Question 1

One result of a tax is an increase in economic efficiency.

Accepted Answer

A) True 
 B)False

Question 2

What do economists mean by an efficient tax?

Accepted Answer

A tax is efficient i

Question 3

Marginal benefit is equal to the ________ benefit a consumer receives from consuming one more unit of a good or service.

Accepted Answer

A)  total 
B)  unintended 
C)  additional 
D)  surplus 
A)  total 
B)  unintended 
C)  additional 
D)  surplus

Question 4

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

Accepted Answer

A)  the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low. 
B)  producers should lower the price to $3 in order to sell the quantity demanded of 4000. 
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 lower the price to $3 in order to sell the quantity demanded of 4000. 
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 5

In a city with rent-controlled apartments, all of the following are true except

Accepted Answer

A)  apartments usually rent for rates lower than the market rate. 
B)  apartments are often in shorter supply than they would be without rent control. 
C)  it usually takes more time to find an apartment than it would without rent control. 
D)  landlords have an incentive to rent more apartments than they would without rent control. 
A)  apartments usually rent for rates lower than the market rate. 
B)  apartments are often in shorter supply than they would be without rent control. 
C)  it usually takes more time to find an apartment than it would without rent control. 
D)  landlords have an incentive to rent more apartments than they would without rent control.

Question 6

Assume the market price for lemon grass is $4.00 per pound, but most buyers are willing to pay more than the market price. At the market price of $4.00, the quantity of lemon grass demanded is 1500 pounds per month, and quantity demanded does not reach zero until the price reaches $30.00 per pound. Construct a graph showing this data, calculate the total consumer surplus in the market for lemon grass, and show the consumer surplus on the graph.

Accepted Answer

The answer of Assume the market price for lemon grass...

Question 7

Black markets only exist in developing nations.

Accepted Answer

A) True 
 B)False

Question 8

-Refer to Table 5-4. Suppose that the quantity of labour demanded increases by 40 000 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 = $11.50; Q = 610 000 
A)  W = $8.50; Q = 550 000 
B)  W = $12.50; Q = 630 000 
C)  W = $9.50; Q = 570 000 
D)  W = $11.50; Q = 610 000

Question 9

When a competitive equilibrium is achieved in a market,

Accepted Answer

A)  all individuals are better off than they would be if a price ceiling or price floor was imposed by government. 
B)  the total net benefit to society is maximised. 
C)  the total benefits to consumers are equal to the total benefits to producers. 
D)  economic surplus equals the deadweight loss. 
A)  all individuals are better off than they would be if a price ceiling or price floor was imposed by government. 
B)  the total net benefit to society is maximised. 
C)  the total benefits to consumers are equal to the total benefits to producers. 
D)  economic surplus equals the deadweight loss.

Question 10

-Refer to Figure 5-1. If the market price is $1.50, what is the consumer surplus on the first 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 11

-Refer to Figure 5-8. Suppose the market is initially in equilibrium at price P1 and now the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax? For demand curve D1

Accepted Answer

A)  the producer bears a greater share of the tax burden if the supply curve is S2. 
B)  the producer bears a greater share of the tax burden if the supply curve is S1. 
C)  the producer's share of the tax burden is the same whether the supply curve is S1 or S2. 
D)  the producer bears the entire burden of the tax if the supply curve is S1, and the consumer bears the entire burden of the tax if the supply curve is S2. 
A)  the producer bears a greater share of the tax burden if the supply curve is S2. 
B)  the producer bears a greater share of the tax burden if the supply curve is S1. 
C)  the producer's share of the tax burden is the same whether the supply curve is S1 or S2. 
D)  the producer bears the entire burden of the tax if the supply curve is S1, and the consumer bears the entire burden of the tax if the supply curve is S2.

Question 12

In order to be binding, a price ceiling

Accepted Answer

A)  must lie above the free market equilibrium price. 
B)  must lie below the free market equilibrium price. 
C)  must coincide with the free market equilibrium price. 
D)  must be high enough for firms to earn a profit. 
A)  must lie above the free market equilibrium price. 
B)  must lie below the free market equilibrium price. 
C)  must coincide with the free market equilibrium price. 
D)  must be high enough for firms to earn a profit.

Question 13

-Refer to Table 5-1. The table above lists the highest prices three consumers, Tom, Dick and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of the shirts falls from $28 to $20,

Accepted Answer

A)  consumer surplus increases from $14 to $35. 
B)  Tom will buy two shirts; Dick and Harriet will each buy one shirt. 
C)  consumer surplus will increase from $70 to $95. 
D)  Harriet will receive more consumer surplus than Tom or Dick. 
A)  consumer surplus increases from $14 to $35. 
B)  Tom will buy two shirts; Dick and Harriet will each buy one shirt. 
C)  consumer surplus will increase from $70 to $95. 
D)  Harriet will receive more consumer surplus than Tom or Dick.

Question 14

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

Accepted Answer

A)  $0. 
B)  $1.00. 
C)  $2.50. 
D)  $3.00. 
A)  $0. 
B)  $1.00. 
C)  $2.50. 
D)  $3.00.

Question 15

-Refer to Table 5-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specialises in producing fancy dress costumes. If the market price of cowboy hats is $50, how many hats will be produced?

Accepted Answer

A)  0 
B)  1 
C)  2 
D)  4 
A)  0 
B)  1 
C)  2 
D)  4

Question 16

What is marginal benefit? Which curve is also referred to as a marginal benefit curve?

Accepted Answer

Marginal benefit is the additi

Question 17

-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, what changes in the market would result in an economically efficient output?

Accepted Answer

A)  The price would decrease, the quantity supplied would decrease and the quantity demanded would increase. 
B)  The quantity supplied would increase, the quantity demanded would decrease and the equilibrium price would decrease. 
C)  The price would decrease, the demand would increase and the supply would decrease. 
D)  The price would increase, the quantity demanded would decrease and the quantity supplied would increase. 
A)  The price would decrease, the quantity supplied would decrease and the quantity demanded would increase. 
B)  The quantity supplied would increase, the quantity demanded would decrease and the equilibrium price would decrease. 
C)  The price would decrease, the demand would increase and the supply would decrease. 
D)  The price would increase, the quantity demanded would decrease and the quantity supplied would increase.

Question 18

What is economic surplus? When is economic surplus at a maximum?

Accepted Answer

Economic surplus is sum of con

Question 19

-Refer to Figure 5-3. What is the value of producer surplus at a price of $18?

Accepted Answer

A)  $240 
B)  $300 
C)  $340 
D)  $720 
A)  $240 
B)  $300 
C)  $340 
D)  $720

Question 20

-Refer to Figure 5-3. What is the value of producer surplus at the equilibrium price of $15?

Accepted Answer

A)  $80 
B)  $160 
C)  $240 
D)  $400 
A)  $80 
B)  $160 
C)  $240 
D)  $400

One result of a tax is an increase in economic efficiency.

What do economists mean by an efficient tax?

Marginal benefit is equal to the ________ benefit a consumer receives from consuming one more unit of a good or service.

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

In a city with rent-controlled apartments, all of the following are true except

Black markets only exist in developing nations.

-Refer to Table 5-4. Suppose that the quantity of labour demanded increases by 40 000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

When a competitive equilibrium is achieved in a market,

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

-Refer to Figure 5-8. Suppose the market is initially in equilibrium at price P₁ and now the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax? For demand curve D₁

In order to be binding, a price ceiling

-Refer to Table 5-1. The table above lists the highest prices three consumers, Tom, Dick and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of the shirts falls from $28 to $20,

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

-Refer to Table 5-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specialises in producing fancy dress costumes. If the market price of cowboy hats is $50, how many hats will be produced?

What is marginal benefit? Which curve is also referred to as a marginal benefit curve?

-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, what changes in the market would result in an economically efficient output?

What is economic surplus? When is economic surplus at a maximum?

-Refer to Figure 5-3. What is the value of producer surplus at a price of $18?

-Refer to Figure 5-3. What is the value of producer surplus at the equilibrium price of $15?

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

One result of a tax is an increase in economic efficiency.

What do economists mean by an efficient tax?

Marginal benefit is equal to the ________ benefit a consumer receives from consuming one more unit of a good or service.

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

In a city with rent-controlled apartments, all of the following are true except

Black markets only exist in developing nations.

-Refer to Table 5-4. Suppose that the quantity of labour demanded increases by 40 000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

When a competitive equilibrium is achieved in a market,

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

-Refer to Figure 5-8. Suppose the market is initially in equilibrium at price P1 and now the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax? For demand curve D1

In order to be binding, a price ceiling

-Refer to Table 5-1. The table above lists the highest prices three consumers, Tom, Dick and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of the shirts falls from $28 to $20,

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

-Refer to Table 5-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specialises in producing fancy dress costumes. If the market price of cowboy hats is $50, how many hats will be produced?

What is marginal benefit? Which curve is also referred to as a marginal benefit curve?

-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, what changes in the market would result in an economically efficient output?

What is economic surplus? When is economic surplus at a maximum?

-Refer to Figure 5-3. What is the value of producer surplus at a price of $18?

-Refer to Figure 5-3. What is the value of producer surplus at the equilibrium price of $15?

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 5-8. Suppose the market is initially in equilibrium at price P₁ and now the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax? For demand curve D₁