Question 1

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. At a price of $3,

Accepted Answer

A)  the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low. 
B)  producers should raise the price to $9 in order to sell the quantity demanded of 12 000. 
C)  the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. 
D)  the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low. 
A)  the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low. 
B)  producers should raise the price to $9 in order to sell the quantity demanded of 12 000. 
C)  the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. 
D)  the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low.

Question 2

The payroll tax is a tax imposed on ________ that is used to fund Social Security and Medicare.

Accepted Answer

A)  employers only 
B)  workers only 
C)  employers and workers 
D)  the unemployed 
A)  employers only 
B)  workers only 
C)  employers and workers 
D)  the unemployed

Question 3

In a competitive market, the demand curve shows the ________ received by consumers, and the supply curve shows the ________.

Accepted Answer

A)  utility; average cost. 
B)  marginal benefit; marginal cost 
C)  economic surplus; opportunity cost 
D)  net benefit; net cost 
A)  utility; average cost. 
B)  marginal benefit; marginal cost 
C)  economic surplus; opportunity cost 
D)  net benefit; net cost

Question 4

-Refer to Figure 5-9. Suppose the market is initially in equilibrium at price P1, and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?

Accepted Answer

A)  The consumer will bear a smaller share of the tax burden if the demand curve is D1. 
B)  The consumer's share of the tax burden is the same whether the demand curve is D1 or D2. 
C)  The consumer will bear a smaller share of the tax burden if the demand curve is D2. 
D)  The consumer will bear the entire burden of the tax if the demand curve is D2, and the producer will bear the entire burden of the tax if the demand curve is D1. 
A)  The consumer will bear a smaller share of the tax burden if the demand curve is D1. 
B)  The consumer's share of the tax burden is the same whether the demand curve is D1 or D2. 
C)  The consumer will bear a smaller share of the tax burden if the demand curve is D2. 
D)  The consumer will bear the entire burden of the tax if the demand curve is D2, and the producer will bear the entire burden of the tax if the demand curve is D1.

Question 5

-Refer to Figure 5-1. If the market price is $1.00, what is the consumer surplus on the third burrito?

Accepted Answer

A)  $0.50 
B)  $1.00 
C)  $1.50 
D)  $7.50 
A)  $0.50 
B)  $1.00 
C)  $1.50 
D)  $7.50

Question 6

When the government taxes a good or service, it

Accepted Answer

A)  affects the market equilibrium for that good or service. 
B)  eliminates the deadweight loss associated with the good or service. 
C)  increases consumer surplus for the good or service. 
D)  increases producer surplus for the good or service. 
A)  affects the market equilibrium for that good or service. 
B)  eliminates the deadweight loss associated with the good or service. 
C)  increases consumer surplus for the good or service. 
D)  increases producer surplus for the good or service.

Question 7

Producer surplus is the difference between the lowest 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 8

-Refer to Table 5-4. If a minimum wage of $12.50 is mandated, there will be a

Accepted Answer

A)  shortage of 40 000 units of labour. 
B)  surplus of 40 000 units of labour. 
C)  shortage of 80 000 units of labour. 
D)  surplus of 80 000 units of labour. 
A)  shortage of 40 000 units of labour. 
B)  surplus of 40 000 units of labour. 
C)  shortage of 80 000 units of labour. 
D)  surplus of 80 000 units of labour.

Question 9

-Refer to Table 5-2. The table above lists the highest prices five consumers are willing to pay for a theatre ticket. If the price of one ticket falls from $25 to $10,

Accepted Answer

A)  only three tickets will be sold. 
B)  consumer surplus decreases from $24 to $12. 
C)  consumer surplus increases from $0 to $31. 
D)  everyone will buy a ticket. 
A)  only three tickets will be sold. 
B)  consumer surplus decreases from $24 to $12. 
C)  consumer surplus increases from $0 to $31. 
D)  everyone will buy a ticket.

Question 10

Which of the following is not a result of government price controls?

Accepted Answer

A)  Some people win and some people lose. 
B)  Price controls benefit poor consumers but harm producers and wealthy consumers. 
C)  Price controls decrease economic efficiency. 
D)  A deadweight loss will occur. 
A)  Some people win and some people lose. 
B)  Price controls benefit poor consumers but harm producers and wealthy consumers. 
C)  Price controls decrease economic efficiency. 
D)  A deadweight loss will occur.

Question 11

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. Which of the following is true?

Accepted Answer

A)  If the price of pecans is $3, the output will be economically efficient but there will be a deadweight loss. 
B)  If the price of pecans is $9, consumers will purchase more than the economically efficient output. 
C)  Both 4000 pounds and 12 000 pounds are economically inefficient rates of output. 
D)  If the price of pecans is $3, producers will sell 12 000 pounds of pecans, but this output will be economically inefficient. 
A)  If the price of pecans is $3, the output will be economically efficient but there will be a deadweight loss. 
B)  If the price of pecans is $9, consumers will purchase more than the economically efficient output. 
C)  Both 4000 pounds and 12 000 pounds are economically inefficient rates of output. 
D)  If the price of pecans is $3, producers will sell 12 000 pounds of pecans, but this output will be economically inefficient.

Question 12

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which

Accepted Answer

A)  the sum of consumer surplus and producer surplus is at a maximum. 
B)  economic surplus is minimised. 
C)  the sum of the benefits to firms is equal to the sum of the benefits to consumers. 
D)  the sum of consumer surplus and producer surplus is minimised. 
A)  the sum of consumer surplus and producer surplus is at a maximum. 
B)  economic surplus is minimised. 
C)  the sum of the benefits to firms is equal to the sum of the benefits to consumers. 
D)  the sum of consumer surplus and producer surplus is minimised.

Question 13

Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

Accepted Answer

A) True 
 B)False

Question 14

-Refer to Table 5-2. The table above lists the highest prices five consumers are willing to pay for a theatre ticket. If the price of one ticket rises from $10 to $19,

Accepted Answer

A)  only three tickets will be sold. 
B)  consumer surplus decreases from $31 to $6. 
C)  consumer surplus increases from $44 to $71. 
D)  no one will buy a ticket. 
A)  only three tickets will be sold. 
B)  consumer surplus decreases from $31 to $6. 
C)  consumer surplus increases from $44 to $71. 
D)  no one will buy a ticket.

Question 15

Economists refer a to a market where buying and selling take place at prices that violate government price regulations as

Accepted Answer

A)  a black market. 
B)  an outlaw market. 
C)  a noncompetitive market. 
D)  a restricted market. 
A)  a black market. 
B)  an outlaw market. 
C)  a noncompetitive market. 
D)  a restricted market.

Question 16

The marginal cost for Java Joe's to produce its first cup of coffee is $0.75. Its marginal cost to produce its second cup of coffee is $1.25. Its marginal cost increases by $0.50 for each additional cup of coffee it produces. Suppose the market price for coffee is $2.25. Construct a graph showing the producer surplus for each cup of coffee Java Joe's will sell. How many cups of coffee will Java Joe's sell? What is the value of the producer surplus Java Joe's receives for each cup of coffee it sells?

Accepted Answer

@#IMG-DLM& Java Joe will sell 3 cups of coffee, th

Question 17

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. If 8000 pounds of pecans are sold,

Accepted Answer

A)  the deadweight loss is equal to economic surplus. 
B)  producer surplus equals consumer surplus. 
C)  the marginal benefit of each of the 8000 pounds of pecans equals $9. 
D)  marginal benefit is equal to marginal cost. 
A)  the deadweight loss is equal to economic surplus. 
B)  producer surplus equals consumer surplus. 
C)  the marginal benefit of each of the 8000 pounds of pecans equals $9. 
D)  marginal benefit is equal to marginal cost.

Question 18

To affect the market outcome, a price ceiling

Accepted Answer

A)  must be set below the black market price. 
B)  must be set below the legal price. 
C)  must be set below the price floor. 
D)  must be set below the equilibrium price. 
A)  must be set below the black market price. 
B)  must be set below the legal price. 
C)  must be set below the price floor. 
D)  must be set below the equilibrium price.

Question 19

The total amount of consumer surplus in a market is equal to the area below the demand curve.

Accepted Answer

A) True 
 B)False

Question 20

Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is

Accepted Answer

A)  $325. 
B)  $200. 
C)  $125. 
D)  $75. 
A)  $325. 
B)  $200. 
C)  $125. 
D)  $75.

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. At a price of $3,

The payroll tax is a tax imposed on ________ that is used to fund Social Security and Medicare.

In a competitive market, the demand curve shows the received by consumers, and the supply curve shows the .

-Refer to Figure 5-9. Suppose the market is initially in equilibrium at price P₁,and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?

-Refer to Figure 5-1. If the market price is $1.00, what is the consumer surplus on the third burrito?

When the government taxes a good or service, it

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

-Refer to Table 5-4. If a minimum wage of $12.50 is mandated, there will be a

-Refer to Table 5-2. The table above lists the highest prices five consumers are willing to pay for a theatre ticket. If the price of one ticket falls from $25 to $10,

Which of the following is not a result of government price controls?

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. Which of the following is true?

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which

Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

-Refer to Table 5-2. The table above lists the highest prices five consumers are willing to pay for a theatre ticket. If the price of one ticket rises from $10 to $19,

Economists refer a to a market where buying and selling take place at prices that violate government price regulations as

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. If 8000 pounds of pecans are sold,

To affect the market outcome, a price ceiling

The total amount of consumer surplus in a market is equal to the area below the demand curve.

Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 5: Economic Efficiency , Government Price Setting and Taxes

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. At a price of $3,

The payroll tax is a tax imposed on ________ that is used to fund Social Security and Medicare.

In a competitive market, the demand curve shows the ________ received by consumers, and the supply curve shows the ________.

-Refer to Figure 5-9. Suppose the market is initially in equilibrium at price P1, and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?

-Refer to Figure 5-1. If the market price is $1.00, what is the consumer surplus on the third burrito?

When the government taxes a good or service, it

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

-Refer to Table 5-4. If a minimum wage of $12.50 is mandated, there will be a

-Refer to Table 5-2. The table above lists the highest prices five consumers are willing to pay for a theatre ticket. If the price of one ticket falls from $25 to $10,

Which of the following is not a result of government price controls?

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. Which of the following is true?

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which

Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

-Refer to Table 5-2. The table above lists the highest prices five consumers are willing to pay for a theatre ticket. If the price of one ticket rises from $10 to $19,

Economists refer a to a market where buying and selling take place at prices that violate government price regulations as

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. If 8000 pounds of pecans are sold,

To affect the market outcome, a price ceiling

The total amount of consumer surplus in a market is equal to the area below the demand curve.

Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

In a competitive market, the demand curve shows the received by consumers, and the supply curve shows the .

-Refer to Figure 5-9. Suppose the market is initially in equilibrium at price P₁,and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?