Question 1

In a competitive market equilibrium,

Accepted Answer

A)  total consumer surplus equals total producer surplus. 
B)  marginal benefit and marginal cost are maximized. 
C)  consumers and producers benefit equally. 
D)  the marginal benefit equals the marginal cost of the last unit sold. 
A)  total consumer surplus equals total producer surplus. 
B)  marginal benefit and marginal cost are maximized. 
C)  consumers and producers benefit equally. 
D)  the marginal benefit equals the marginal cost of the last unit sold.

Question 2

Using a supply and demand graph, illustrate the market for rent-controlled apartments with the following data:
Equilibrium rent without rent control: $1,500
Rent with rent control: $700
Quantity of apartments demanded with rent control: 50,000
Quantity of apartments supplied with rent control: 20,000
What is the value of the initial shortage of apartments with rent control?
Now assume rent control leads to a reduction in the supply of apartments, and the new quantity supplied is now 15,000. Illustrate this on your graph.
What is the value of the shortage of apartments following the decrease in supply?

Accepted Answer

@#IMG-DLM& The initial shortage of apartments is (

Question 3

Table 4-8
   Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.
-Refer to Table 4-8. If a minimum wage of $10.00 an hour is mandated, what is the quantity of labor demanded?

Accepted Answer

A)  390,000 
B)  370,000 
C)  350,000 
D)  40,000 
A)  390,000 
B)  370,000 
C)  350,000 
D)  40,000

Question 4

Economists have shown that the burden of a tax is the same whether the tax is collected from the buyer or the seller. Why, then, are gasoline and cigarette taxes imposed on sellers?

Accepted Answer

A)  Sellers are more honest than buyers. 
B)  The demand for both gasoline and cigarettes is very elastic. 
C)  The Equal Protection Clause of the U.S. Constitution prohibits the government from imposing taxes like these on buyers. 
D)  It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right of amount of tax revenue is collected. 
A)  Sellers are more honest than buyers. 
B)  The demand for both gasoline and cigarettes is very elastic. 
C)  The Equal Protection Clause of the U.S. Constitution prohibits the government from imposing taxes like these on buyers. 
D)  It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right of amount of tax revenue is collected.

Question 5

Table 4-8
   Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.
-A black market is a market where buying and selling take place

Accepted Answer

A)  at prices that violate government price regulations. 
B)  in non-licensed shops and warehouses. 
C)  after regular office hours. 
D)  on foreign soil. 
A)  at prices that violate government price regulations. 
B)  in non-licensed shops and warehouses. 
C)  after regular office hours. 
D)  on foreign soil.

Question 6

Figure 4-4   Figure 4-4 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 40 in order to raise the price to $18.
-Refer to Figure 4-4. 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

Question 7

Table 4-14
  
-Refer to Table 4-14. The equations above describe the demand and supply for Pauline's Pickled Pomegranates. The equilibrium price and quantity for Pauline's Pickled Pomegranates are $30 and 15 thousand units. What is the value of consumer surplus?

Accepted Answer

A)  $50 thousand 
B)  $112.5 thousand 
C)  $225 thousand 
D)  $337.5 thousand 
A)  $50 thousand 
B)  $112.5 thousand 
C)  $225 thousand 
D)  $337.5 thousand

Question 8

Figure 4-3   Figure 4-3 shows Kendra's demand curve for ice-cream cones.
-Refer to Figure 4-3. If the market price is $4.00, what is the maximum number of ice cream cones that Kendra will buy?

Accepted Answer

A)  0 
B)  2 
C)  3 
D)  4 
A)  0 
B)  2 
C)  3 
D)  4

Question 9

Figure 4-2  
-Suppose there are two cities that have rent controlled apartments. In one city (Albany) all apartments are subject to rent control; in the other city (Halftrack) one-half of the apartments are rent controlled. Which of the following is most likely to be true?

Accepted Answer

A)  It will be difficult to find a rent-controlled apartment in Albany or Halftrack; rents for the Halftrack apartments not subject to controls will be higher than they would be without rent control. 
B)  It will be easier to find an affordable apartment in Albany since rents will be low across the board. 
C)  It will be easier to find an affordable apartment in Halftrack, either a rent-controlled apartment or another apartment, at a reasonable price. 
D)  It will be impossible to rent an apartment in either city at any price. 
A)  It will be difficult to find a rent-controlled apartment in Albany or Halftrack; rents for the Halftrack apartments not subject to controls will be higher than they would be without rent control. 
B)  It will be easier to find an affordable apartment in Albany since rents will be low across the board. 
C)  It will be easier to find an affordable apartment in Halftrack, either a rent-controlled apartment or another apartment, at a reasonable price. 
D)  It will be impossible to rent an apartment in either city at any price.

Question 10

In a competitive market equilibrium the ________ equals the ________ of the last unit sold.

Accepted Answer

A)  total profit; marginal benefit 
B)  total cost; marginal cost 
C)  profit; selling price 
D)  marginal benefit; marginal cost 
A)  total profit; marginal benefit 
B)  total cost; marginal cost 
C)  profit; selling price 
D)  marginal benefit; marginal cost

Question 11

Figure 4-10   Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R0.
-Refer to Figure 4-10. Suppose that instead of a price ceiling, the government imposed a price floor of R1. What is the quantity of apartments demanded at the new price?

Accepted Answer

A)  0 
B)  Q1 
C)  Q* 
D)  Q0 
A)  0 
B)  Q1 
C)  Q* 
D)  Q0

Question 12

Table 4-7
   Table 4-7 shows the demand and supply schedules for labor market in the city of Pixley.
-Refer to Table 4-7. If a minimum wage of $11.50 is mandated there will be a

Accepted Answer

A)  shortage of 20,000 units of labor. 
B)  surplus of 20,000 units of labor. 
C)  shortage of 40,000 units of labor. 
D)  surplus of 40,000 units of labor. 
A)  shortage of 20,000 units of labor. 
B)  surplus of 20,000 units of labor. 
C)  shortage of 40,000 units of labor. 
D)  surplus of 40,000 units of labor.

Question 13

Figure 4-3   Figure 4-3 shows Kendra's demand curve for ice-cream cones.
-Refer to Figure 4-3. Kendra's marginal benefit from consuming the second ice cream cone is

Accepted Answer

A)  $6.50 
B)  $6.00 
C)  $3.00 
D)  $2.25 
A)  $6.50 
B)  $6.00 
C)  $3.00 
D)  $2.25

Question 14

Figure 4-1   Figure 4-1 shows Arnold's demand curve for burritos.
-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 15

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 16

Companies in the sharing economy, such as Airbnb and Uber, have the potential to increase consumer surplus and decrease deadweight loss. This would occur by ________ the equilibrium price in their market, and by doing so ________ efficiency.

Accepted Answer

A)  lowering; decreasing 
B)  lowering; increasing 
C)  raising; decreasing 
D)  raising; increasing 
A)  lowering; decreasing 
B)  lowering; increasing 
C)  raising; decreasing 
D)  raising; increasing

Question 17

Table 4-8
   Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.
-Refer to Table 4-8. If a minimum wage of $10.50 an hour is mandated, what is the quantity of labor demanded?

Accepted Answer

A)  400,000 
B)  370,000 
C)  340,000 
D)  60,000 
A)  400,000 
B)  370,000 
C)  340,000 
D)  60,000

Question 18

Rent control is an example of a price floor.

Accepted Answer

A) True 
 B)False

Question 19

Table 4-11
  
-Refer to Table 4-11. The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick. The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units. What is the value of economic surplus in this market?

Accepted Answer

A)  $300 thousand 
B)  $600 thousand 
C)  $1,200 thousand 
D)  $1,600 thousand 
A)  $300 thousand 
B)  $600 thousand 
C)  $1,200 thousand 
D)  $1,600 thousand

Question 20

Figure 4-3   Figure 4-3 shows Kendra's demand curve for ice-cream cones.
-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

Exam 4: Economic Efficiency, Government Price Setting, and Taxes

In a competitive market equilibrium,

Table 4-8 Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-8. If a minimum wage of $10.00 an hour is mandated, what is the quantity of labor demanded?

Economists have shown that the burden of a tax is the same whether the tax is collected from the buyer or the seller. Why, then, are gasoline and cigarette taxes imposed on sellers?

Table 4-8 Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -A black market is a market where buying and selling take place

Table 4-14 -Refer to Table 4-14. The equations above describe the demand and supply for Pauline's Pickled Pomegranates. The equilibrium price and quantity for Pauline's Pickled Pomegranates are $30 and 15 thousand units. What is the value of consumer surplus?

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-3. If the market price is $4.00, what is the maximum number of ice cream cones that Kendra will buy?

Figure 4-2 -Suppose there are two cities that have rent controlled apartments. In one city (Albany) all apartments are subject to rent control; in the other city (Halftrack) one-half of the apartments are rent controlled. Which of the following is most likely to be true?

In a competitive market equilibrium the ________ equals the ________ of the last unit sold.

Figure 4-10 Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R0. -Refer to Figure 4-10. Suppose that instead of a price ceiling, the government imposed a price floor of R1. What is the quantity of apartments demanded at the new price?

Table 4-7 Table 4-7 shows the demand and supply schedules for labor market in the city of Pixley. -Refer to Table 4-7. If a minimum wage of $11.50 is mandated there will be a

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-3. Kendra's marginal benefit from consuming the second ice cream cone is

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Suppliers will be willing to supply a product only if

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

Companies in the sharing economy, such as Airbnb and Uber, have the potential to increase consumer surplus and decrease deadweight loss. This would occur by ________ the equilibrium price in their market, and by doing so ________ efficiency.

Table 4-8 Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-8. If a minimum wage of $10.50 an hour is mandated, what is the quantity of labor demanded?

Rent control is an example of a price floor.

Table 4-11 -Refer to Table 4-11. The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick. The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units. What is the value of economic surplus in this market?

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -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.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

In a competitive market equilibrium the equals the of the last unit sold.

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

Companies in the sharing economy, such as Airbnb and Uber, have the potential to increase consumer surplus and decrease deadweight loss. This would occur by the equilibrium price in their market, and by doing so efficiency.