Question 1

What is the difference between scarcity and a shortage?

Accepted Answer

Scarcity is a situation in which unlimited wants exceed the limited resources available to fulfil those wants.A shortage of a good occurs only if the quantity demanded is greater than the quantity supplied at the current price.

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 40 in order to raise the price to $18.
-Refer to Figure 5-3.What is the value of the deadweight loss at the equilibrium price of $15?

Accepted Answer

A)  $0 
B)  $40 
C)  $60 
D)  $100 
A)  $0 
B)  $40 
C)  $60 
D)  $100 A

Question 3

Lucinda buys a new GPS system for $250.She receives consumer surplus of $75 from the purchase.How much does Lucinda value her GPS system?

Accepted Answer

A)  $75 
B)  $175 
C)  $250 
D)  $325 
A)  $75 
B)  $175 
C)  $250 
D)  $325 D

Question 4

What do economists mean by an efficient tax?

Accepted Answer

A tax is efficient i

Question 5

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 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 6

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 the consumer surplus on the first burrito?

Accepted Answer

A)  $0.50 
B)  $1.00 
C)  $2.00 
D)  $7.50 
A)  $0.50 
B)  $1.00 
C)  $2.00 
D)  $7.50

Question 7

Figure 5-5   Figure 5-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1000 per month.
-Refer to Figure 5-5.Suppose that instead of a rent ceiling,the government imposed a price floor of $2000 per month for apartments.What is the value of the deadweight loss after the imposition of the price floor?

Accepted Answer

A)  $50 000 
B)  $125 000 
C)  $175 000 
D)  $260 000 
A)  $50 000 
B)  $125 000 
C)  $175 000 
D)  $260 000

Question 8

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 40 in order to raise the price to $18.
-Refer to Figure 5-3.What is the value of the deadweight loss at a price of $18?

Accepted Answer

A)  $100 
B)  $180 
C)  $660 
D)  $1040 
A)  $100 
B)  $180 
C)  $660 
D)  $1040

Question 9

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

Accepted Answer

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

Question 10

Figure 5-5   Figure 5-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1000 per month.
-Refer to Figure 5-5.What is the value of consumer surplus after the imposition of the ceiling?

Accepted Answer

A)  $120 000 
B)  $230 000 
C)  $270 000 
D)  $430 000 
A)  $120 000 
B)  $230 000 
C)  $270 000 
D)  $430 000

Question 11

The difference between the ________ and the ________ from the sale of a product is called producer surplus.

Accepted Answer

A)  lowest price a firm would have been willing to accept; price it actually receives 
B)  highest price a firm wold have been willing to accept; lowest price it was willing to accept 
C)  cost to produce a product; price a firm actually receives 
D)  cost to produce a product; profit received 
A)  lowest price a firm would have been willing to accept; price it actually receives 
B)  highest price a firm wold have been willing to accept; lowest price it was willing to accept 
C)  cost to produce a product; price a firm actually receives 
D)  cost to produce a product; profit received

Question 12

Table 5-4
   Table 5-4 shows the demand and supply schedules for the labour market in the city of Pixley.
-Refer to Table 5-4.If a minimum wage of $12.50 an hour is mandated,what is the quantity of labour 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 13

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

Question 14

Table 5-3
  
-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 price of cowboy hats decreases from $38 to $30

Accepted Answer

A)  consumer surplus will rise by $6. 
B)  the marginal cost of producing the third cowboy hat will fall to $30. 
C)  producer surplus will fall from $22 to $6. 
D)  producer surplus will rise from $8 to $24. 
A)  consumer surplus will rise by $6. 
B)  the marginal cost of producing the third cowboy hat will fall to $30. 
C)  producer surplus will fall from $22 to $6. 
D)  producer surplus will rise from $8 to $24.

Question 15

What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price,where must price ceilings and price floors be set to have an effect on the market?

Accepted Answer

A price ceiling is a legally determined

Question 16

Which of the following statements is true?

Accepted Answer

A)  Consumer surplus measures the total benefit from participating in a market. 
B)  When a market is in equilibrium, consumer surplus equals producer surplus. 
C)  Consumer surplus measures the net benefit from participating in a market. 
D)  Producer surplus measures the total benefit received by producers from participating in a market. 
A)  Consumer surplus measures the total benefit from participating in a market. 
B)  When a market is in equilibrium, consumer surplus equals producer surplus. 
C)  Consumer surplus measures the net benefit from participating in a market. 
D)  Producer surplus measures the total benefit received by producers from participating in a market.

Question 17

Figure 5-1   Figure 5-1 shows Arnold's demand curve for burritos.
-Refer to Figure 5-1.If the market price is $1.00,what is the consumer surplus on the fourth burrito?

Accepted Answer

A)  $0 
B)  $0.50 
C)  $1.50 
D)  $2.25 
A)  $0 
B)  $0.50 
C)  $1.50 
D)  $2.25

Question 18

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

Accepted Answer

Marginal benefit is the additi

Question 19

Figure 5-9  
-Refer to Figure 5-9.Suppose the market is initially in equilibrium at price P1,and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

Accepted Answer

A)  The consumer will bear a smaller share of the tax burden if the demand curve is D1. 
B)  The consumer's share of the tax burden is the same whether the demand curve is D1 or D2. 
C)  The consumer will bear a smaller share of the tax burden if the demand curve is D2. 
D)  The consumer will bear the entire burden of the tax if the demand curve is D2, and the producer will bear the entire burden of the tax if the demand curve is D1. 
A)  The consumer will bear a smaller share of the tax burden if the demand curve is D1. 
B)  The consumer's share of the tax burden is the same whether the demand curve is D1 or D2. 
C)  The consumer will bear a smaller share of the tax burden if the demand curve is D2. 
D)  The consumer will bear the entire burden of the tax if the demand curve is D2, and the producer will bear the entire burden of the tax if the demand curve is D1.

Question 20

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.

What is the difference between scarcity and a shortage?

Lucinda buys a new GPS system for $250.She receives consumer surplus of $75 from the purchase.How much does Lucinda value her GPS system?

What do economists mean by an efficient tax?

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,

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 the consumer surplus on the first burrito?

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

Figure 5-5 Figure 5-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1000 per month. -Refer to Figure 5-5.What is the value of consumer surplus after the imposition of the ceiling?

The difference between the and the from the sale of a product is called producer surplus.

Table 5-4 Table 5-4 shows the demand and supply schedules for the labour market in the city of Pixley. -Refer to Table 5-4.If a minimum wage of $12.50 an hour is mandated,what is the quantity of labour supplied?

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.

Table 5-3 -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 price of cowboy hats decreases from $38 to $30

What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price,where must price ceilings and price floors be set to have an effect on the market?

Which of the following statements is true?

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.If the market price is $1.00,what is the consumer surplus on the fourth burrito?

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

Figure 5-9 -Refer to Figure 5-9.Suppose the market is initially in equilibrium at price P₁,and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

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,

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 5: The Economics of Healthcare

What is the difference between scarcity and a shortage?

Lucinda buys a new GPS system for $250.She receives consumer surplus of $75 from the purchase.How much does Lucinda value her GPS system?

What do economists mean by an efficient tax?

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,

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 the consumer surplus on the first burrito?

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

Figure 5-5 Figure 5-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1000 per month. -Refer to Figure 5-5.What is the value of consumer surplus after the imposition of the ceiling?

The difference between the ________ and the ________ from the sale of a product is called producer surplus.

Table 5-4 Table 5-4 shows the demand and supply schedules for the labour market in the city of Pixley. -Refer to Table 5-4.If a minimum wage of $12.50 an hour is mandated,what is the quantity of labour supplied?

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.

Table 5-3 -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 price of cowboy hats decreases from $38 to $30

What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price,where must price ceilings and price floors be set to have an effect on the market?

Which of the following statements is true?

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.If the market price is $1.00,what is the consumer surplus on the fourth burrito?

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

Figure 5-9 -Refer to Figure 5-9.Suppose the market is initially in equilibrium at price P1,and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

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,

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

The difference between the and the from the sale of a product is called producer surplus.

Figure 5-9 -Refer to Figure 5-9.Suppose the market is initially in equilibrium at price P₁,and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?