as

Arthur buys a new cell phone for $150.He receives consumer surplus of $150 from the purchase.What value does Arthur place on his cell phone?

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?

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9

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 the consumer surplus on the second burrito?

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

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

Rent control is an example of a price ceiling.

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

If, in a competitive market, marginal benefit is less than marginal cost

Rent control is an example of

What is marginal benefit? Which curve is also referred to as a marginal benefit curve?

Table 4-4 Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley. -Refer to Table 4-4.What is the equilibrium hourly wage (W*)and the equilibrium quantity of labor (Q*)?

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 Arnold's consumer surplus?

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

Table 4-4 Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley. -Refer to Table 4-4.What is the equilibrium hourly wage (W)and the equilibrium quantity of labor (Q)?