Question 1

Exhibit 7-8   Refer to Exhibit 7-8.When the price is P2,the producer surplus is equal to area:

Accepted Answer

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

Question 2

If the world supply of diamonds decreases,diamonds become more valuable,and therefore,the consumer surplus derived from diamonds increases.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 7-9   Refer to Exhibit 7-9.The total welfare after the tax is the area:

Accepted Answer

A)  a + b + d + f 
B)  b + d 
C)  c + e 
D)  d + e + f 
A)  a + b + d + f 
B)  b + d 
C)  c + e 
D)  d + e + f

Question 4

Exhibit 7-8   Refer to Exhibit 7-8.When the price is P1,the producer surplus is equal to area:

Accepted Answer

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

Question 5

Ceteris paribus,an increase in the price of a good will cause the:

Accepted Answer

A)  quantity demanded of the good to increase. 
B)  quantity supplied of the good to decrease. 
C)  supply of the good to increase. 
D)  consumer surplus derived from the good to decrease. 
A)  quantity demanded of the good to increase. 
B)  quantity supplied of the good to decrease. 
C)  supply of the good to increase. 
D)  consumer surplus derived from the good to decrease.

Question 6

Exhibit 7-11   Refer to Exhibit 7-11.The consumer surplus before the price ceiling is area:

Accepted Answer

A)  a + b + d + f 
B)  a 
C)  a + b 
D)  a + b + c 
A)  a + b + d + f 
B)  a 
C)  a + b 
D)  a + b + c

Question 7

Exhibit 7-10   Refer to Exhibit 7-10.The producer surplus after the subsidy is area

Accepted Answer

A)  c + d + b + g 
B)  a + b + c + d 
C)  c + g 
D)  c + d + b + e 
A)  c + d + b + g 
B)  a + b + c + d 
C)  c + g 
D)  c + d + b + e

Question 8

A government payment to producers for the difference between a target price and the price at which producers were able to sell their goods is known as a:

Accepted Answer

A)  subsidy. 
B)  deficiency payment. 
C)  producer surplus. 
D)  price support. 
A)  subsidy. 
B)  deficiency payment. 
C)  producer surplus. 
D)  price support.

Question 9

A subsidy in an industry would result in:

Accepted Answer

A)  an increase in consumer surplus. 
B)  an increase in producer surplus 
C)  both (a) and (b). 
D)  none of the above. 
A)  an increase in consumer surplus. 
B)  an increase in producer surplus 
C)  both (a) and (b). 
D)  none of the above.

Question 10

Which of the following is true about consumer surplus?

Accepted Answer

A)  Consumer surplus is how much more consumers have to pay than they are willing to pay. 
B)  Consumer surplus is shown graphically as the area under the demand curve but above the supply curve. 
C)  An increase in the market price due to a decrease in supply will increase consumer surplus. 
D)  A decrease in market price due to an increase in supply will increase consumer surplus. 
A)  Consumer surplus is how much more consumers have to pay than they are willing to pay. 
B)  Consumer surplus is shown graphically as the area under the demand curve but above the supply curve. 
C)  An increase in the market price due to a decrease in supply will increase consumer surplus. 
D)  A decrease in market price due to an increase in supply will increase consumer surplus.

Question 11

Exhibit 7-5 The schedule below represents the willingness of a typical consumer to pay for wine in a year.Suppose there are 10,000 identical consumers in the community.
  Refer to Exhibit 7-5.If the market price of wine is $20,the total consumer surplus for the community equals:

Accepted Answer

A)  $20,000. 
B)  $30,000. 
C)  $50,000. 
D)  $60,000. 
A)  $20,000. 
B)  $30,000. 
C)  $50,000. 
D)  $60,000.

Question 12

Exhibit 7-3   Refer to Exhibit 7-3.What is the producer surplus of the 10th unit bought/sold?

Accepted Answer

A)  $1.25 
B)  $2.25 
C)  $2.75 
D)  $3.50 
A)  $1.25 
B)  $2.25 
C)  $2.75 
D)  $3.50

Question 13

A tax would not impose a welfare cost only if:

Accepted Answer

A)  the quantity exchanged did not change as a result. 
B)  supply was perfectly elastic. 
C)  supply was unit elastic. 
D)  the demand curve was perfectly elastic. 
A)  the quantity exchanged did not change as a result. 
B)  supply was perfectly elastic. 
C)  supply was unit elastic. 
D)  the demand curve was perfectly elastic.

Question 14

Welfare effects are the gains and losses associated with ____ in markets.

Accepted Answer

A)  supply shocks 
B)  government intervention 
C)  excess production 
D)  demand supply gap 
A)  supply shocks 
B)  government intervention 
C)  excess production 
D)  demand supply gap

Question 15

Exhibit 7-7   Refer to Exhibit 7-7.When the price falls from P2 to P1,consumer surplus

Accepted Answer

A)  increases by area D + E 
B)  increases by area B + C 
C)  decreases by area B + C 
D)  decreases by area C 
A)  increases by area D + E 
B)  increases by area B + C 
C)  decreases by area B + C 
D)  decreases by area C

Question 16

Exhibit 7-1 Miles demands jazz CDs according to the following demand schedule:
  Refer to Exhibit 7-1.If the price of the jazz CDs equals $15,the total consumer surplus Miles receives from purchasing jazz CDs is:

Accepted Answer

A)  $15. 
B)  $25. 
C)  $30. 
D)  $55. 
A)  $15. 
B)  $25. 
C)  $30. 
D)  $55.

Question 17

Exhibit 7-2   Refer to Exhibit 7-2.What is the producer surplus of the 1st unit sold assuming this market reaches equilibrium?

Accepted Answer

A)  $1.00 
B)  $2.00 
C)  $3.00 
D)  $7.00 
A)  $1.00 
B)  $2.00 
C)  $3.00 
D)  $7.00

Question 18

Which of the following is true about producer surplus?

Accepted Answer

A)  Producer surplus is how much more it costs sellers than they are paid. 
B)  Producer surplus is shown graphically as the area under the demand curve but above the supply curve. 
C)  An increase in the market price due to an increase in demand will increase producer surplus. 
D)  All of the above are true about producer surplus. 
A)  Producer surplus is how much more it costs sellers than they are paid. 
B)  Producer surplus is shown graphically as the area under the demand curve but above the supply curve. 
C)  An increase in the market price due to an increase in demand will increase producer surplus. 
D)  All of the above are true about producer surplus.

Question 19

Exhibit 7-12   Refer to Exhibit 7-12.When the price floor is implemented,the price changes to ____ and the output bought by consumers changes to ____.

Accepted Answer

A)  P1; Q1 
B)  P2; Q1 
C)  P2; Q2 
D)  P1; Qs 
A)  P1; Q1 
B)  P2; Q1 
C)  P2; Q2 
D)  P1; Qs

Question 20

A tax in an industry would result in:

Accepted Answer

A)  a decrease in consumer surplus. 
B)  a decrease in producer surplus 
C)  a decrease in the gains from trade. 
D)  all of the above. 
A)  a decrease in consumer surplus. 
B)  a decrease in producer surplus 
C)  a decrease in the gains from trade. 
D)  all of the above.

Exam 7: Market Efficiency and Welfare

Exhibit 7-8 Refer to Exhibit 7-8.When the price is P2,the producer surplus is equal to area:

If the world supply of diamonds decreases,diamonds become more valuable,and therefore,the consumer surplus derived from diamonds increases.

Exhibit 7-9 Refer to Exhibit 7-9.The total welfare after the tax is the area:

Exhibit 7-8 Refer to Exhibit 7-8.When the price is P1,the producer surplus is equal to area:

Ceteris paribus,an increase in the price of a good will cause the:

Exhibit 7-11 Refer to Exhibit 7-11.The consumer surplus before the price ceiling is area:

Exhibit 7-10 Refer to Exhibit 7-10.The producer surplus after the subsidy is area

A government payment to producers for the difference between a target price and the price at which producers were able to sell their goods is known as a:

A subsidy in an industry would result in:

Which of the following is true about consumer surplus?

Exhibit 7-5 The schedule below represents the willingness of a typical consumer to pay for wine in a year.Suppose there are 10,000 identical consumers in the community. Refer to Exhibit 7-5.If the market price of wine is $20,the total consumer surplus for the community equals:

Exhibit 7-3 Refer to Exhibit 7-3.What is the producer surplus of the 10th unit bought/sold?

A tax would not impose a welfare cost only if:

Welfare effects are the gains and losses associated with ____ in markets.

Exhibit 7-7 Refer to Exhibit 7-7.When the price falls from P2 to P1,consumer surplus

Exhibit 7-1 Miles demands jazz CDs according to the following demand schedule: Refer to Exhibit 7-1.If the price of the jazz CDs equals $15,the total consumer surplus Miles receives from purchasing jazz CDs is:

Exhibit 7-2 Refer to Exhibit 7-2.What is the producer surplus of the 1st unit sold assuming this market reaches equilibrium?

Which of the following is true about producer surplus?

Exhibit 7-12 Refer to Exhibit 7-12.When the price floor is implemented,the price changes to ____ and the output bought by consumers changes to ____.

A tax in an industry would result in:

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

Filters

Exhibit 7-8 Refer to Exhibit 7-8.When the price is P₂,the producer surplus is equal to area:

Exhibit 7-8 Refer to Exhibit 7-8.When the price is P₁,the producer surplus is equal to area:

Exhibit 7-3 Refer to Exhibit 7-3.What is the producer surplus of the 10^th unit bought/sold?

Exhibit 7-7 Refer to Exhibit 7-7.When the price falls from P₂ to P₁,consumer surplus

Exhibit 7-2 Refer to Exhibit 7-2.What is the producer surplus of the 1^st unit sold assuming this market reaches equilibrium?

Exhibit 7-12 Refer to Exhibit 7-12.When the price floor is implemented,the price changes to and the output bought by consumers changes to .