Question 1

Consumers seek to

Accepted Answer

A)  maximize profits. 
B)  maximize expected consumer surplus. 
C)  minimize expenditures. 
D)  maximize choice. 
A)  maximize profits. 
B)  maximize expected consumer surplus. 
C)  minimize expenditures. 
D)  maximize choice.

Question 2

-The above figure shows the demand and supply curves in the market for milk.Currently the market is in equilibrium.If the government establishes a $2 per gallon price ceiling to ensure that children are nourished,estimate the change in p,Q,and social welfare.

Accepted Answer

At a price of $2,only 500 gall

Question 3

Assume the price of tomatoes increases.Which of the following causes would correspond to greater producer surplus?

Accepted Answer

A)  an increase in supply 
B)  an increase in costs 
C)  a decrease in supply 
D)  an increase in demand 
A)  an increase in supply 
B)  an increase in costs 
C)  a decrease in supply 
D)  an increase in demand

Question 4

Which of the following expressions can be used to calculate the producer surplus (PS)?

Accepted Answer

A)  PS = profit * output 
B)  PS = profit + fixed cost 
C)  PS = variable cost - fixed cost 
D)  PS = average cost * output 
A)  PS = profit * output 
B)  PS = profit + fixed cost 
C)  PS = variable cost - fixed cost 
D)  PS = average cost * output

Question 5

-The above figure shows the market for rice in Japan where price is expressed in dollars.S represents the domestic supply curve,and the horizontal line at P = 1 represents the world supply curve.Suppose a free market exists.The smallest tariff necessary to completely eliminate imported rice is

Accepted Answer

A)  $0.50 per unit. 
B)  $1.00 per unit. 
C)  $1.50 per unit. 
D)  $2.00 per unit. 
A)  $0.50 per unit. 
B)  $1.00 per unit. 
C)  $1.50 per unit. 
D)  $2.00 per unit.

Question 6

Producer surplus equals

Accepted Answer

A)  total revenue minus total variable cost. 
B)  total revenue minus the sum of all marginal cost. 
C)  profit plus fixed cost. 
D)  All of the above. 
A)  total revenue minus total variable cost. 
B)  total revenue minus the sum of all marginal cost. 
C)  profit plus fixed cost. 
D)  All of the above.

Question 7

Economists claim that measuring society's welfare as CS + PS

Accepted Answer

A)  is inappropriate since ultimately everyone is a consumer. 
B)  is valid only when the same person could be either a consumer or a producer. 
C)  treats the gains to consumers and producers equally. 
D)  is not commonly accepted. 
A)  is inappropriate since ultimately everyone is a consumer. 
B)  is valid only when the same person could be either a consumer or a producer. 
C)  treats the gains to consumers and producers equally. 
D)  is not commonly accepted.

Question 8

If a market produces a level of output that exceeds the competitive equilibrium output,then

Accepted Answer

A)  social welfare will be higher. 
B)  producer surplus will be higher. 
C)  marginal cost will exceed price. 
D)  All of the above. 
A)  social welfare will be higher. 
B)  producer surplus will be higher. 
C)  marginal cost will exceed price. 
D)  All of the above.

Question 9

Advocates of steel tariffs to protect U.S.steel firms realize that when imposing such tariffs,the gains of firms are outweighed by the losses to consumers.This implies that

Accepted Answer

A)  such advocates value producer surplus more than consumer surplus. 
B)  such advocates want to help consumers. 
C)  such advocates value consumer surplus more than producer surplus. 
D)  such advocates value producer surplus and consumer surplus equally. 
A)  such advocates value producer surplus more than consumer surplus. 
B)  such advocates want to help consumers. 
C)  such advocates value consumer surplus more than producer surplus. 
D)  such advocates value producer surplus and consumer surplus equally.

Question 10

-Figure 9.6 shows an individual's demand curve for time per month spent telecommunicating while driving (talking on the car phone.)A car phone is useless except for talking with somebody who is not in the car.If calls are priced at ten cents per minute,what is the consumer surplus derived from talking? What is the most this person would pay for the car phone? Explain.

Accepted Answer

The consumer surplus from talking on the

Question 11

The services of real estate brokers are provided in a competitive market.If the state Board of Realtors enacts several requirements that limit the number of real estate brokers,then social welfare will most likely

Accepted Answer

A)  not change, but there will be a transfer from consumer to producer. 
B)  not change, but there will be a transfer from producer to consumer. 
C)  decrease, although producers are made better off. 
D)  decrease, although consumers are made better off. 
A)  not change, but there will be a transfer from consumer to producer. 
B)  not change, but there will be a transfer from producer to consumer. 
C)  decrease, although producers are made better off. 
D)  decrease, although consumers are made better off.

Question 12

Deadweight loss occurs when

Accepted Answer

A)  producer surplus is greater than consumer surplus. 
B)  the maximum level of total welfare is not achieved. 
C)  consumer surplus is reduced. 
D)  an inferior good is consumed. 
A)  producer surplus is greater than consumer surplus. 
B)  the maximum level of total welfare is not achieved. 
C)  consumer surplus is reduced. 
D)  an inferior good is consumed.

Question 13

If an economist states that not enough of a good is being produced,she usually means that

Accepted Answer

A)  not everyone can afford the good. 
B)  price exceeds marginal cost. 
C)  consumer surplus equals zero. 
D)  at equilibrium, some people who still wish to sell the good cannot find a buyer. 
A)  not everyone can afford the good. 
B)  price exceeds marginal cost. 
C)  consumer surplus equals zero. 
D)  at equilibrium, some people who still wish to sell the good cannot find a buyer.

Question 14

What is one reason existing firms might lobby the government to increase regulation in their industry?

Accepted Answer

A)  It increases entry and exit costs, thereby reducing producer surplus to existing firms. 
B)  It increases entry and exit costs, thereby potentially increasing producer surplus to existing firms. 
C)  It increases entry and exit costs, but has no impact on producer surplus. 
D)  Firms cannot be trusted to treat their customers fairly and ethically. 
A)  It increases entry and exit costs, thereby reducing producer surplus to existing firms. 
B)  It increases entry and exit costs, thereby potentially increasing producer surplus to existing firms. 
C)  It increases entry and exit costs, but has no impact on producer surplus. 
D)  Firms cannot be trusted to treat their customers fairly and ethically.

Question 15

In a perfectly competitive market the long-run demand and supply curves are Q = 12 - P and Q = 5P respectively.Producer surplus in this market equals

Accepted Answer

A)  0. 
B)  5. 
C)  10. 
D)  It cannot be determined without more information. 
A)  0. 
B)  5. 
C)  10. 
D)  It cannot be determined without more information.

Question 16

-The above figure shows the market for rice in Japan.S represents the domestic supply curve,and the horizontal line at P =1 represents the world supply curve.If imported rice is banned,the loss in social welfare is

Accepted Answer

A)  a + b + c + d + e. 
B)  a. 
C)  c + e. 
D)  i. 
A)  a + b + c + d + e. 
B)  a. 
C)  c + e. 
D)  i.

Question 17

The larger the U.S.imposed per unit import tariff on a good imported and produced in the United States,

Accepted Answer

A)  the smaller the U.S. consumer surplus. 
B)  the larger the U.S. producer surplus. 
C)  the larger the government revenue. 
D)  All of the above. 
A)  the smaller the U.S. consumer surplus. 
B)  the larger the U.S. producer surplus. 
C)  the larger the government revenue. 
D)  All of the above.

Question 18

-The above figure shows the market for rice in Japan where price is expressed in dollars.S represents the domestic supply curve,and the horizontal line at P = 1 represents the world supply curve.A $1 per unit tariff has the same effect on producer and consumer surplus as a quota of

Accepted Answer

A)  Q1 units. 
B)  Q2 units. 
C)  Q2 - Q1 units. 
D)  Q1 - Q2 units. 
A)  Q1 units. 
B)  Q2 units. 
C)  Q2 - Q1 units. 
D)  Q1 - Q2 units.

Question 19

Which of the following is NOT a potential result of a price floor?

Accepted Answer

A)  excess supply 
B)  price greater than free-market equilibrium price 
C)  Lower quality inputs are used, which increases marginal cost. 
D)  All of the above. 
A)  excess supply 
B)  price greater than free-market equilibrium price 
C)  Lower quality inputs are used, which increases marginal cost. 
D)  All of the above.

Question 20

What is one reason firms might lobby to prevent entry into their market?

Accepted Answer

A)  The long run equilibrium might be characterized by P = MC = ATC. 
B)  The long run equilibrium might be characterized by P = MC  MC = ATC. 
D)  The long run equilibrium might be characterized by P = MC > ATC. 
A)  The long run equilibrium might be characterized by P = MC = ATC. 
B)  The long run equilibrium might be characterized by P = MC  MC = ATC. 
D)  The long run equilibrium might be characterized by P = MC > ATC.

Consumers seek to

-The above figure shows the demand and supply curves in the market for milk.Currently the market is in equilibrium.If the government establishes a $2 per gallon price ceiling to ensure that children are nourished,estimate the change in p,Q,and social welfare.

Assume the price of tomatoes increases.Which of the following causes would correspond to greater producer surplus?

Which of the following expressions can be used to calculate the producer surplus (PS)?

-The above figure shows the market for rice in Japan where price is expressed in dollars.S represents the domestic supply curve,and the horizontal line at P = 1 represents the world supply curve.Suppose a free market exists.The smallest tariff necessary to completely eliminate imported rice is

Producer surplus equals

Economists claim that measuring society's welfare as CS + PS

If a market produces a level of output that exceeds the competitive equilibrium output,then

Advocates of steel tariffs to protect U.S.steel firms realize that when imposing such tariffs,the gains of firms are outweighed by the losses to consumers.This implies that

The services of real estate brokers are provided in a competitive market.If the state Board of Realtors enacts several requirements that limit the number of real estate brokers,then social welfare will most likely

Deadweight loss occurs when

If an economist states that not enough of a good is being produced,she usually means that

What is one reason existing firms might lobby the government to increase regulation in their industry?

In a perfectly competitive market the long-run demand and supply curves are Q = 12 - P and Q = 5P respectively.Producer surplus in this market equals

-The above figure shows the market for rice in Japan.S represents the domestic supply curve,and the horizontal line at P =1 represents the world supply curve.If imported rice is banned,the loss in social welfare is

The larger the U.S.imposed per unit import tariff on a good imported and produced in the United States,

-The above figure shows the market for rice in Japan where price is expressed in dollars.S represents the domestic supply curve,and the horizontal line at P = 1 represents the world supply curve.A $1 per unit tariff has the same effect on producer and consumer surplus as a quota of

Which of the following is NOT a potential result of a price floor?

What is one reason firms might lobby to prevent entry into their market?

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 9: Applying the Competitive Model

Consumers seek to

-The above figure shows the demand and supply curves in the market for milk.Currently the market is in equilibrium.If the government establishes a $2 per gallon price ceiling to ensure that children are nourished,estimate the change in p,Q,and social welfare.

Assume the price of tomatoes increases.Which of the following causes would correspond to greater producer surplus?

Which of the following expressions can be used to calculate the producer surplus (PS)?

-The above figure shows the market for rice in Japan where price is expressed in dollars.S represents the domestic supply curve,and the horizontal line at P = 1 represents the world supply curve.Suppose a free market exists.The smallest tariff necessary to completely eliminate imported rice is

Producer surplus equals

Economists claim that measuring society's welfare as CS + PS

If a market produces a level of output that exceeds the competitive equilibrium output,then

Advocates of steel tariffs to protect U.S.steel firms realize that when imposing such tariffs,the gains of firms are outweighed by the losses to consumers.This implies that

The services of real estate brokers are provided in a competitive market.If the state Board of Realtors enacts several requirements that limit the number of real estate brokers,then social welfare will most likely

Deadweight loss occurs when

If an economist states that not enough of a good is being produced,she usually means that

What is one reason existing firms might lobby the government to increase regulation in their industry?

In a perfectly competitive market the long-run demand and supply curves are Q = 12 - P and Q = 5P respectively.Producer surplus in this market equals

-The above figure shows the market for rice in Japan.S represents the domestic supply curve,and the horizontal line at P =1 represents the world supply curve.If imported rice is banned,the loss in social welfare is

The larger the U.S.imposed per unit import tariff on a good imported and produced in the United States,

-The above figure shows the market for rice in Japan where price is expressed in dollars.S represents the domestic supply curve,and the horizontal line at P = 1 represents the world supply curve.A $1 per unit tariff has the same effect on producer and consumer surplus as a quota of

Which of the following is NOT a potential result of a price floor?

What is one reason firms might lobby to prevent entry into their market?

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters