Question 1

How does the deadweight loss occur in a deficiency payment program?

Accepted Answer

The deadweight loss occurs because the program increases the output beyond the efficient level of output. From the efficient level of output to the new level of output, the marginal cost to sellers for producing the good is greater than the marginal benefit to consumers.​

Question 2

​Exhibit 7-8  
-Refer to Exhibit 7-8. When the price is P2, the producer surplus is equal to area:

Accepted Answer

A) ​A 
B) ​B 
C) ​A + B 
D) ​A + B + C 
A) ​A 
B) ​B 
C) ​A + B 
D) ​A + B + C C

Question 3

If James is willing to sell an extra concert ticket for $40 and actually sells it for $100, his consumer surplus is $60.

Accepted Answer

A) True 
 B)False  False

Question 4

Ceteris paribus, a decrease in the price of a good will cause the:

Accepted Answer

A) ​quantity demanded of the good to decrease. 
B) ​quantity supplied of the good to increase. 
C) ​consumer surplus derived from the good to increase. 
D) ​supply of the good to decrease. 
A) ​quantity demanded of the good to decrease. 
B) ​quantity supplied of the good to increase. 
C) ​consumer surplus derived from the good to increase. 
D) ​supply of the good to decrease.

Question 5

​Exhibit 7-11  
-Refer to Exhibit 7-11. The deadweight loss from the price ceiling is area:

Accepted Answer

A) ​d + e + f 
B) ​d + e 
C) ​b + c 
D) ​c + e 
A) ​d + e + f 
B) ​d + e 
C) ​b + c 
D) ​c + e

Question 6

Producer surplus is always the total area below the demand curve and above the supply curve.

Accepted Answer

A) True 
 B)False

Question 7

​Exhibit 7-3  
-Refer to Exhibit 7-3. What is the producer surplus of the 10th unit bought/sold?​

Accepted Answer

A) ​$1.25 
B) ​$2.25 
C) ​$2.75 
D) ​$3.50 
A) ​$1.25 
B) ​$2.25 
C) ​$2.75 
D) ​$3.50

Question 8

The difference between the value of a good to consumers and its price is known as:

Accepted Answer

A) ​demand. 
B) ​marginal utility. 
C) ​total utility. 
D) ​consumer surplus. 
A) ​demand. 
B) ​marginal utility. 
C) ​total utility. 
D) ​consumer surplus.

Question 9

Producer surplus from a unit of output is the difference between the market price and the seller's cost of producing that unit.
​

Accepted Answer

A) True 
 B)False

Question 10

​Exhibit 7-12  
-Refer to Exhibit 7-12. The deadweight loss when the government buys the surplus is:

Accepted Answer

A) ​b + c 
B) ​d 
C) ​c + f + g + h + i + d 
D) ​c + f + g + h + i 
A) ​b + c 
B) ​d 
C) ​c + f + g + h + i + d 
D) ​c + f + g + h + i

Question 11

A deadweight loss occurs as a result of a per-unit tax because:

Accepted Answer

A) ​the government spends tax dollars less efficiently than do private citizens. 
B) ​there is a decline in output for units for which the marginal benefit exceeds the marginal cost. 
C) ​taxes cause an overproduction of output relative to the socially efficient level or production. 
D) ​a surplus is created. 
A) ​the government spends tax dollars less efficiently than do private citizens. 
B) ​there is a decline in output for units for which the marginal benefit exceeds the marginal cost. 
C) ​taxes cause an overproduction of output relative to the socially efficient level or production. 
D) ​a surplus is created.

Question 12

​Exhibit 7-9  
-Refer to Exhibit 7-9. The deadweight loss of a tax is area:

Accepted Answer

A) ​a + b + c 
B) ​d + e + f 
C) ​c + e 
D) ​a + b + d + f 
A) ​a + b + c 
B) ​d + e + f 
C) ​c + e 
D) ​a + b + d + f

Question 13

A government payment to producers for the difference between a target price and the price at which producers were able to sell their goods is known as a:

Accepted Answer

A) ​subsidy. 
B) ​deficiency payment. 
C) ​producer surplus. 
D) ​price support. 
A) ​subsidy. 
B) ​deficiency payment. 
C) ​producer surplus. 
D) ​price support.

Question 14

Other things being equal, the less elastic demand is:

Accepted Answer

A) ​the lower the deadweight loss is resulting from the imposition of a given tax on a product. 
B) ​the greater the burden is of the tax borne by consumers. 
C) ​the greater the tax revenue collected by the government is. 
D) ​all of the above 
A) ​the lower the deadweight loss is resulting from the imposition of a given tax on a product. 
B) ​the greater the burden is of the tax borne by consumers. 
C) ​the greater the tax revenue collected by the government is. 
D) ​all of the above

Question 15

Ceteris paribus, an increase in the price of a good will cause the:​

Accepted Answer

A) ​quantity demanded of the good to increase. 
B) ​quantity supplied of the good to decrease. 
C) ​supply of the good to increase. 
D) ​consumer surplus derived from the good to decrease. 
A) ​quantity demanded of the good to increase. 
B) ​quantity supplied of the good to decrease. 
C) ​supply of the good to increase. 
D) ​consumer surplus derived from the good to decrease.

Question 16

​Exhibit 7-12  
-Refer to Exhibit 7-12. Producer surplus before the price floor is area:​

Accepted Answer

A) ​e + f + b + c + d 
B) ​a + b + c 
C) ​e + f 
D) ​b + c + d + e + f 
A) ​e + f + b + c + d 
B) ​a + b + c 
C) ​e + f 
D) ​b + c + d + e + f

Question 17

​Exhibit 7-6  
-Refer to Exhibit 7-6. If the market is in equilibrium and then the government imposes a price floor equal to P1, society suffers a deadweight loss equal to area:

Accepted Answer

A) ​C + D + F. 
B) ​A + B + E. 
C) ​E + F. 
D) ​E only. 
A) ​C + D + F. 
B) ​A + B + E. 
C) ​E + F. 
D) ​E only.

Question 18

Which of the following is true?​

Accepted Answer

A) ​If the consumer is a buyer of several units of a good, the earlier units will have greater marginal value and therefore create more consumer surplus, because marginal willingness to pay falls as greater quantities are consumed in any period. 
B) ​When some units of output can be produced at a cost that is lower than the market price, the seller receives a surplus, or net benefit, from producing those units. 
C) ​At the market equilibrium both consumers and producers benefit from trading every unit up to the market equilibrium output. 
D) ​All of the above are true. 
A) ​If the consumer is a buyer of several units of a good, the earlier units will have greater marginal value and therefore create more consumer surplus, because marginal willingness to pay falls as greater quantities are consumed in any period. 
B) ​When some units of output can be produced at a cost that is lower than the market price, the seller receives a surplus, or net benefit, from producing those units. 
C) ​At the market equilibrium both consumers and producers benefit from trading every unit up to the market equilibrium output. 
D) ​All of the above are true.

Question 19

​Exhibit 7-14  
-Refer to Exhibit 7-14. Identify the areas of consumer and producer surplus when a price floor equal to $30 is imposed.​

Accepted Answer

Consumer surplus equ

Question 20

​Exhibit 7-7  
-Refer to Exhibit 7-7. When the price is P1, the consumer surplus is equal to the area:

Accepted Answer

A) ​A 
B) ​C 
C) ​A + B 
D) ​A + B + C 
A) ​A 
B) ​C 
C) ​A + B 
D) ​A + B + C

Exam 7: Market Efficiency and Welfare

How does the deadweight loss occur in a deficiency payment program?

​Exhibit 7-8 -Refer to Exhibit 7-8. When the price is P2, the producer surplus is equal to area:

If James is willing to sell an extra concert ticket for $40 and actually sells it for $100, his consumer surplus is $60.

Ceteris paribus, a decrease in the price of a good will cause the:

​Exhibit 7-11 -Refer to Exhibit 7-11. The deadweight loss from the price ceiling is area:

Producer surplus is always the total area below the demand curve and above the supply curve.

​Exhibit 7-3 -Refer to Exhibit 7-3. What is the producer surplus of the 10th unit bought/sold?​

The difference between the value of a good to consumers and its price is known as:

Producer surplus from a unit of output is the difference between the market price and the seller's cost of producing that unit. ​

​Exhibit 7-12 -Refer to Exhibit 7-12. The deadweight loss when the government buys the surplus is:

A deadweight loss occurs as a result of a per-unit tax because:

​Exhibit 7-9 -Refer to Exhibit 7-9. The deadweight loss of a tax is area:

A government payment to producers for the difference between a target price and the price at which producers were able to sell their goods is known as a:

Other things being equal, the less elastic demand is:

Ceteris paribus, an increase in the price of a good will cause the:​

​Exhibit 7-12 -Refer to Exhibit 7-12. Producer surplus before the price floor is area:​

​Exhibit 7-6 -Refer to Exhibit 7-6. If the market is in equilibrium and then the government imposes a price floor equal to P1, society suffers a deadweight loss equal to area:

Which of the following is true?​

​Exhibit 7-14 -Refer to Exhibit 7-14. Identify the areas of consumer and producer surplus when a price floor equal to $30 is imposed.​

​Exhibit 7-7 -Refer to Exhibit 7-7. When the price is P1, the consumer surplus is equal to the area:

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exhibit 7-8 -Refer to Exhibit 7-8. When the price is P₂, the producer surplus is equal to area:

Exhibit 7-11 -Refer to Exhibit 7-11. The deadweight loss from the price ceiling is area:

Exhibit 7-3 -Refer to Exhibit 7-3. What is the producer surplus of the 10^th unit bought/sold?

Producer surplus from a unit of output is the difference between the market price and the seller's cost of producing that unit.

Exhibit 7-12 -Refer to Exhibit 7-12. The deadweight loss when the government buys the surplus is:

Exhibit 7-9 -Refer to Exhibit 7-9. The deadweight loss of a tax is area:

Ceteris paribus, an increase in the price of a good will cause the:

Exhibit 7-12 -Refer to Exhibit 7-12. Producer surplus before the price floor is area:

Exhibit 7-6 -Refer to Exhibit 7-6. If the market is in equilibrium and then the government imposes a price floor equal to P₁, society suffers a deadweight loss equal to area:

Which of the following is true?

Exhibit 7-14 -Refer to Exhibit 7-14. Identify the areas of consumer and producer surplus when a price floor equal to $30 is imposed.

Exhibit 7-7 -Refer to Exhibit 7-7. When the price is P₁, the consumer surplus is equal to the area: