Question 1

Willingness to pay measures

Accepted Answer

A)  the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it. 
B)  the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good. 
C)  the maximum price that a buyer is willing to pay for a good. 
D)  the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept. 
A)  the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it. 
B)  the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good. 
C)  the maximum price that a buyer is willing to pay for a good. 
D)  the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept.

Question 2

Figure 5-8  
-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 3

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 Arnold's consumer surplus?

Accepted Answer

A)  $1.00 
B)  $2.00 
C)  $6.00 
D)  $7.00 
A)  $1.00 
B)  $2.00 
C)  $6.00 
D)  $7.00

Question 4

Producer surplus is the difference between the lowest price a firm is willing to accept for a product and the price it actually receives for the product.

Accepted Answer

A) True 
 B)False

Question 5

Will equilibrium in a market always result in an outcome that is economically efficient? Explain.

Accepted Answer

An economically efficient outcome means

Question 6

When the government taxes a good or service,it

Accepted Answer

A)  affects the market equilibrium for that good or service. 
B)  eliminates the deadweight loss associated with the good or service. 
C)  increases consumer surplus for the good or service. 
D)  increases producer surplus for the good or service. 
A)  affects the market equilibrium for that good or service. 
B)  eliminates the deadweight loss associated with the good or service. 
C)  increases consumer surplus for the good or service. 
D)  increases producer surplus for the good or service.

Question 7

Which of the following is not a result of imposing a rent ceiling?

Accepted Answer

A)  Some consumer surplus is converted to producer surplus. 
B)  There is a reduction in the quantity supplied of apartments. 
C)  There is an increase in the quantity demanded of apartments. 
D)  The marginal benefit of the last apartment rented is greater than the marginal cost of supplying it. 
A)  Some consumer surplus is converted to producer surplus. 
B)  There is a reduction in the quantity supplied of apartments. 
C)  There is an increase in the quantity demanded of apartments. 
D)  The marginal benefit of the last apartment rented is greater than the marginal cost of supplying it.

Question 8

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 demanded?

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 9

Figure 5-1   Figure 5-1 shows Arnold's demand curve for burritos.
-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 10

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 11

A minimum wage law dictates

Accepted Answer

A)  the minimum quantity of labour that a firm must employ. 
B)  the lowest wage that firms may pay for labour. 
C)  the highest wage that firms must pay for labour. 
D)  the minimum qualifications for labour. 
A)  the minimum quantity of labour that a firm must employ. 
B)  the lowest wage that firms may pay for labour. 
C)  the highest wage that firms must pay for labour. 
D)  the minimum qualifications for labour.

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 $11.50 is mandated,there will be a

Accepted Answer

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

Question 13

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.As a result of the tax,is there a loss in consumer surplus?

Accepted Answer

A)  Yes, because consumers are paying a price above the economically efficient price. 
B)  No, because the producer pays the tax. 
C)  No, because the market reaches a new equilibrium. 
D)  No, because consumers are charged a lower price to cover their tax burden. 
A)  Yes, because consumers are paying a price above the economically efficient price. 
B)  No, because the producer pays the tax. 
C)  No, because the market reaches a new equilibrium. 
D)  No, because consumers are charged a lower price to cover their tax burden.

Question 14

Frieda is at her local florist to buy a dozen roses.She is willing to pay $75 for the roses,and buys them for $75.Frieda's consumer surplus from the purchase is

Accepted Answer

A)  $150. 
B)  $75. 
C)  $37.50. 
D)  $0. 
A)  $150. 
B)  $75. 
C)  $37.50. 
D)  $0.

Question 15

The graph below represents the market for lychee nuts.The equilibrium price is $7.00 per bushel,but the market price is $5.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and deadweight loss at the equilibrium price of $7.00 and at the market price of $5.00.

Accepted Answer

At the equilibrium price of $7.00:
Consu

Question 16

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production,and the sum of consumer surplus and producer surplus is maximised.

Accepted Answer

A) True 
 B)False

Question 17

Figure 5-2  
-Refer to Figure 5-2.What area represents the increase in producer surplus when the market price rises from P1 to P2?

Accepted Answer

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

Question 18

Paul goes to Sportsmart to buy a new tennis racquet.He is willing to pay $200 for a new racquet,but buys one on sale for $125.Paul's consumer surplus from the purchase is

Accepted Answer

A)  $325. 
B)  $200. 
C)  $125. 
D)  $75. 
A)  $325. 
B)  $200. 
C)  $125. 
D)  $75.

Question 19

Figure 5-1   Figure 5-1 shows Arnold's demand curve for burritos.
-Refer to Figure 5-1.If the market price is $1.50,what is the consumer surplus on the second burrito?

Accepted Answer

A)  $0.50 
B)  $1.00 
C)  $1.50 
D)  $3.50 
A)  $0.50 
B)  $1.00 
C)  $1.50 
D)  $3.50

Question 20

Arthur buys a new mobile phone for $150.He receives consumer surplus of $150 from the purchase.How much does Arthur value his mobile phone?

Accepted Answer

A)  $0 
B)  $150 
C)  $225 
D)  $300 
A)  $0 
B)  $150 
C)  $225 
D)  $300

Willingness to pay measures

Figure 5-8 -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

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 Arnold's consumer surplus?

Producer surplus is the difference between the lowest price a firm is willing to accept for a product and the price it actually receives for the product.

Will equilibrium in a market always result in an outcome that is economically efficient? Explain.

When the government taxes a good or service,it

Which of the following is not a result of imposing a rent ceiling?

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 demanded?

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.If the market price is $1.50,what is the consumer surplus on the first burrito?

Marginal cost is

A minimum wage law dictates

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 $11.50 is mandated,there will be a

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.As a result of the tax,is there a loss in consumer surplus?

Frieda is at her local florist to buy a dozen roses.She is willing to pay $75 for the roses,and buys them for $75.Frieda's consumer surplus from the purchase is

The graph below represents the market for lychee nuts.The equilibrium price is $7.00 per bushel,but the market price is $5.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and deadweight loss at the equilibrium price of $7.00 and at the market price of $5.00.

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production,and the sum of consumer surplus and producer surplus is maximised.

Figure 5-2 -Refer to Figure 5-2.What area represents the increase in producer surplus when the market price rises from P₁ to P₂?

Paul goes to Sportsmart to buy a new tennis racquet.He is willing to pay $200 for a new racquet,but buys one on sale for $125.Paul's consumer surplus from the purchase is

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.If the market price is $1.50,what is the consumer surplus on the second burrito?

Arthur buys a new mobile phone for $150.He receives consumer surplus of $150 from the purchase.How much does Arthur value his mobile phone?

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

Willingness to pay measures

Figure 5-8 -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

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 Arnold's consumer surplus?

Producer surplus is the difference between the lowest price a firm is willing to accept for a product and the price it actually receives for the product.

Will equilibrium in a market always result in an outcome that is economically efficient? Explain.

When the government taxes a good or service,it

Which of the following is not a result of imposing a rent ceiling?

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 demanded?

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.If the market price is $1.50,what is the consumer surplus on the first burrito?

Marginal cost is

A minimum wage law dictates

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 $11.50 is mandated,there will be a

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.As a result of the tax,is there a loss in consumer surplus?

Frieda is at her local florist to buy a dozen roses.She is willing to pay $75 for the roses,and buys them for $75.Frieda's consumer surplus from the purchase is

The graph below represents the market for lychee nuts.The equilibrium price is $7.00 per bushel,but the market price is $5.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and deadweight loss at the equilibrium price of $7.00 and at the market price of $5.00.

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production,and the sum of consumer surplus and producer surplus is maximised.

Figure 5-2 -Refer to Figure 5-2.What area represents the increase in producer surplus when the market price rises from P1 to P2?

Paul goes to Sportsmart to buy a new tennis racquet.He is willing to pay $200 for a new racquet,but buys one on sale for $125.Paul's consumer surplus from the purchase is

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.If the market price is $1.50,what is the consumer surplus on the second burrito?

Arthur buys a new mobile phone for $150.He receives consumer surplus of $150 from the purchase.How much does Arthur value his mobile phone?

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

Figure 5-8 -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

Figure 5-2 -Refer to Figure 5-2.What area represents the increase in producer surplus when the market price rises from P₁ to P₂?