Question 1

________ refers to the reduction in economic surplus resulting from not being in competitive equilibrium.

Accepted Answer

A)  Marginal cost 
B)  Producer atrophy 
C)  Deadweight loss 
D)  Economic shortage 
A)  Marginal cost 
B)  Producer atrophy 
C)  Deadweight loss 
D)  Economic shortage

Question 2

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

Question 3

What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price,where must price ceilings and price floors be set to have an effect on the market.

Accepted Answer

A price ceiling is a legally determined

Question 4

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 5

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia.What will be the likely effect on the market for sparkling wine in Vinyardia?

Accepted Answer

A)  Quantity demanded will decrease, quantity supplied will increase, and a surplus will result. 
B)  Quantity demanded will increase, quantity supplied will decrease, and a surplus will result. 
C)  Quantity demanded will decrease, quantity supplied will increase, and a shortage will result. 
D)  Quantity demanded will increase, quantity supplied will decrease, and a shortage will result. 
A)  Quantity demanded will decrease, quantity supplied will increase, and a surplus will result. 
B)  Quantity demanded will increase, quantity supplied will decrease, and a surplus will result. 
C)  Quantity demanded will decrease, quantity supplied will increase, and a shortage will result. 
D)  Quantity demanded will increase, quantity supplied will decrease, and a shortage will result.

Question 6

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 7

Table 4-5
  
-Refer to Table 4-5.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.What are the equilibrium price and quantity (in thousands)for Chef Ernie's sushi?

Accepted Answer

A)  $80 and 80 thousand 
B)  $60 and 20 thousand 
C)  $50 and 100 thousand 
D)  $40 and 50 thousand 
A)  $80 and 80 thousand 
B)  $60 and 20 thousand 
C)  $50 and 100 thousand 
D)  $40 and 50 thousand

Question 8

Which of the following statements is true?

Accepted Answer

A)  Consumer surplus measures the total benefit from participating in a market. 
B)  When a market is in equilibrium consumer surplus equals producer surplus. 
C)  Consumer surplus measures the net benefit from participating in a market. 
D)  Producer surplus measures the total benefit received by producers from participating in a market. 
A)  Consumer surplus measures the total benefit from participating in a market. 
B)  When a market is in equilibrium consumer surplus equals producer surplus. 
C)  Consumer surplus measures the net benefit from participating in a market. 
D)  Producer surplus measures the total benefit received by producers from participating in a market.

Question 9

To affect the market outcome,a price ceiling

Accepted Answer

A)  must be set below the black market price. 
B)  must be set below the legal price. 
C)  must be set below the price floor. 
D)  must be set below the equilibrium price. 
A)  must be set below the black market price. 
B)  must be set below the legal price. 
C)  must be set below the price floor. 
D)  must be set below the equilibrium price.

Question 10

________ is maximized in a competitive market when marginal benefit equals marginal cost.

Accepted Answer

A)  Deadweight loss 
B)  Marginal profit 
C)  Economic surplus 
D)  Selling price 
A)  Deadweight loss 
B)  Marginal profit 
C)  Economic surplus 
D)  Selling price

Question 11

Table 4-3
   
Table 4-3 shows the demand and supply schedules for labor market in the city of Pixley.
-Refer to Table 4-3.Suppose that the quantity of labor demanded decreases by 80,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Accepted Answer

A)  W = $8.50; Q = 550,000 
B)  W = $12.50; Q = 630,000 
C)  W = $9.50; Q = 570,000 
D)  W = $9.50; Q = 590,000 
A)  W = $8.50; Q = 550,000 
B)  W = $12.50; Q = 630,000 
C)  W = $9.50; Q = 570,000 
D)  W = $9.50; Q = 590,000

Question 12

Suppose the demand curve for a product is vertical and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

Accepted Answer

A)  sellers bear the entire burden of the tax. 
B)  buyers bear the entire burden of the tax. 
C)  the tax burden will be shared equally between buyers and sellers. 
D)  buyers share the burden of the tax with government. 
A)  sellers bear the entire burden of the tax. 
B)  buyers bear the entire burden of the tax. 
C)  the tax burden will be shared equally between buyers and sellers. 
D)  buyers share the burden of the tax with government.

Question 13

The payroll tax is a tax imposed on ________ that is used to fund Social Security and Medicare.

Accepted Answer

A)  employers only 
B)  workers only 
C)  employers and workers 
D)  the unemployed 
A)  employers only 
B)  workers only 
C)  employers and workers 
D)  the unemployed

Question 14

Marginal cost is the additional cost to a firm of producing one more unit of a good or service.

Accepted Answer

A) True 
 B)False

Question 15

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 will sell 3 cups of coffee,the

Question 16

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

Accepted Answer

A)  demand 
B)  supply 
C)  production possibilities 
D)  marginal cost 
A)  demand 
B)  supply 
C)  production possibilities 
D)  marginal cost

Question 17

Figure 4-8
   
Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market.
-Refer to Figure 4-8.For each unit sold,the price sellers receive after the tax (net of tax)is

Accepted Answer

A)  $20. 
B)  $22. 
C)  $27. 
D)  $32. 
A)  $20. 
B)  $22. 
C)  $27. 
D)  $32.

Question 18

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 19

Figure 4-2
  
-Refer to Figure 4-2.What area represents producer surplus at a price of P2?

Accepted Answer

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

Question 20

Table 4-2
  
-Refer to Table 4-2.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 The Waco Kid's cowboy hats is $40

Accepted Answer

A)  The Waco Kid will produce four hats. 
B)  producer surplus from the first hat is $40. 
C)  producer surplus will equal $28. 
D)  there will be a surplus; as a result, the price will fall to $24. 
A)  The Waco Kid will produce four hats. 
B)  producer surplus from the first hat is $40. 
C)  producer surplus will equal $28. 
D)  there will be a surplus; as a result, the price will fall to $24.

________ refers to the reduction in economic surplus resulting from not being in competitive equilibrium.

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?

What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price,where must price ceilings and price floors be set to have an effect on the market.

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

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia.What will be the likely effect on the market for sparkling wine in Vinyardia?

Table 4-5 -Refer to Table 4-5.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.What are the equilibrium price and quantity (in thousands)for Chef Ernie's sushi?

Which of the following statements is true?

To affect the market outcome,a price ceiling

________ is maximized in a competitive market when marginal benefit equals marginal cost.

Table 4-3 Table 4-3 shows the demand and supply schedules for labor market in the city of Pixley. -Refer to Table 4-3.Suppose that the quantity of labor demanded decreases by 80,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Suppose the demand curve for a product is vertical and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

The payroll tax is a tax imposed on ________ that is used to fund Social Security and Medicare.

Marginal cost is the additional cost to a firm of producing one more unit of a good or service.

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

Figure 4-8 Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 4-8.For each unit sold,the price sellers receive after the tax (net of tax)is

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.

Figure 4-2 -Refer to Figure 4-2.What area represents producer surplus at a price of P₂?

Table 4-2 -Refer to Table 4-2.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 The Waco Kid's cowboy hats is $40

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

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

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

________ refers to the reduction in economic surplus resulting from not being in competitive equilibrium.

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?

What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price,where must price ceilings and price floors be set to have an effect on the market.

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

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia.What will be the likely effect on the market for sparkling wine in Vinyardia?

Table 4-5 -Refer to Table 4-5.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.What are the equilibrium price and quantity (in thousands)for Chef Ernie's sushi?

Which of the following statements is true?

To affect the market outcome,a price ceiling

________ is maximized in a competitive market when marginal benefit equals marginal cost.

Table 4-3 Table 4-3 shows the demand and supply schedules for labor market in the city of Pixley. -Refer to Table 4-3.Suppose that the quantity of labor demanded decreases by 80,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Suppose the demand curve for a product is vertical and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

The payroll tax is a tax imposed on ________ that is used to fund Social Security and Medicare.

Marginal cost is the additional cost to a firm of producing one more unit of a good or service.

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

Figure 4-8 Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 4-8.For each unit sold,the price sellers receive after the tax (net of tax)is

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.

Figure 4-2 -Refer to Figure 4-2.What area represents producer surplus at a price of P2?

Table 4-2 -Refer to Table 4-2.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 The Waco Kid's cowboy hats is $40

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

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

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?

Figure 4-2 -Refer to Figure 4-2.What area represents producer surplus at a price of P₂?