Question 1

-Refer to the diagram above.When quantity supplied and quantity demanded are equal,consumer surplus is equal to

Accepted Answer

A) $600. 
B) $1,200. 
C) $1,400. 
D) $2,000. 
E) $2,400. 
A) $600. 
B) $1,200. 
C) $1,400. 
D) $2,000. 
E) $2,400.

Question 2

-Refer to the above graph to answer this question.If buyers of this product were subsidized by an amount equal to the external benefits,what would be the equilibrium price and quantity?

Accepted Answer

A) $30 and 500. 
B) $40 and 800. 
C) $50 and 700. 
D) $50 and 900. 
E) $60 and 800. 
A) $30 and 500. 
B) $40 and 800. 
C) $50 and 700. 
D) $50 and 900. 
E) $60 and 800.

Question 3

What are external costs?

Accepted Answer

A) The costs involved in exporting products abroad. 
B) The costs that are suffered by outside workers. 
C) The costs that are suffered by people other than the producers or consumers of a product. 
D) The costs that are imposed on plants which are located abroad. 
A) The costs involved in exporting products abroad. 
B) The costs that are suffered by outside workers. 
C) The costs that are suffered by people other than the producers or consumers of a product. 
D) The costs that are imposed on plants which are located abroad.

Question 4

09-05 Explain how governments try to encourage production of goods and services;such as education;that carry external benefits.
 09-18 Providing Subsidies
The following graph refers to a province's day care market which is in equilibrium:
  
-Refer to the above graph to answer this question.In an effort to increase the number of daycare spaces,suppose the authorities give parents a subsidy of $150 for each child registered.What will be the new equilibrium fee?

Accepted Answer

A) $350. 
B) $450. 
C) $500. 
D) $600. 
E) $650. 
A) $350. 
B) $450. 
C) $500. 
D) $600. 
E) $650.

Question 5

"If at the present level of output,the price of the product is less than the social marginal cost,then society would prefer more of this product being produced." Evaluate this statement.

Accepted Answer

This statement is incorrect.If the price

Question 6

What is meant by the term 'laissez-faire"?

Accepted Answer

Laissez-faire is an economic doctrine as

Question 7

Suppose that a market is in equilibrium.The area between the market price and the supply curve is

Accepted Answer

A) the deadweight loss. 
B) the value of trades not made. 
C) consumer surplus. 
D) total economic surplus. 
E) producer surplus. 
A) the deadweight loss. 
B) the value of trades not made. 
C) consumer surplus. 
D) total economic surplus. 
E) producer surplus.

Question 8

Table 9.1 shows the marginal private benefit and marginal private cost schedule for a certain product.
Table 9.1
   Suppose the external cost is $2 per unit and the external benefit is $4 per unit.(Hint: Draw a diagram. )
a)What are the equilibrium price and quantity for an unregulated market?
b)What are the equilibrium price and quantity if external costs are recognized but external benefits are not?
c)What are the equilibrium price and quantity if external benefits are recognized but external costs are not?
d)What are the most desirable price and quantity from society's point of view?
e)If government wanted to increase the quantity to the amount in d)above,what subsidy would it need to give to producers?
f)If government wanted to increase the quantity to the amount in d)above,what subsidy would it need to give to consumers?

Accepted Answer

a)$4 and 10 units.
b)$5 and 8

Question 9

What are externalities?

Accepted Answer

A) The extra cost involved in the packaging and marketing of a product. 
B) The additional costs of a product which cannot be recouped from the government. 
C) The extra cost to the consumers of a product in terms of maintenance and insurance. 
D) The benefits or costs of a product experienced by people who neither consume nor produce that product. 
A) The extra cost involved in the packaging and marketing of a product. 
B) The additional costs of a product which cannot be recouped from the government. 
C) The extra cost to the consumers of a product in terms of maintenance and insurance. 
D) The benefits or costs of a product experienced by people who neither consume nor produce that product.

Question 10

Explain why competitive markets encourage technological change?

Accepted Answer

Successful technological changes will lo

Question 11

What does the term market failure mean?

Accepted Answer

A) The inability of markets to ensure that people get what they want. 
B) The inability of markets to ensure that an efficient or equitable allocation of resources is attained. 
C) The inability of the government to ensure that productive or allocative efficiency is attained. 
D) The inability of the government to ensure that people get what they want. 
A) The inability of markets to ensure that people get what they want. 
B) The inability of markets to ensure that an efficient or equitable allocation of resources is attained. 
C) The inability of the government to ensure that productive or allocative efficiency is attained. 
D) The inability of the government to ensure that people get what they want.

Question 12

The following table shows the marginal private benefits and marginal private cost of providing daycare spaces in the province:
  
-Refer to the above information to answer this question.In an effort to increase the number of daycare spaces,suppose the authorities give daycare operators a subsidy of $150 for each child registered.What will be the new equilibrium fee?

Accepted Answer

A) $350. 
B) $550. 
C) $500. 
D) $450. 
E) $650. 
A) $350. 
B) $550. 
C) $500. 
D) $450. 
E) $650.

Question 13

The cumulative difference between the price producers actually receive and the price they are willing to produce for is

Accepted Answer

A) producer surplus. 
B) deadweight loss. 
C) total economic surplus. 
D) conspicuous consumption. 
E) consumer surplus. 
A) producer surplus. 
B) deadweight loss. 
C) total economic surplus. 
D) conspicuous consumption. 
E) consumer surplus.

Question 14

The following graph depicts the various cost curves for a representative competitive firm producing quantity Q1:
  
-Refer to the above graph to answer this question.If the price of the product is P1,what does the graph suggest?

Accepted Answer

A) The market is achieving productive efficiency but not necessarily allocative efficiency. 
B) The market is achieving allocative efficiency but not necessarily productive efficiency. 
C) The market is achieving neither productive efficiency nor allocative efficiency. 
D) The market is achieving both allocative efficiency and productive efficiency. 
A) The market is achieving productive efficiency but not necessarily allocative efficiency. 
B) The market is achieving allocative efficiency but not necessarily productive efficiency. 
C) The market is achieving neither productive efficiency nor allocative efficiency. 
D) The market is achieving both allocative efficiency and productive efficiency.

Question 15

What does the long-run equilibrium of a perfectly competitive market suggest?

Accepted Answer

A) That the price is equal to the lowest SRAC but not necessarily the lowest LRAC. 
B) That the price is equal to the lowest LRAC but not necessarily the lowest SRAC. 
C) That the price is equal to both the lowest SRAC and the lowest LRAC. 
D) That price cannot equal marginal cost. 
A) That the price is equal to the lowest SRAC but not necessarily the lowest LRAC. 
B) That the price is equal to the lowest LRAC but not necessarily the lowest SRAC. 
C) That the price is equal to both the lowest SRAC and the lowest LRAC. 
D) That price cannot equal marginal cost.

Question 16

What is the term for the production of that combination of products which best satisfies consumers' demands?

Accepted Answer

A) Allocative efficiency. 
B) Productive efficiency. 
C) Marginal efficiency. 
D) Optimal efficiency. 
A) Allocative efficiency. 
B) Productive efficiency. 
C) Marginal efficiency. 
D) Optimal efficiency.

Question 17

"If at the present level of output,the price of the product is less than the social marginal benefit,then society would prefer less of this product being produced." Evaluate this statement.

Accepted Answer

This statement is incorrect.If the price

Question 18

Marginal social benefits are the total of both marginal private benefits and marginal external benefits.

Accepted Answer

A) True 
 B)False

Question 19

09-05 Explain how governments try to encourage production of goods and services;such as education;that carry external benefits.
 09-18 Providing Subsidies
Added Y axis line.
  
-Refer to the diagram above.Assuming a perfectly competitive market structure,what area represents the consumer surplus?

Accepted Answer

A) AEB 
B) AEC 
C) AFC 
D) BED 
A) AEB 
B) AEC 
C) AFC 
D) BED

Question 20

-Refer to the above graph to answer this question.If buyers of this product were subsidized by an amount equal to the external benefits,what would be the total cost to the government of the subsidy

Accepted Answer

A) $6,000. 
B) $8,000. 
C) $10,000. 
D) $14,000. 
E) $18,000. 
A) $6,000. 
B) $8,000. 
C) $10,000. 
D) $14,000. 
E) $18,000.

-Refer to the diagram above.When quantity supplied and quantity demanded are equal,consumer surplus is equal to

-Refer to the above graph to answer this question.If buyers of this product were subsidized by an amount equal to the external benefits,what would be the equilibrium price and quantity?

What are external costs?

"If at the present level of output,the price of the product is less than the social marginal cost,then society would prefer more of this product being produced." Evaluate this statement.

What is meant by the term 'laissez-faire"?

Suppose that a market is in equilibrium.The area between the market price and the supply curve is

What are externalities?

Explain why competitive markets encourage technological change?

What does the term market failure mean?

The cumulative difference between the price producers actually receive and the price they are willing to produce for is

The following graph depicts the various cost curves for a representative competitive firm producing quantity Q1: -Refer to the above graph to answer this question.If the price of the product is P1,what does the graph suggest?

What does the long-run equilibrium of a perfectly competitive market suggest?

What is the term for the production of that combination of products which best satisfies consumers' demands?

"If at the present level of output,the price of the product is less than the social marginal benefit,then society would prefer less of this product being produced." Evaluate this statement.

Marginal social benefits are the total of both marginal private benefits and marginal external benefits.

09-05 Explain how governments try to encourage production of goods and services;such as education;that carry external benefits. 09-18 Providing Subsidies Added Y axis line. -Refer to the diagram above.Assuming a perfectly competitive market structure,what area represents the consumer surplus?

-Refer to the above graph to answer this question.If buyers of this product were subsidized by an amount equal to the external benefits,what would be the total cost to the government of the subsidy

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

Exam 9: An Evaluation of Competitive Markets

-Refer to the diagram above.When quantity supplied and quantity demanded are equal,consumer surplus is equal to

-Refer to the above graph to answer this question.If buyers of this product were subsidized by an amount equal to the external benefits,what would be the equilibrium price and quantity?

What are external costs?

"If at the present level of output,the price of the product is less than the social marginal cost,then society would prefer more of this product being produced." Evaluate this statement.

What is meant by the term 'laissez-faire"?

Suppose that a market is in equilibrium.The area between the market price and the supply curve is

What are externalities?

Explain why competitive markets encourage technological change?

What does the term market failure mean?

The cumulative difference between the price producers actually receive and the price they are willing to produce for is

The following graph depicts the various cost curves for a representative competitive firm producing quantity Q1: -Refer to the above graph to answer this question.If the price of the product is P1,what does the graph suggest?

What does the long-run equilibrium of a perfectly competitive market suggest?

What is the term for the production of that combination of products which best satisfies consumers' demands?

"If at the present level of output,the price of the product is less than the social marginal benefit,then society would prefer less of this product being produced." Evaluate this statement.

Marginal social benefits are the total of both marginal private benefits and marginal external benefits.

09-05 Explain how governments try to encourage production of goods and services;such as education;that carry external benefits. 09-18 Providing Subsidies Added Y axis line. -Refer to the diagram above.Assuming a perfectly competitive market structure,what area represents the consumer surplus?

-Refer to the above graph to answer this question.If buyers of this product were subsidized by an amount equal to the external benefits,what would be the total cost to the government of the subsidy

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters