Question 1

Each point on a demand curve shows

Accepted Answer

A) the willingness of consumers to purchase a product at different prices. 
B) the consumer surplus received from purchasing a given quantity of a product. 
C) the economic surplus received from purchasing a given quantity of a product. 
D) the legally determined maximum price that sellers may charge for a given quantity of a product. 
A) the willingness of consumers to purchase a product at different prices. 
B) the consumer surplus received from purchasing a given quantity of a product. 
C) the economic surplus received from purchasing a given quantity of a product. 
D) the legally determined maximum price that sellers may charge for a given quantity of a product.

Question 2

The difference between the ________ for a good and the ________ is called consumer surplus.

Accepted Answer

A) highest price a consumer is willing to pay; lowest price a consumer is willing to pay 
B) lowest price a consumer is willing to pay; price the consumer actually pays 
C) highest price a consumer is willing to pay; price the consumer actually pays 
D) price the consumer actually pays; actual cost to the producer 
A) highest price a consumer is willing to pay; lowest price a consumer is willing to pay 
B) lowest price a consumer is willing to pay; price the consumer actually pays 
C) highest price a consumer is willing to pay; price the consumer actually pays 
D) price the consumer actually pays; actual cost to the producer

Question 3

Brett buys a new cell phone for $100.He receives consumer surplus of $80 from the purchase.How much does Brett value his cell phone?

Accepted Answer

A) $180 
B) $100 
C) $80 
D) $20 
A) $180 
B) $100 
C) $80 
D) $20

Question 4

Price controls in Venezuela resulted in a thriving black market in many goods.The black market arose because the price controls that were implemented by the Venezuelan government were ________ which resulted in a ________ of products.

Accepted Answer

A) price floors; surplus 
B) price floors; shortage 
C) price ceilings; surplus 
D) price ceilings; shortage 
A) price floors; surplus 
B) price floors; shortage 
C) price ceilings; surplus 
D) price ceilings; shortage

Question 5

Table 4-7
  
-Refer to Table 4-7.The equations above describe the demand and supply for Pauline's Pickled Pomegranates.The equilibrium price and quantity for Pauline's Pickled Pomegranates are $30 and 15 thousand units.What is the value of economic surplus in this market?

Accepted Answer

A) $50 thousand 
B) $112.5 thousand 
C) $225 thousand 
D) $337.5 thousand 
A) $50 thousand 
B) $112.5 thousand 
C) $225 thousand 
D) $337.5 thousand

Question 6

Congress passed the Freedom to Farm Act in 1996.What was the purpose of this act?

Accepted Answer

A) to encourage more people to become farmers 
B) to grant free land to farmers in order to produce crops that were particularly scarce 
C) to phase out the use of price ceilings in agricultural markets 
D) to phase out price floors and return to a free market in agriculture 
A) to encourage more people to become farmers 
B) to grant free land to farmers in order to produce crops that were particularly scarce 
C) to phase out the use of price ceilings in agricultural markets 
D) to phase out price floors and return to a free market in agriculture

Question 7

Suppose an excise tax of $0.75 is imposed on every pack of cigarettes sold and sellers are responsible for paying this tax.How would the imposition of the tax be illustrated in a graph?

Accepted Answer

A) The supply curve for cigarettes would shift up by $0.75. 
B) The supply curve for cigarettes would shift up by less than $0.75. 
C) The supply curve for cigarettes would shift up by more than $0.75. 
D) The supply curve for cigarettes would shift down by $0.75. 
A) The supply curve for cigarettes would shift up by $0.75. 
B) The supply curve for cigarettes would shift up by less than $0.75. 
C) The supply curve for cigarettes would shift up by more than $0.75. 
D) The supply curve for cigarettes would shift down by $0.75.

Question 8

Table 4-4
   Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.
-Refer to Table 4-4.If a minimum wage of $9.50 an hour is mandated,what is the quantity of labor supplied?

Accepted Answer

A) 390,000 
B) 380,000 
C) 370,000 
D) 340,000 
A) 390,000 
B) 380,000 
C) 370,000 
D) 340,000

Question 9

Table 4-4
   Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.
-Refer to Table 4-4.If a minimum wage of $10.00 an hour is mandated,what is the quantity of labor supplied?

Accepted Answer

A) 390,000 
B) 370,000 
C) 350,000 
D) 40,000 
A) 390,000 
B) 370,000 
C) 350,000 
D) 40,000

Question 10

Figure 4-12  
-Refer to Figure 4-12.The figure above represents demand and supply in the market for cigarettes.Use the diagram to answer the following questions.
a.How much is the government tax on each pack of cigarettes?
b.What portion of the unit tax is paid by consumers?
c.What portion of the unit tax is paid by producers?
d.What is the quantity sold after the imposition of the tax?
e.What is the after-tax revenue per pack received by producers?
f.What is the total tax revenue collected by the government?
g.What is the value of the excess burden of the tax?
h.Is this cigarette tax efficient?

Accepted Answer

a.$1.25 b.Consumer burden = $1.00 c.Prod

Question 11

Table 4-6
  
-Refer to Table 4-6.The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion.What are the equilibrium price and quantity (in thousands)for Aunt Maud's Lotion?

Accepted Answer

A) $20 and 30 thousand 
B) $30 and 20 thousand 
C) $60 and 30 thousand 
D) $20 and 60 thousand 
A) $20 and 30 thousand 
B) $30 and 20 thousand 
C) $60 and 30 thousand 
D) $20 and 60 thousand

Question 12

Table 4-3
  
-Refer to Table 4-3.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 $13,Marko's will produce

Accepted Answer

A) 1 shirt. 
B) 2 shirts. 
C) 3 shirts. 
D) 4 shirts. 
A) 1 shirt. 
B) 2 shirts. 
C) 3 shirts. 
D) 4 shirts.

Question 13

Rent control is an example of a price floor.

Accepted Answer

A) True 
 B)False

Question 14

Producer surplus is the difference between the highest price a firm is willing to accept for a product and the price it actually receives for the product.

Accepted Answer

A) True 
 B)False

Question 15

The willingness of consumers to buy a product at different prices is shown on a

Accepted Answer

A) demand curve. 
B) supply curve. 
C) production possibilities frontier. 
D) marginal cost curve. 
A) demand curve. 
B) supply curve. 
C) production possibilities frontier. 
D) marginal cost curve.

Question 16

Suppose there are two cities that have rent controlled apartments.In one city (Albany)all apartments are subject to rent control; in the other city (Halftrack)one-half of the apartments are rent controlled.Which of the following is most likely to be true?

Accepted Answer

A) It will be difficult to find a rent-controlled apartment in Albany or Halftrack; rents for the Halftrack apartments not subject to controls will be higher than they would be without rent control. 
B) It will be easier to find an affordable apartment in Albany since rents will be low across the board. 
C) It will be easier to find an affordable apartment in Halftrack,either a rent-controlled apartment or another apartment,at a reasonable price. 
D) It will be impossible to rent an apartment in either city at any price. 
A) It will be difficult to find a rent-controlled apartment in Albany or Halftrack; rents for the Halftrack apartments not subject to controls will be higher than they would be without rent control. 
B) It will be easier to find an affordable apartment in Albany since rents will be low across the board. 
C) It will be easier to find an affordable apartment in Halftrack,either a rent-controlled apartment or another apartment,at a reasonable price. 
D) It will be impossible to rent an apartment in either city at any price.

Question 17

Figure 4-1   Figure 4-1 shows Kendra's demand curve for ice cream cones.
-Refer to Figure 4-1.If the market price is $3.00,what is Kendra's consumer surplus?

Accepted Answer

A) $6.50 
B) $5.50 
C) $2.50 
D) $0.50 
A) $6.50 
B) $5.50 
C) $2.50 
D) $0.50

Question 18

The additional benefit to a consumer from consuming one more unit of a good or service

Accepted Answer

A) is equal to consumer surplus. 
B) is equal to the opportunity cost of consuming the good or service. 
C) is equal to marginal benefit. 
D) is equal to economic surplus. 
A) is equal to consumer surplus. 
B) is equal to the opportunity cost of consuming the good or service. 
C) is equal to marginal benefit. 
D) is equal to economic surplus.

Question 19

Figure 4-3   Figure 4-3 shows the market for granola.The market is initially in equilibrium at a price of PS1U1B11S1U1B0 and a quantity of QS1U1B11S1U1B0.Now suppose producers decide to cut output to QS1U1B12 S1U1B0in order to raise the price to PS1U1B12.S1U1B0
-Refer to Figure 4-3.At the equilibrium price of P1,consumers are willing to buy Q1 pounds of granola.Is this an economically efficient quantity?

Accepted Answer

A) No,the marginal benefit of the last unit (Q1)exceeds the marginal cost of that last unit. 
B) Yes,because marginal cost is zero at the price of P1. 
C) Yes,because P1 is the price where marginal benefit equals marginal cost. 
D) No,the marginal cost of the last unit (Q1)exceeds the marginal benefit of the last unit. 
A) No,the marginal benefit of the last unit (Q1)exceeds the marginal cost of that last unit. 
B) Yes,because marginal cost is zero at the price of P1. 
C) Yes,because P1 is the price where marginal benefit equals marginal cost. 
D) No,the marginal cost of the last unit (Q1)exceeds the marginal benefit of the last unit.

Question 20

Figure 4-1   Figure 4-1 shows Kendra's demand curve for ice cream cones.
-Refer to Figure 4-1.Kendra's marginal benefit from consuming the second ice cream cone is

Accepted Answer

A) $6.50. 
B) $6.00. 
C) $3.00. 
D) $2.25. 
A) $6.50. 
B) $6.00. 
C) $3.00. 
D) $2.25.

Each point on a demand curve shows

The difference between the for a good and the is called consumer surplus.

Brett buys a new cell phone for $100.He receives consumer surplus of $80 from the purchase.How much does Brett value his cell phone?

Price controls in Venezuela resulted in a thriving black market in many goods.The black market arose because the price controls that were implemented by the Venezuelan government were which resulted in a of products.

Table 4-7 -Refer to Table 4-7.The equations above describe the demand and supply for Pauline's Pickled Pomegranates.The equilibrium price and quantity for Pauline's Pickled Pomegranates are $30 and 15 thousand units.What is the value of economic surplus in this market?

Congress passed the Freedom to Farm Act in 1996.What was the purpose of this act?

Suppose an excise tax of $0.75 is imposed on every pack of cigarettes sold and sellers are responsible for paying this tax.How would the imposition of the tax be illustrated in a graph?

Table 4-4 Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-4.If a minimum wage of $9.50 an hour is mandated,what is the quantity of labor supplied?

Table 4-4 Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-4.If a minimum wage of $10.00 an hour is mandated,what is the quantity of labor supplied?

Table 4-6 -Refer to Table 4-6.The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion.What are the equilibrium price and quantity (in thousands)for Aunt Maud's Lotion?

Table 4-3 -Refer to Table 4-3.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 $13,Marko's will produce

Rent control is an example of a price floor.

Producer surplus is the difference between the highest price a firm is willing to accept for a product and the price it actually receives for the product.

The willingness of consumers to buy a product at different prices is shown on a

Suppose there are two cities that have rent controlled apartments.In one city (Albany)all apartments are subject to rent control; in the other city (Halftrack)one-half of the apartments are rent controlled.Which of the following is most likely to be true?

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-1.If the market price is $3.00,what is Kendra's consumer surplus?

The additional benefit to a consumer from consuming one more unit of a good or service

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-1.Kendra's marginal benefit from consuming the second ice cream cone is

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

Each point on a demand curve shows

The difference between the ________ for a good and the ________ is called consumer surplus.

Brett buys a new cell phone for $100.He receives consumer surplus of $80 from the purchase.How much does Brett value his cell phone?

Price controls in Venezuela resulted in a thriving black market in many goods.The black market arose because the price controls that were implemented by the Venezuelan government were ________ which resulted in a ________ of products.

Table 4-7 -Refer to Table 4-7.The equations above describe the demand and supply for Pauline's Pickled Pomegranates.The equilibrium price and quantity for Pauline's Pickled Pomegranates are $30 and 15 thousand units.What is the value of economic surplus in this market?

Congress passed the Freedom to Farm Act in 1996.What was the purpose of this act?

Suppose an excise tax of $0.75 is imposed on every pack of cigarettes sold and sellers are responsible for paying this tax.How would the imposition of the tax be illustrated in a graph?

Table 4-4 Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-4.If a minimum wage of $9.50 an hour is mandated,what is the quantity of labor supplied?

Table 4-4 Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-4.If a minimum wage of $10.00 an hour is mandated,what is the quantity of labor supplied?

Table 4-6 -Refer to Table 4-6.The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion.What are the equilibrium price and quantity (in thousands)for Aunt Maud's Lotion?

Table 4-3 -Refer to Table 4-3.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 $13,Marko's will produce

Rent control is an example of a price floor.

Producer surplus is the difference between the highest price a firm is willing to accept for a product and the price it actually receives for the product.

The willingness of consumers to buy a product at different prices is shown on a

Suppose there are two cities that have rent controlled apartments.In one city (Albany)all apartments are subject to rent control; in the other city (Halftrack)one-half of the apartments are rent controlled.Which of the following is most likely to be true?

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-1.If the market price is $3.00,what is Kendra's consumer surplus?

The additional benefit to a consumer from consuming one more unit of a good or service

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-1.Kendra's marginal benefit from consuming the second ice cream cone is

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

The difference between the for a good and the is called consumer surplus.

Price controls in Venezuela resulted in a thriving black market in many goods.The black market arose because the price controls that were implemented by the Venezuelan government were which resulted in a of products.