Question 1

-Refer to Figure 5-2. What area represents producer surplus at a price of P2?

Accepted Answer

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

Question 2

-Refer to Figure 5-3. At a price of $18, consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity?

Accepted Answer

A)  No, the marginal benefit of the 40th unit exceeds the marginal cost of that 80th unit. 
B)  Yes, otherwise consumers would not buy 40 units. 
C)  Yes, because $18 shows what consumers are willing to pay for the product. 
D)  No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th unit. 
A)  No, the marginal benefit of the 40th unit exceeds the marginal cost of that 80th unit. 
B)  Yes, otherwise consumers would not buy 40 units. 
C)  Yes, because $18 shows what consumers are willing to pay for the product. 
D)  No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th unit.

Question 3

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

Accepted Answer

A)  producer surplus. 
B)  the substitution effect. 
C)  the income effect. 
D)  consumer surplus. 
A)  producer surplus. 
B)  the substitution effect. 
C)  the income effect. 
D)  consumer surplus.

Question 4

-Refer to Figure 5-1. Arnold's marginal benefit from consuming the third burrito is

Accepted Answer

A)  $1.25. 
B)  $1.50. 
C)  $2.50. 
D)  $6.00. 
A)  $1.25. 
B)  $1.50. 
C)  $2.50. 
D)  $6.00.

Question 5

-Refer to Table 5-7. The equations above describe the demand and supply for Bubba's Fried Jellybeans. The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units. What is the value of economic surplus in this market?

Accepted Answer

A)  $5 thousand 
B)  $12.5 thousand 
C)  $25 thousand 
D)  $37.5 thousand 
A)  $5 thousand 
B)  $12.5 thousand 
C)  $25 thousand 
D)  $37.5 thousand

Question 6

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $9,

Accepted Answer

A)  economic surplus is maximised. 
B)  too many consumers want to buy pecans. 
C)  the quantity supplied is greater than the economically efficient quantity. 
D)  the quantity demanded is economically efficient, but the quantity supplied is economically inefficient. 
A)  economic surplus is maximised. 
B)  too many consumers want to buy pecans. 
C)  the quantity supplied is greater than the economically efficient quantity. 
D)  the quantity demanded is economically efficient, but the quantity supplied is economically inefficient.

Question 7

Suppliers will be willing to supply a product only if

Accepted Answer

A)  the price received is less than the additional cost of producing the product. 
B)  the price received is at least equal to the additional cost of producing the product. 
C)  the price is higher than the average cost of producing the product. 
D)  the price received is at least double the additional cost of producing the product. 
A)  the price received is less than the additional cost of producing the product. 
B)  the price received is at least equal to the additional cost of producing the product. 
C)  the price is higher than the average cost of producing the product. 
D)  the price received is at least double the additional cost of producing the product.

Question 8

Marginal cost is

Accepted Answer

A)  the total cost of producing one unit of a good or service. 
B)  the average cost of producing a good or service. 
C)  the difference between the lowest price a firm would have been willing to accept and the price it actually receives. 
D)  the additional cost to a firm of producing one more unit of a good or service. 
A)  the total cost of producing one unit of a good or service. 
B)  the average cost of producing a good or service. 
C)  the difference between the lowest price a firm would have been willing to accept and the price it actually receives. 
D)  the additional cost to a firm of producing one more unit of a good or service.

Question 9

-Refer to Figure 5-1. If the market price is $1.50, what is the consumer surplus on the second burrito?

Accepted Answer

A)  $0.50 
B)  $1.00 
C)  $1.50 
D)  $3.50 
A)  $0.50 
B)  $1.00 
C)  $1.50 
D)  $3.50

Question 10

The demand and supply equations for the apple market are:
Demand: P = 12 - 0.01Q
Supply: P = 0.02Q
where P= price per bushel, and Q = quantity.
a. Calculate the equilibrium price and quantity.
b. Suppose the government guaranteed producers a price of $10 per bushel. What would be the effect on quantity supplied? Provide a numerical value.
c. By how much would the $10 price change the quantity of apples demanded? Provide a numerical value.
d. Would there be a shortage or surplus of apples?
e. What is the size of this shortage or surplus? Provide a numerical value.

Accepted Answer

a. Q = 400 bushels, P = $8.
b.

Question 11

Suppose the demand curve for a product is vertical and the supply curve is upward sloping. If a unit tax is imposed in the market for this product,

Accepted Answer

A)  sellers bear the entire burden of the tax. 
B)  buyers bear the entire burden of the tax. 
C)  the tax burden will be shared equally between buyers and sellers. 
D)  buyers share the burden of the tax with the government. 
A)  sellers bear the entire burden of the tax. 
B)  buyers bear the entire burden of the tax. 
C)  the tax burden will be shared equally between buyers and sellers. 
D)  buyers share the burden of the tax with the government.

Question 12

-Refer to Table 5-7. The equations above describe the demand and supply for Bubba's Fried Jellybeans. What are the equilibrium price and quantity (in thousands) for Bubba's Fried Jellybeans?

Accepted Answer

A)  $80 and 40 thousand 
B)  $60 and 10 thousand 
C)  $20 and 20 thousand 
D)  $40 and 5 thousand 
A)  $80 and 40 thousand 
B)  $60 and 10 thousand 
C)  $20 and 20 thousand 
D)  $40 and 5 thousand

Question 13

The total amount of producer surplus in a market is equal to

Accepted Answer

A)  the difference between quantity supplied and quantity demanded. 
B)  the area above the market supply curve and below the market price. 
C)  the area above the market supply curve. 
D)  the area between the demand curve and the supply curve below the market price. 
A)  the difference between quantity supplied and quantity demanded. 
B)  the area above the market supply curve and below the market price. 
C)  the area above the market supply curve. 
D)  the area between the demand curve and the supply curve below the market price.

Question 14

What is a black market?

Accepted Answer

A black market is a market in

Question 15

Arthur buys a new mobile phone for $150. He receives consumer surplus of $150 from the purchase. How much does Arthur value his cell phone?

Accepted Answer

A)  $0 
B)  $150 
C)  $225 
D)  $300 
A)  $0 
B)  $150 
C)  $225 
D)  $300

Question 16

Marginal cost is the additional cost to a firm of producing one more unit of a good or service.

Accepted Answer

A) True 
 B)False

Question 17

-Refer to Table 5-4. Suppose that the quantity of labour demanded decreases by 80 000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

Accepted Answer

A)  W = $8.50; Q = 550 000 
B)  W = $12.50; Q = 630 000 
C)  W = $9.50; Q = 570 000 
D)  W = $9.50; Q = 590 000 
A)  W = $8.50; Q = 550 000 
B)  W = $12.50; Q = 630 000 
C)  W = $9.50; Q = 570 000 
D)  W = $9.50; Q = 590 000

Question 18

A ________ curve shows the marginal cost of producing one more unit of a good or service.

Accepted Answer

A)  demand 
B)  supply 
C)  production possibilities 
D)  marginal benefit 
A)  demand 
B)  supply 
C)  production possibilities 
D)  marginal benefit

Question 19

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

Accepted Answer

A)  demand 
B)  supply 
C)  production possibilities 
D)  marginal cost 
A)  demand 
B)  supply 
C)  production possibilities 
D)  marginal cost

Question 20

If the quantity of donuts supplied is represented by the equation QS = -15 + 5P, then the corresponding price of donuts is represented by the equation

Accepted Answer

A)  P = 0.2QS + 3. 
B)  P = 5QS + 75. 
C)  P = QS - 7.5. 
D)  P = 15 - 0.5QS. 
A)  P = 0.2QS + 3. 
B)  P = 5QS + 75. 
C)  P = QS - 7.5. 
D)  P = 15 - 0.5QS.

-Refer to Figure 5-2. What area represents producer surplus at a price of P₂?

-Refer to Figure 5-3. At a price of $18, consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity?

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

-Refer to Figure 5-1. Arnold's marginal benefit from consuming the third burrito is

-Refer to Table 5-7. The equations above describe the demand and supply for Bubba's Fried Jellybeans. The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units. What is the value of economic surplus in this market?

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $9,

Suppliers will be willing to supply a product only if

Marginal cost is

-Refer to Figure 5-1. If the market price is $1.50, what is the consumer surplus on the second burrito?

Suppose the demand curve for a product is vertical and the supply curve is upward sloping. If a unit tax is imposed in the market for this product,

-Refer to Table 5-7. The equations above describe the demand and supply for Bubba's Fried Jellybeans. What are the equilibrium price and quantity (in thousands) for Bubba's Fried Jellybeans?

The total amount of producer surplus in a market is equal to

What is a black market?

Arthur buys a new mobile phone for $150. He receives consumer surplus of $150 from the purchase. How much does Arthur value his cell phone?

Marginal cost is the additional cost to a firm of producing one more unit of a good or service.

-Refer to Table 5-4. Suppose that the quantity of labour demanded decreases by 80 000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

A ________ curve shows the marginal cost of producing one more unit of a good or service.

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

If the quantity of donuts supplied is represented by the equation Q_S = -15 + 5P, then the corresponding price of donuts is represented by the equation

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 5-2. What area represents producer surplus at a price of P2?

-Refer to Figure 5-3. At a price of $18, consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity?

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

-Refer to Figure 5-1. Arnold's marginal benefit from consuming the third burrito is

-Refer to Table 5-7. The equations above describe the demand and supply for Bubba's Fried Jellybeans. The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units. What is the value of economic surplus in this market?

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $9,

Suppliers will be willing to supply a product only if

Marginal cost is

-Refer to Figure 5-1. If the market price is $1.50, what is the consumer surplus on the second burrito?

Suppose the demand curve for a product is vertical and the supply curve is upward sloping. If a unit tax is imposed in the market for this product,

-Refer to Table 5-7. The equations above describe the demand and supply for Bubba's Fried Jellybeans. What are the equilibrium price and quantity (in thousands) for Bubba's Fried Jellybeans?

The total amount of producer surplus in a market is equal to

What is a black market?

Arthur buys a new mobile phone for $150. He receives consumer surplus of $150 from the purchase. How much does Arthur value his cell phone?

Marginal cost is the additional cost to a firm of producing one more unit of a good or service.

-Refer to Table 5-4. Suppose that the quantity of labour demanded decreases by 80 000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

A ________ curve shows the marginal cost of producing one more unit of a good or service.

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

If the quantity of donuts supplied is represented by the equation QS = -15 + 5P, then the corresponding price of donuts is represented by the equation

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

-Refer to Figure 5-2. What area represents producer surplus at a price of P₂?

If the quantity of donuts supplied is represented by the equation Q_S = -15 + 5P, then the corresponding price of donuts is represented by the equation