Question 1

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 2

Which of the following statements is not true?

Accepted Answer

A)  Consumer surplus measures the difference between the highest price a consumer is willing to pay for a product and the price she actually pays. 
B)  Marginal benefit is the additional benefit to a consumer from consuming one more unit of a product. 
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 difference between the highest price a consumer is willing to pay for a product and the price she actually pays. 
B)  Marginal benefit is the additional benefit to a consumer from consuming one more unit of a product. 
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 3

Suppliers will be willing to supply a product in all of the following situations except when

Accepted Answer

A)  the price received is greater 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 received is equal to the additional cost of producing the product. 
D)  the price received is less than the additional cost of producing the product. 
A)  the price received is greater 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 received is equal to the additional cost of producing the product. 
D)  the price received is less than the additional cost of producing the product.

Question 4

Price ceilings are illegal in the United States.

Accepted Answer

A) True 
 B)False

Question 5

What are property rights?

Accepted Answer

A)  the title to ownership of any physical asset 
B)  a legal document verifying ownership of intangible assets 
C)  the rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it 
D)  the right of the government to appropriate private assets for the good of society 
A)  the title to ownership of any physical asset 
B)  a legal document verifying ownership of intangible assets 
C)  the rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it 
D)  the right of the government to appropriate private assets for the good of society

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 $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 7

Table 4-6
 $\begin{array}{|c|c|}
\hline \begin{array}{c}
\text { Marko's } \
\text { Polos }
\end{array} & \begin{array}{c}
\text { Marginal Cost } \
\text { (dollars) }
\end{array} \
\hline \text { 1st shirt } & \$ 7 \
\hline \text { 2nd shirt } & 10 \
\hline \text { 3rd shirt } & 15 \
\hline \text { 4th shirt } & 20 \
\hline
\end{array}$
-Refer to Table 4-6.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the price of polo shirts decreases from $15 to $10

Accepted Answer

A)  consumers will buy no polo shirts. 
B)  the marginal cost of producing the third polo shirt will increase to $25. 
C)  producer surplus will fall from $13 to $3. 
D)  there will be a shortage of polo shirts. 
A)  consumers will buy no polo shirts. 
B)  the marginal cost of producing the third polo shirt will increase to $25. 
C)  producer surplus will fall from $13 to $3. 
D)  there will be a shortage of polo shirts.

Question 8

Figure 4-20
   Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities.
-Refer to Figure 4-20.What does D₂ represent?

Accepted Answer

A)  the social welfare curve 
B)  the demand curve reflecting marginal social benefits 
C)  the demand curve reflecting marginal private benefits 
D)  the positive externalities curve 
A)  the social welfare curve 
B)  the demand curve reflecting marginal social benefits 
C)  the demand curve reflecting marginal private benefits 
D)  the positive externalities curve

Question 9

Figure 4-4
   Figure 4-4 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 4-4.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 10

Which of the following statements best describes the concept of consumer surplus?

Accepted Answer

A)  "I paid $89 for a microwave oven last week. This week the same store is selling the same microwave oven for $69." 
B)  "I sold my hard copy of Harry Potter and the Half-Blood Prince to a used book store for $10 even though I was willing to sell it for $5." 
C)  "Target was having a sale on tube socks so I bought 5 pairs." 
D)  "I was going to pay $200 for new sunglasses that I had seen at the Oakley store but I ended up paying only $140 for the same sunglasses." 
A)  "I paid $89 for a microwave oven last week. This week the same store is selling the same microwave oven for $69." 
B)  "I sold my hard copy of Harry Potter and the Half-Blood Prince to a used book store for $10 even though I was willing to sell it for $5." 
C)  "Target was having a sale on tube socks so I bought 5 pairs." 
D)  "I was going to pay $200 for new sunglasses that I had seen at the Oakley store but I ended up paying only $140 for the same sunglasses."

Question 11

An external cost is created when you

Accepted Answer

A)  graduate from college. 
B)  buy flowers for your mother on Mother's Day. 
C)  litter on the side of the road. 
D)  buy a sandwich for lunch. 
A)  graduate from college. 
B)  buy flowers for your mother on Mother's Day. 
C)  litter on the side of the road. 
D)  buy a sandwich for lunch.

Question 12

In 2017,economists working at the U.S.Department of Treasury's Office of Tax Analysis have estimated that the marginal social cost of carbon dioxide emissions was about

Accepted Answer

A)  $7 per metric ton. 
B)  $32 per metric ton. 
C)  $49 per metric ton. 
D)  $70 per metric ton. 
A)  $7 per metric ton. 
B)  $32 per metric ton. 
C)  $49 per metric ton. 
D)  $70 per metric ton.

Question 13

Deadweight loss refers to a loss in revenue resulting from producers having to reduce their selling price to remain competitive.

Accepted Answer

A) True 
 B)False

Question 14

Figure 4-8
   Figure 4-8 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.
-Refer to Figure 4-8.With rent control,the quantity supplied is 200 apartments.Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get.What is the highest rent they can get per month?

Accepted Answer

A)  $1,000 
B)  $1,500 
C)  $2,000 
D)  $2,300 
A)  $1,000 
B)  $1,500 
C)  $2,000 
D)  $2,300

Question 15

Table 4-6
 $\begin{array}{|c|c|}
\hline \begin{array}{c}
\text { Marko's } \
\text { Polos }
\end{array} & \begin{array}{c}
\text { Marginal Cost } \
\text { (dollars) }
\end{array} \
\hline \text { 1st shirt } & \$ 7 \
\hline \text { 2nd shirt } & 10 \
\hline \text { 3rd shirt } & 15 \
\hline \text { 4th shirt } & 20 \
\hline
\end{array}$
-Refer to Table 4-6.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the market price of Marko's polo shirts is $30,producer surplus is

Accepted Answer

A)  $0. 
B)  $16. 
C)  $52. 
D)  $68. 
A)  $0. 
B)  $16. 
C)  $52. 
D)  $68.

Question 16

________ dictates the lowest wage that firms may pay for labor.

Accepted Answer

A)  A maximum wage requirement 
B)  A minimum wage law 
C)  The black-market wage 
D)  A price-ceiling wage 
A)  A maximum wage requirement 
B)  A minimum wage law 
C)  The black-market wage 
D)  A price-ceiling wage

Question 17

Figure 4-16
   Figure 4-16 shows a market with a negative externality.
-Refer to Figure 4-16.The size of marginal external costs can be determined by

Accepted Answer

A)  S₂ + S₁ at each output level. 
B)  S₂ - S₁ at each output level. 
C)  the supply curve S₂. 
D)  the supply curve S₁. 
A)  S₂ + S₁ at each output level. 
B)  S₂ - S₁ at each output level. 
C)  the supply curve S₂. 
D)  the supply curve S₁.

Question 18

When there is a positive externality

Accepted Answer

A)  the marginal private benefit received by consumers is greater than the external benefit. 
B)  the marginal social benefit received by consumers is greater than the marginal private benefit. 
C)  the marginal private benefit received by consumers is greater than the marginal private cost. 
D)  the marginal private benefit received by consumers is greater than the marginal social benefit. 
A)  the marginal private benefit received by consumers is greater than the external benefit. 
B)  the marginal social benefit received by consumers is greater than the marginal private benefit. 
C)  the marginal private benefit received by consumers is greater than the marginal private cost. 
D)  the marginal private benefit received by consumers is greater than the marginal social benefit.

Question 19

When a negative externality exists,the private market produces

Accepted Answer

A)  more than the economically efficient output level. 
B)  less than the economically efficient output level. 
C)  products at a low opportunity cost. 
D)  products at a high opportunity cost. 
A)  more than the economically efficient output level. 
B)  less than the economically efficient output level. 
C)  products at a low opportunity cost. 
D)  products at a high opportunity cost.

Question 20

Figure 4-20
   Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities.
-Refer to Figure 4-20.What is the market equilibrium output level?

Accepted Answer

A)  Q₁ 
B)  Q₂ 
C)  Q₁ + Q₂ 
D)  Q₂ - Q₁ 
A)  Q₁ 
B)  Q₂ 
C)  Q₁ + Q₂ 
D)  Q₂ - Q₁

A demand curve shows

Which of the following statements is not true?

Suppliers will be willing to supply a product in all of the following situations except when

Price ceilings are illegal in the United States.

What are property rights?

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?

Table 4-6 Marko's Polos Marginal Cost (dollars) 1st shirt \ 7 2nd shirt 10 3rd shirt 15 4th shirt 20 -Refer to Table 4-6.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the price of polo shirts decreases from $15 to $10

Figure 4-20 Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to Figure 4-20.What does D₂ represent?

Figure 4-4 Figure 4-4 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 4-4.What is the value of consumer surplus at a price of $18?

Which of the following statements best describes the concept of consumer surplus?

An external cost is created when you

In 2017,economists working at the U.S.Department of Treasury's Office of Tax Analysis have estimated that the marginal social cost of carbon dioxide emissions was about

Deadweight loss refers to a loss in revenue resulting from producers having to reduce their selling price to remain competitive.

________ dictates the lowest wage that firms may pay for labor.

Figure 4-16 Figure 4-16 shows a market with a negative externality. -Refer to Figure 4-16.The size of marginal external costs can be determined by

When there is a positive externality

When a negative externality exists,the private market produces

Figure 4-20 Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to Figure 4-20.What is the market equilibrium output level?

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

A demand curve shows

Which of the following statements is not true?

Suppliers will be willing to supply a product in all of the following situations except when

Price ceilings are illegal in the United States.

What are property rights?

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?

Table 4-6 Marko's Polos Marginal Cost (dollars) 1st shirt \ 7 2nd shirt 10 3rd shirt 15 4th shirt 20 -Refer to Table 4-6.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the price of polo shirts decreases from $15 to $10

Figure 4-20 Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to Figure 4-20.What does D₂ represent?

Figure 4-4 Figure 4-4 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 4-4.What is the value of consumer surplus at a price of $18?

Which of the following statements best describes the concept of consumer surplus?

An external cost is created when you

In 2017,economists working at the U.S.Department of Treasury's Office of Tax Analysis have estimated that the marginal social cost of carbon dioxide emissions was about

Deadweight loss refers to a loss in revenue resulting from producers having to reduce their selling price to remain competitive.

________ dictates the lowest wage that firms may pay for labor.

Figure 4-16 Figure 4-16 shows a market with a negative externality. -Refer to Figure 4-16.The size of marginal external costs can be determined by

When there is a positive externality

When a negative externality exists,the private market produces

Figure 4-20 Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to Figure 4-20.What is the market equilibrium output level?

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