Question 1

In order to be binding,a price ceiling

Accepted Answer

A)  must lie above the free market equilibrium price. 
B)  must lie below the free market equilibrium price. 
C)  must coincide with the free market equilibrium price. 
D)  must be high enough for firms to earn a profit. 
A)  must lie above the free market equilibrium price. 
B)  must lie below the free market equilibrium price. 
C)  must coincide with the free market equilibrium price. 
D)  must be high enough for firms to earn a profit.

Question 2

One result of a tax is an increase in economic efficiency.

Accepted Answer

A) True 
 B)False

Question 3

The area ________ the market supply curve and ________ the market price is equal to the total amount of producer surplus in a market.

Accepted Answer

A)  above; above 
B)  above; below 
C)  below; above 
D)  below; below 
A)  above; above 
B)  above; below 
C)  below; above 
D)  below; below

Question 4

Table 4-1
  
-Refer to Table 4-1.The table above lists the highest prices three consumers,Tom,Dick and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of the shirts falls from $28 to $20

Accepted Answer

A)  consumer surplus increases from $14 to $35. 
B)  Tom will buy two shirts; Dick and Harriet will each buy one shirt. 
C)  consumer surplus will increase from $70 to $95. 
D)  Harriet will receive more consumer surplus than Tom or Dick. 
A)  consumer surplus increases from $14 to $35. 
B)  Tom will buy two shirts; Dick and Harriet will each buy one shirt. 
C)  consumer surplus will increase from $70 to $95. 
D)  Harriet will receive more consumer surplus than Tom or Dick.

Question 5

Figure 4-4  
-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following is true?

Accepted Answer

A)  If the price of pecans is $3 the output will be economically efficient but there will be a deadweight loss. 
B)  If the price of pecans is $9 consumers will purchase more than the economically efficient output. 
C)  Both 40,000 pounds and 12,000 pounds are economically inefficient rates of output. 
D)  If the price of pecans is $3 producers will sell 12,000 pounds of pecans but this output will be economically inefficient. 
A)  If the price of pecans is $3 the output will be economically efficient but there will be a deadweight loss. 
B)  If the price of pecans is $9 consumers will purchase more than the economically efficient output. 
C)  Both 40,000 pounds and 12,000 pounds are economically inefficient rates of output. 
D)  If the price of pecans is $3 producers will sell 12,000 pounds of pecans but this output will be economically inefficient.

Question 6

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 7

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 8

Table 4-3
  
 Table 4-3 shows the demand and supply schedules for labor market in the city of Pixley.
-Refer to Table 4-3.If a minimum wage of $9.50 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 9

Figure 4-8  
 Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market.
-Refer to Figure 4-8.The price buyers pay after the tax is

Accepted Answer

A)  $7. 
B)  $20. 
C)  $22. 
D)  $27. 
A)  $7. 
B)  $20. 
C)  $22. 
D)  $27.

Question 10

In New York City,about 1 million apartments are subject to rent control by the local government.Rent control

Accepted Answer

A)  puts a legal limit on the rent that landlords can charge for an apartment. 
B)  is a price floor which sets a minimum rent for apartments. 
C)  only applies to those apartments which are owned and rented out by the local government. 
D)  is a government policy which limits apartment rental to those people whose incomes are less than $50,000 per year. 
A)  puts a legal limit on the rent that landlords can charge for an apartment. 
B)  is a price floor which sets a minimum rent for apartments. 
C)  only applies to those apartments which are owned and rented out by the local government. 
D)  is a government policy which limits apartment rental to those people whose incomes are less than $50,000 per year.

Question 11

You are given the following market data for Venus automobiles in Saturnia.
Demand: P = 200 - 0.25Q
Supply: P = 130 + 0.10Q
where P = Price and Q = Quantity.
a.Calculate the equilibrium price and quantity.
b.Calculate the consumer surplus in this market.
c.Calculate the producer surplus in this market.

Accepted Answer

a.Price = $150; Quan

Question 12

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 13

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

Question 14

Figure 4-1  
 Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $1.00,what is the maximum number of burritos that Arnold will buy?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 15

Figure 4-1  
 Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $1.00,what is the consumer surplus on the third 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 16

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 17

Table 4-1
  
-Refer to Table 4-1.The table above lists the highest prices three consumers,Tom,Dick and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of one of the shirts is $28 dollars

Accepted Answer

A)  Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts. 
B)  Tom will receive $12 of consumer surplus from buying one shirt. 
C)  Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts. 
D)  Harriet will receive $25 of consumer surplus since she will buy no shirts. 
A)  Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts. 
B)  Tom will receive $12 of consumer surplus from buying one shirt. 
C)  Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts. 
D)  Harriet will receive $25 of consumer surplus since she will buy no shirts.

Question 18

Rent control is an example of a price ceiling.

Accepted Answer

A) True 
 B)False

Question 19

Marginal benefit is equal to the ________ benefit to a consumer receives from consuming one more unit of a good or service

Accepted Answer

A)  total 
B)  unintended 
C)  additional 
D)  surplus 
A)  total 
B)  unintended 
C)  additional 
D)  surplus

Question 20

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.

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

In order to be binding,a price ceiling

One result of a tax is an increase in economic efficiency.

The area ________ the market supply curve and ________ the market price is equal to the total amount of producer surplus in a market.

Table 4-1 -Refer to Table 4-1.The table above lists the highest prices three consumers,Tom,Dick and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of the shirts falls from $28 to $20

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following is true?

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

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

Table 4-3 Table 4-3 shows the demand and supply schedules for labor market in the city of Pixley. -Refer to Table 4-3.If a minimum wage of $9.50 is mandated there will be a

Figure 4-8 Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 4-8.The price buyers pay after the tax is

In New York City,about 1 million apartments are subject to rent control by the local government.Rent control

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.

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?

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $1.00,what is the maximum number of burritos that Arnold will buy?

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $1.00,what is the consumer surplus on the third burrito?

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

Table 4-1 -Refer to Table 4-1.The table above lists the highest prices three consumers,Tom,Dick and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of one of the shirts is $28 dollars

Rent control is an example of a price ceiling.

Marginal benefit is equal to the ________ benefit to a consumer receives from consuming one more unit of a good or service

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

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

The area the market supply curve and the market price is equal to the total amount of producer surplus in a market.

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