Question 1

What is consumer surplus? Why would policy makers be interested in consumer surplus?

Accepted Answer

Consumer surplus is the difference betwe

Question 2

The actual division of the burden of a tax between buyers and sellers in a market is called

Accepted Answer

A)  tax incidence. 
B)  tax liability. 
C)  tax bearer. 
D)  tax parity. 
A)  tax incidence. 
B)  tax liability. 
C)  tax bearer. 
D)  tax parity.

Question 3

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia. What will be the likely effect on the market for sparkling wine in Vinyardia?

Accepted Answer

A)  Consumer surplus will increase. 
B)  Producer surplus will increase. 
C)  Deadweight loss will increase. 
D)  Market efficiency will increase. 
A)  Consumer surplus will increase. 
B)  Producer surplus will increase. 
C)  Deadweight loss will increase. 
D)  Market efficiency will increase.

Question 4

Figure 4-3   Figure 4-3 shows Kendra's demand curve for ice-cream cones.
-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 5

Figure 4-1   Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1. What is the total amount that Arnold is willing to pay for 4 burritos?

Accepted Answer

A)  $1.00 
B)  $4.00 
C)  $7.00 
D)  $10.00 
A)  $1.00 
B)  $4.00 
C)  $7.00 
D)  $10.00

Question 6

If the price of toothpaste is represented by equation P = 40 - .5QD, then the corresponding quantity of toothpaste demanded is represented by the equation

Accepted Answer

A)  QD = 20 - .5P. 
B)  QD = 40 - P. 
C)  QD = 80 - 2P. 
D)  QD = -20 + P. 
A)  QD = 20 - .5P. 
B)  QD = 40 - P. 
C)  QD = 80 - 2P. 
D)  QD = -20 + P.

Question 7

If the quantity of nail polish supplied is represented by the equation QS = -3 + 2P then the corresponding price of nail polish is represented by the equation

Accepted Answer

A)  P = 0.5QS + 1.5. 
B)  P = 2QS + 6. 
C)  P = 2QS - 6. 
D)  P = 1.5 - 0.5QS. 
A)  P = 0.5QS + 1.5. 
B)  P = 2QS + 6. 
C)  P = 2QS - 6. 
D)  P = 1.5 - 0.5QS.

Question 8

If the quantity of hearing aids demanded is represented by the equation QD = 40 - P then the corresponding price of hearing aids is represented by the equation

Accepted Answer

A)  P = 0.5QD + 20. 
B)  P = 40 - QD. 
C)  P = 0.25 - 4QD. 
D)  P = QD + 40. 
A)  P = 0.5QD + 20. 
B)  P = 40 - QD. 
C)  P = 0.25 - 4QD. 
D)  P = QD + 40.

Question 9

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 10

Table 4-7
   Table 4-7 shows the demand and supply schedules for labor market in the city of Pixley.
-Government intervention in agricultural markets in the U.S. began in the

Accepted Answer

A)  1920s. 
B)  1930s. 
C)  1950s. 
D)  1970s. 
A)  1920s. 
B)  1930s. 
C)  1950s. 
D)  1970s.

Question 11

Figure 4-6   Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2.
-Refer to Figure 4-6. What area represents consumer surplus at the equilibrium price of P1?

Accepted Answer

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

Question 12

What area on a supply and demand graph represents producer surplus?

Accepted Answer

Producer surplus is

Question 13

Figure 4-8   Figure 4-8 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.
-Refer to Figure 4-8. With rent control, the quantity supplied is 200 apartments. Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get. What is the highest rent they can get per month?

Accepted Answer

A)  $1,000 
B)  $1,500 
C)  $2,000 
D)  $2,300 
A)  $1,000 
B)  $1,500 
C)  $2,000 
D)  $2,300

Question 14

Table 4-3
  
-Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of The Waco Kid's cowboy hats is $40,

Accepted Answer

A)  The Waco Kid will produce four hats. 
B)  producer surplus from the first hat is $40. 
C)  producer surplus will equal $28. 
D)  there will be a surplus; as a result, the price will fall to $24. 
A)  The Waco Kid will produce four hats. 
B)  producer surplus from the first hat is $40. 
C)  producer surplus will equal $28. 
D)  there will be a surplus; as a result, the price will fall to $24.

Question 15

Figure 4-2  
-Refer to Figure 4-2. What area represents the decrease in producer surplus when the market price falls from P2 to P1?

Accepted Answer

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

Question 16

If the quantity of fishing poles demanded is represented by the equation QD = 60 - P, then the corresponding price of fishing poles is represented by the equation

Accepted Answer

A)  P = 0.6QD + 10. 
B)  P = 60 - QD. 
C)  P = -60 + QD. 
D)  P = QD + 60. 
A)  P = 0.6QD + 10. 
B)  P = 60 - QD. 
C)  P = -60 + QD. 
D)  P = QD + 60.

Question 17

Figure 4-6   Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2.
-Refer to Figure 4-6. What area represents producer surplus at P2?

Accepted Answer

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

Question 18

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 $12.50 an hour is mandated, what is the quantity of labor supplied?

Accepted Answer

A)  80,000 
B)  550,000 
C)  630,000 
D)  1,180,000 
A)  80,000 
B)  550,000 
C)  630,000 
D)  1,180,000

Question 19

Table 4-6
  
-Refer to Table 4-6. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the market price of Marko's polo shirts is $13, Marko's will produce

Accepted Answer

A)  1 shirt. 
B)  2 shirts. 
C)  3 shirts. 
D)  4 shirts. 
A)  1 shirt. 
B)  2 shirts. 
C)  3 shirts. 
D)  4 shirts.

Question 20

Table 4-5
  
-Refer to Table 4-5. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one ticket rises from $20 to $38,

Accepted Answer

A)  only three tickets will be sold. 
B)  consumer surplus decreases from $62 to $12. 
C)  consumer surplus increases from $88 to $142. 
D)  no one will buy a ticket. 
A)  only three tickets will be sold. 
B)  consumer surplus decreases from $62 to $12. 
C)  consumer surplus increases from $88 to $142. 
D)  no one will buy a ticket.

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

What is consumer surplus? Why would policy makers be interested in consumer surplus?

The actual division of the burden of a tax between buyers and sellers in a market is called

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia. What will be the likely effect on the market for sparkling wine in Vinyardia?

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -The total amount of consumer surplus in a market is equal to the area below the demand curve.

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1. What is the total amount that Arnold is willing to pay for 4 burritos?

If the price of toothpaste is represented by equation P = 40 - .5QD, then the corresponding quantity of toothpaste demanded is represented by the equation

If the quantity of nail polish supplied is represented by the equation QS = -3 + 2P then the corresponding price of nail polish is represented by the equation

If the quantity of hearing aids demanded is represented by the equation QD = 40 - P then the corresponding price of hearing aids is represented by the equation

Marginal cost is

Table 4-7 Table 4-7 shows the demand and supply schedules for labor market in the city of Pixley. -Government intervention in agricultural markets in the U.S. began in the

What area on a supply and demand graph represents producer surplus?

Table 4-3 -Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of The Waco Kid's cowboy hats is $40,

Figure 4-2 -Refer to Figure 4-2. What area represents the decrease in producer surplus when the market price falls from P2 to P1?

If the quantity of fishing poles demanded is represented by the equation QD = 60 - P, then the corresponding price of fishing poles is represented by the equation

Figure 4-6 Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2. -Refer to Figure 4-6. What area represents producer surplus at P2?

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 $12.50 an hour is mandated, what is the quantity of labor supplied?

Table 4-6 -Refer to Table 4-6. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the market price of Marko's polo shirts is $13, Marko's will produce

Table 4-5 -Refer to Table 4-5. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one ticket rises from $20 to $38,

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

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