Question 1

Other things equal,for a given tax,if the demand curve is more elastic,

Accepted Answer

A)  the greater the tax revenue raised and the greater the deadweight cost of the tax. 
B)  the greater the tax revenue raised and the smaller the deadweight cost of the tax. 
C)  the less the tax revenue raised and the greater the deadweight cost of the tax. 
D)  the less the tax revenue raised and the smaller the deadweight cost of the tax. 
A)  the greater the tax revenue raised and the greater the deadweight cost of the tax. 
B)  the greater the tax revenue raised and the smaller the deadweight cost of the tax. 
C)  the less the tax revenue raised and the greater the deadweight cost of the tax. 
D)  the less the tax revenue raised and the smaller the deadweight cost of the tax.

Question 2

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 $20,the consumer surplus Miles receives from purchasing jazz CDs is:

Accepted Answer

A)  $10. 
B)  $15. 
C)  $20. 
D)  $55. 
A)  $10. 
B)  $15. 
C)  $20. 
D)  $55.

Question 3

The area between the market price and the demand curve provides a measure of:

Accepted Answer

A)  consumer surplus. 
B)  producer surplus. 
C)  consumer surplus plus producer surplus. 
D)  marginal utility. 
A)  consumer surplus. 
B)  producer surplus. 
C)  consumer surplus plus producer surplus. 
D)  marginal utility.

Question 4

Exhibit 7-14
   Refer to Exhibit 7-14.Identify the deadweight loss in the above diagram when a price ceiling equal to $10 is imposed.

Accepted Answer

The deadweight loss

Question 5

Ceteris paribus,explain why it is that when a lower ceiling price is imposed below equilibrium price,a greater deadweight loss results.

Accepted Answer

When a lower price ceiling is imposed be

Question 6

Producer surplus from a unit of output is the difference between the market price and the seller's cost of producing that unit.

Accepted Answer

A) True 
 B)False

Question 7

The area between the market price and the supply curve provides a measure of:

Accepted Answer

A)  consumer surplus. 
B)  producer surplus. 
C)  consumer surplus plus producer surplus. 
D)  marginal utility. 
A)  consumer surplus. 
B)  producer surplus. 
C)  consumer surplus plus producer surplus. 
D)  marginal utility.

Question 8

Consumer surplus equals the quantity supplied minus the quantity demanded.

Accepted Answer

A) True 
 B)False

Question 9

If James is willing to sell an extra concert ticket for $40 and actually sells it for $100,his consumer surplus is $60.

Accepted Answer

A) True 
 B)False

Question 10

The more elastic the demand curve,the smaller is the deadweight loss resulting from the imposition of a tax.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 7-10   Refer to Exhibit 7-10.The deadweight loss from the subsidy is area

Accepted Answer

A)  e + f + g 
B)  b + e + f + c + g 
C)  f 
D)  zero 
A)  e + f + g 
B)  b + e + f + c + g 
C)  f 
D)  zero

Question 12

Exhibit 7-11   Refer to Exhibit 7-11.The deadweight loss from the price ceiling is area:

Accepted Answer

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

Question 13

Consumer surplus is:

Accepted Answer

A)  the area underneath the demand curve. 
B)  the total utility derived from consuming a good. 
C)  the marginal utility of the last unit consumed multiplied by the number of units consumed. 
D)  the difference between what consumers are willing to pay and what they are required to pay for a good. 
A)  the area underneath the demand curve. 
B)  the total utility derived from consuming a good. 
C)  the marginal utility of the last unit consumed multiplied by the number of units consumed. 
D)  the difference between what consumers are willing to pay and what they are required to pay for a good.

Question 14

Other things being equal,the less elastic demand is:

Accepted Answer

A)  the lower the deadweight loss is resulting from the imposition of a given tax on a product. 
B)  the greater the burden is of the tax borne by consumers. 
C)  the greater the tax revenue collected by the government is. 
D)  all of the above 
A)  the lower the deadweight loss is resulting from the imposition of a given tax on a product. 
B)  the greater the burden is of the tax borne by consumers. 
C)  the greater the tax revenue collected by the government is. 
D)  all of the above

Question 15

Exhibit 7-4 The schedule below shows the prices that a consumer is willing to pay for pounds of shrimp:
  Refer to Exhibit 7-4.If the price of shrimp were to decrease from $12 to $10,the increase in consumer surplus would equal:

Accepted Answer

A)  $2. 
B)  $6. 
C)  $10. 
D)  $13. 
A)  $2. 
B)  $6. 
C)  $10. 
D)  $13.

Question 16

Which of the following best explains the source of consumer surplus for Good A?

Accepted Answer

A) Many consumers pay prices that are greater than the equilibrium price of Good A. 
B) Many consumers would be willing to pay more than the market price for some units of Good A. 
C) Many consumers think the market price of Good A is greater than its cost. 
D) Many consumers of Good A place a value on it that is less than the market price. 
A) Many consumers pay prices that are greater than the equilibrium price of Good A. 
B) Many consumers would be willing to pay more than the market price for some units of Good A. 
C) Many consumers think the market price of Good A is greater than its cost. 
D) Many consumers of Good A place a value on it that is less than the market price.

Question 17

Exhibit 7-10   Refer to Exhibit 7-10.The total welfare after the subsidy is the area

Accepted Answer

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

Question 18

Exhibit 7-12   Refer to Exhibit 7-12.The cost to government (tax payers)after the price floor is area:

Accepted Answer

A)  g + h + i 
B)  d 
C)  c + f + g + h + i 
D)  c + d + f + g + h + i 
A)  g + h + i 
B)  d 
C)  c + f + g + h + i 
D)  c + d + f + g + h + i

Question 19

Lydia enjoys going to the theater to see Broadway musicals.The following demand schedule shows Lydia's willingness to pay for theater tickets in a year.   If the price of tickets to Broadway musicals equals $50,Lydia's consumer surplus will be:

Accepted Answer

A)  $350. 
B)  $300. 
C)  $250. 
D)  $100. 
A)  $350. 
B)  $300. 
C)  $250. 
D)  $100.

Question 20

Exhibit 7-3   Refer to Exhibit 7-3.What is the consumer 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

Exam 7: Market Efficiency and Welfare

Other things equal,for a given tax,if the demand curve is more elastic,

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 $20,the consumer surplus Miles receives from purchasing jazz CDs is:

The area between the market price and the demand curve provides a measure of:

Exhibit 7-14 Refer to Exhibit 7-14.Identify the deadweight loss in the above diagram when a price ceiling equal to $10 is imposed.

Ceteris paribus,explain why it is that when a lower ceiling price is imposed below equilibrium price,a greater deadweight loss results.

Producer surplus from a unit of output is the difference between the market price and the seller's cost of producing that unit.

The area between the market price and the supply curve provides a measure of:

Consumer surplus equals the quantity supplied minus the quantity demanded.

If James is willing to sell an extra concert ticket for $40 and actually sells it for $100,his consumer surplus is $60.

The more elastic the demand curve,the smaller is the deadweight loss resulting from the imposition of a tax.

Exhibit 7-10 Refer to Exhibit 7-10.The deadweight loss from the subsidy is area

Exhibit 7-11 Refer to Exhibit 7-11.The deadweight loss from the price ceiling is area:

Consumer surplus is:

Other things being equal,the less elastic demand is:

Exhibit 7-4 The schedule below shows the prices that a consumer is willing to pay for pounds of shrimp: Refer to Exhibit 7-4.If the price of shrimp were to decrease from $12 to $10,the increase in consumer surplus would equal:

Which of the following best explains the source of consumer surplus for Good A?

Exhibit 7-10 Refer to Exhibit 7-10.The total welfare after the subsidy is the area

Exhibit 7-12 Refer to Exhibit 7-12.The cost to government (tax payers)after the price floor is area:

Lydia enjoys going to the theater to see Broadway musicals.The following demand schedule shows Lydia's willingness to pay for theater tickets in a year. If the price of tickets to Broadway musicals equals $50,Lydia's consumer surplus will be:

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

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