Question 1

Which statement is true 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 dead-weight 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 dead-weight loss.

Question 2

Figure 5.3   Figure 5.3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40S1U1B1 S1U1B0in order to raise the price to $18.
-Refer to Figure 5.3.At a price of $18,consumers are willing to buy 40 metrics 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

Figure 5.1   Figure 5.1 shows Arnold's demand curve for burritos.
-Refer to Figure 5.1.What is Arnold's benefit from consuming the fourth burrito?

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 4

What is the reduction in economic surplus resulting from not being in competitive equilibrium?

Accepted Answer

A)  Marginal cost 
B)  Producer atrophy 
C)  Dead-weight loss 
D)  Economic shortage 
A)  Marginal cost 
B)  Producer atrophy 
C)  Dead-weight loss 
D)  Economic shortage

Question 5

In cities with rent controls,the actual rents paid can be higher than the legal maximum.One explanation for this is ________.

Accepted Answer

A)  rent control laws are so complicated that landlords and tenants may not be aware of what the legal price is 
B)  landlords are allowed to charge more than the legal maximum on some apartments so long as they charge less on others 
C)  because there is a shortage of apartments, tenants often are willing to pay rents higher than the law allows 
D)  the legal penalty landlords face for charging more than the legal maximum rent is less than the revenue earned by charging their tenants more than the maximum rent 
A)  rent control laws are so complicated that landlords and tenants may not be aware of what the legal price is 
B)  landlords are allowed to charge more than the legal maximum on some apartments so long as they charge less on others 
C)  because there is a shortage of apartments, tenants often are willing to pay rents higher than the law allows 
D)  the legal penalty landlords face for charging more than the legal maximum rent is less than the revenue earned by charging their tenants more than the maximum rent

Question 6

If the market price is at equilibrium,the dead-weight loss is maximised.

Accepted Answer

A) True 
 B)False

Question 7

What is 'tax incidence'? What determines tax incidence in a competitive market?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Tax incidence refers to the actual divis

Question 8

Figure 5.4  
-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 $3,_________.

Accepted Answer

A)  economic surplus is maximised 
B)  not enough consumers want to buy pecans 
C)  the quantity supplied is less than the economically efficient quantity 
D)  the quantity supplied is economically efficient, but the quantity demanded is economically inefficient 
A)  economic surplus is maximised 
B)  not enough consumers want to buy pecans 
C)  the quantity supplied is less than the economically efficient quantity 
D)  the quantity supplied is economically efficient, but the quantity demanded is economically inefficient

Question 9

If,in a competitive market,marginal benefit is less than marginal cost,________.

Accepted Answer

A)  the net benefit to consumers from participating in the market is less than the net benefit to producers 
B)  the government must force producers to raise prices in order to achieve economic efficiency 
C)  the quantity sold is greater than the equilibrium quantity 
D)  the quantity sold is less than the equilibrium quantity 
A)  the net benefit to consumers from participating in the market is less than the net benefit to producers 
B)  the government must force producers to raise prices in order to achieve economic efficiency 
C)  the quantity sold is greater than the equilibrium quantity 
D)  the quantity sold is less than the equilibrium quantity

Question 10

Figure 5.4  
-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 4 000. 
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 lower the price to $3 in order to sell the quantity demanded of 4 000. 
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 11

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 dead-weight 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 dead-weight loss will occur.

Question 12

What is the difference between scarcity and a shortage?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Scarcity is a situation in which unlimit

Question 13

When is economic efficiency achieved in a competitive market?

Accepted Answer

A)  when economic surplus is equal to consumer surplus 
B)  when consumers and producers are satisfied 
C)  when the marginal benefit equals the marginal cost from the last unit sold 
D)  when producer surplus equals the total amount firms receive from consumers minus the cost of production 
A)  when economic surplus is equal to consumer surplus 
B)  when consumers and producers are satisfied 
C)  when the marginal benefit equals the marginal cost from the last unit sold 
D)  when producer surplus equals the total amount firms receive from consumers minus the cost of production

Question 14

Figure 5.7   Figure 5.7 shows the market for beer. The government plans to impose a unit tax in this market.
-Refer to Figure 5.7.How much of the tax is paid by buyers?

Accepted Answer

A)  $2 
B)  $5 
C)  $7 
D)  $12 
A)  $2 
B)  $5 
C)  $7 
D)  $12

Question 15

Figure 5.1   Figure 5.1 shows Arnold's demand curve for burritos.
-Refer to Figure 5.1.If the market price is $2.00,what is Arnold's consumer surplus?

Accepted Answer

A)  $0.50 
B)  $1.00 
C)  $1.50 
D)  $3.00 
A)  $0.50 
B)  $1.00 
C)  $1.50 
D)  $3.00

Question 16

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximised,then __________.

Accepted Answer

A)  maximum dead-weight loss occurs 
B)  economic efficiency is achieved 
C)  profits are maximised 
D)  costs are minimised 
A)  maximum dead-weight loss occurs 
B)  economic efficiency is achieved 
C)  profits are maximised 
D)  costs are minimised

Question 17

Figure 5.3   Figure 5.3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40S1U1B1 S1U1B0in order to raise the price to $18.
-Refer to Figure 5.3.The value of producer surplus at a price of $18 is ________.

Accepted Answer

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

Question 18

Figure 5.3   Figure 5.3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40S1U1B1 S1U1B0in order to raise the price to $18.
-Refer to Figure 5.3.The value of the dead-weight loss at a price of $18 is ________.

Accepted Answer

A)  $100 
B)  $180 
C)  $660 
D)  $1 040 
A)  $100 
B)  $180 
C)  $660 
D)  $1 040

Question 19

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 20

The minimum wage is an example of a price ceiling.

Accepted Answer

A) True 
 B)False

Which statement is true when a competitive equilibrium is achieved in a market?

Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos. -Refer to Figure 5.1.What is Arnold's benefit from consuming the fourth burrito?

What is the reduction in economic surplus resulting from not being in competitive equilibrium?

In cities with rent controls,the actual rents paid can be higher than the legal maximum.One explanation for this is ________.

If the market price is at equilibrium,the dead-weight loss is maximised.

What is 'tax incidence'? What determines tax incidence in a competitive market? __________________________________________________________________________________________________________________________________________________________________________________________

Figure 5.4 -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 $3,_________.

If,in a competitive market,marginal benefit is less than marginal cost,________.

Figure 5.4 -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,________.

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

What is the difference between scarcity and a shortage? __________________________________________________________________________________________________________________________________________________________________________________________

When is economic efficiency achieved in a competitive market?

Figure 5.7 Figure 5.7 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 5.7.How much of the tax is paid by buyers?

Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos. -Refer to Figure 5.1.If the market price is $2.00,what is Arnold's consumer surplus?

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximised,then __________.

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

The minimum wage is an example of a price ceiling.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

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Exam 5: Economic Efficiency,government Price Setting and Taxes

Which statement is true when a competitive equilibrium is achieved in a market?

Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos. -Refer to Figure 5.1.What is Arnold's benefit from consuming the fourth burrito?

What is the reduction in economic surplus resulting from not being in competitive equilibrium?

In cities with rent controls,the actual rents paid can be higher than the legal maximum.One explanation for this is ________.

If the market price is at equilibrium,the dead-weight loss is maximised.

What is 'tax incidence'? What determines tax incidence in a competitive market? __________________________________________________________________________________________________________________________________________________________________________________________

Figure 5.4 -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 $3,_________.

If,in a competitive market,marginal benefit is less than marginal cost,________.

Figure 5.4 -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,________.

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

What is the difference between scarcity and a shortage? __________________________________________________________________________________________________________________________________________________________________________________________

When is economic efficiency achieved in a competitive market?

Figure 5.7 Figure 5.7 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 5.7.How much of the tax is paid by buyers?

Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos. -Refer to Figure 5.1.If the market price is $2.00,what is Arnold's consumer surplus?

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximised,then __________.

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

The minimum wage is an example of a price ceiling.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters