Question 1

To affect the market outcome,a price floor

Accepted Answer

A)  must be set above the black market price. 
B)  must be set above the legal price. 
C)  must be set above the price ceiling. 
D)  must be set above the equilibrium price. 
A)  must be set above the black market price. 
B)  must be set above the legal price. 
C)  must be set above the price ceiling. 
D)  must be set above the equilibrium price.

Question 2

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 3

Paul goes to Dick's Sporting Goods to buy a new tennis racquet.He is willing to pay $200 for a new racquet,but buys one on sale for $125.Paul's consumer surplus from the purchase is

Accepted Answer

A)  $325. 
B)  $200. 
C)  $125. 
D)  $75. 
A)  $325. 
B)  $200. 
C)  $125. 
D)  $75.

Question 4

Table 4-8
 $\begin{array}{|c|c|c|}
\hline\begin{array}{c}
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array}{c}
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array}{c}
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 8.00 & 350,000 & 390,000 \
\hline 8.50 & 360,000 & 380,000 \
\hline 9.00 & 370,000 & 370,000 \
\hline 9.50 & 380,000 & 360,000 \
\hline 10.00 & 390,000 & 350,000 \
\hline 10.50 & 400,000 & 340,000 \
\hline
\end{array}$ Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.
-Refer to Table 4-8.If a minimum wage of $10.50 an hour is mandated,what is the quantity of labor demanded?

Accepted Answer

A)  400,000 
B)  370,000 
C)  340,000 
D)  60,000 
A)  400,000 
B)  370,000 
C)  340,000 
D)  60,000

Question 5

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 6

A major problem with using a tradable emission allowances system to control pollution is

Accepted Answer

A)  that it grants firms a license to pollute. 
B)  the difficulty in determining the emissions target. 
C)  it discourages firms from implementing cost-effective pollution control technology. 
D)  that it does not eliminate pollution completely. 
A)  that it grants firms a license to pollute. 
B)  the difficulty in determining the emissions target. 
C)  it discourages firms from implementing cost-effective pollution control technology. 
D)  that it does not eliminate pollution completely.

Question 7

Table 4-1
 $\begin{array}{|c|c|}
\hline \text { Consumer } & \text { Willingness to Pay } \
\hline \text { Tom } & \$ 40 \
\hline \text { Dick } & 30 \
\hline \text { Harriet } & 25 \
\hline
\end{array}$
-Refer to Table 4-1.The table above lists the highest prices three consumers,Tom,Dick,and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of one of the shirts is $28 dollars

Accepted Answer

A)  Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts. 
B)  Tom will receive $12 of consumer surplus from buying one shirt. 
C)  Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts. 
D)  Harriet will receive $25 of consumer surplus since she will buy no shirts. 
A)  Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts. 
B)  Tom will receive $12 of consumer surplus from buying one shirt. 
C)  Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts. 
D)  Harriet will receive $25 of consumer surplus since she will buy no shirts.

Question 8

Figure 4-6
   Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P₁ and a quantity of Q₁. Now suppose producers decide to cut output to Q₂ in order to raise the price to P₂.
-Refer to Figure 4-6.What area represents producer surplus at the equilibrium price of P₁?

Accepted Answer

A)  A + B + D 
B)  D + E 
C)  D + E + G + H 
D)  A + B + C + D + E 
A)  A + B + D 
B)  D + E 
C)  D + E + G + H 
D)  A + B + C + D + E

Question 9

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 10

Consumers are willing to purchase a product up to the point where

Accepted Answer

A)  the marginal benefit of consuming the product is equal to the marginal cost of consuming it. 
B)  the consumer surplus is equal to the producer surplus. 
C)  the marginal benefit of consuming the product equals the area below the supply curve and above the market price. 
D)  the marginal benefit of consuming a product is equal to its price. 
A)  the marginal benefit of consuming the product is equal to the marginal cost of consuming it. 
B)  the consumer surplus is equal to the producer surplus. 
C)  the marginal benefit of consuming the product equals the area below the supply curve and above the market price. 
D)  the marginal benefit of consuming a product is equal to its price.

Question 11

Which of the following is a consequence of minimum wage laws?

Accepted Answer

A)  Low-skilled workers benefit because minimum wage increases the number of jobs providing low-skilled workers with training. 
B)  Some employers will be reluctant to hire as many workers as they would without a minimum wage. 
C)  Producers have an incentive to offer workers non-wage benefits such as health care benefits and convenient working hours rather than a higher wage. 
D)  All workers benefit when the minimum wage is increased. 
A)  Low-skilled workers benefit because minimum wage increases the number of jobs providing low-skilled workers with training. 
B)  Some employers will be reluctant to hire as many workers as they would without a minimum wage. 
C)  Producers have an incentive to offer workers non-wage benefits such as health care benefits and convenient working hours rather than a higher wage. 
D)  All workers benefit when the minimum wage is increased.

Question 12

How does a negative externality in production reduce economic efficiency?

Accepted Answer

If there is a negative externality in pr

Question 13

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 14

Suppose a binding 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)  Consumer surplus will increase. 
B)  Producer surplus will increase. 
C)  Deadweight loss will increase. 
D)  Market efficiency will increase. 
A)  Consumer surplus will increase. 
B)  Producer surplus will increase. 
C)  Deadweight loss will increase. 
D)  Market efficiency will increase.

Question 15

Price ceilings result in shortages.

Accepted Answer

A) True 
 B)False

Question 16

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.What is the area that represents the producer surplus after the imposition of the ceiling?

Accepted Answer

A)  F + G 
B)  F 
C)  D + F + G 
D)  A + B + D + F + G 
A)  F + G 
B)  F 
C)  D + F + G 
D)  A + B + D + F + G

Question 17

If marginal benefit is greater than marginal cost,output is inefficiently high.

Accepted Answer

A) True 
 B)False

Question 18

What is producer surplus? What does producer surplus measure?

Accepted Answer

Producer surplus is the difference betwe

Question 19

Figure 4-16
   Figure 4-16 shows a market with a negative externality.
-Refer to Figure 4-16.The efficient output level is

Accepted Answer

A)  Qd. 
B)  Qb. 
C)  Qₐ. 
D)  Qb - Qd. 
A)  Qd. 
B)  Qb. 
C)  Qₐ. 
D)  Qb - Qd.

Question 20

If equilibrium is achieved in a competitive market,then

Accepted Answer

A)  there is no deadweight loss. 
B)  the deadweight loss will be maximized. 
C)  the deadweight loss will equal the sum of consumer surplus and producer surplus. 
D)  the deadweight loss will be the same as the opportunity cost of the last unit of output sold. 
A)  there is no deadweight loss. 
B)  the deadweight loss will be maximized. 
C)  the deadweight loss will equal the sum of consumer surplus and producer surplus. 
D)  the deadweight loss will be the same as the opportunity cost of the last unit of output sold.

To affect the market outcome,a price floor

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?

Paul goes to Dick's Sporting Goods to buy a new tennis racquet.He is willing to pay $200 for a new racquet,but buys one on sale for $125.Paul's consumer surplus from the purchase is

An externality is

A major problem with using a tradable emission allowances system to control pollution is

Table 4-1 Consumer Willingness to Pay Tom \ 40 Dick 30 Harriet 25 -Refer to Table 4-1.The table above lists the highest prices three consumers,Tom,Dick,and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of one of the shirts is $28 dollars

Consumers are willing to purchase a product up to the point where

Which of the following is a consequence of minimum wage laws?

How does a negative externality in production reduce economic efficiency?

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.

Suppose a binding 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?

Price ceilings result in shortages.

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.What is the area that represents the producer surplus after the imposition of the ceiling?

If marginal benefit is greater than marginal cost,output is inefficiently high.

What is producer surplus? What does producer surplus measure?

Figure 4-16 Figure 4-16 shows a market with a negative externality. -Refer to Figure 4-16.The efficient output level is

If equilibrium is achieved in a competitive market,then

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

To affect the market outcome,a price floor

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?

Paul goes to Dick's Sporting Goods to buy a new tennis racquet.He is willing to pay $200 for a new racquet,but buys one on sale for $125.Paul's consumer surplus from the purchase is

An externality is

A major problem with using a tradable emission allowances system to control pollution is

Table 4-1 Consumer Willingness to Pay Tom \ 40 Dick 30 Harriet 25 -Refer to Table 4-1.The table above lists the highest prices three consumers,Tom,Dick,and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of one of the shirts is $28 dollars

Consumers are willing to purchase a product up to the point where

Which of the following is a consequence of minimum wage laws?

How does a negative externality in production reduce economic efficiency?

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.

Suppose a binding 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?

Price ceilings result in shortages.

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.What is the area that represents the producer surplus after the imposition of the ceiling?

If marginal benefit is greater than marginal cost,output is inefficiently high.

What is producer surplus? What does producer surplus measure?

Figure 4-16 Figure 4-16 shows a market with a negative externality. -Refer to Figure 4-16.The efficient output level is

If equilibrium is achieved in a competitive market,then

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