Question 1

If the government wanted a tax to reduce the quantity exchanged a large amount but not raise much in tax revenue, it would want to tax an industry with

Accepted Answer

A) ​elastic supply and demand curves. 
B) ​inelastic supply and demand curves. 
C) ​inelastic supply and elastic demand. 
D) ​elastic supply and inelastic demand. 
A) ​elastic supply and demand curves. 
B) ​inelastic supply and demand curves. 
C) ​inelastic supply and elastic demand. 
D) ​elastic supply and inelastic demand.

Question 2

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

Accepted Answer

A) ​$3.50 
B) ​$5.00 
C) ​$6.25 
D) ​$25.00 
A) ​$3.50 
B) ​$5.00 
C) ​$6.25 
D) ​$25.00

Question 3

Other things equal, a price ceiling will increase consumer surplus by allowing customers to buy more at the lower price.

Accepted Answer

A) True 
 B)False

Question 4

A price ceiling imposed below equilibrium price causes a deadweight loss for society because:​

Accepted Answer

A) ​buyers benefit at the expense of sellers. 
B) ​as a result of the ceiling, units of output are not produced despite the fact that the value to consumers exceeds the production cost. 
C) ​sellers benefit at the expense of buyers. 
D) ​the poor gain at the expense of the rich. 
A) ​buyers benefit at the expense of sellers. 
B) ​as a result of the ceiling, units of output are not produced despite the fact that the value to consumers exceeds the production cost. 
C) ​sellers benefit at the expense of buyers. 
D) ​the poor gain at the expense of the rich.

Question 5

​Exhibit 7-13  
-Refer to Exhibit 7-13. With the deficiency payment program, producers will supply ____ output.

Accepted Answer

A) ​Q1 
B) ​Q2 
C) ​zero 
D) ​none of the above 
A) ​Q1 
B) ​Q2 
C) ​zero 
D) ​none of the above

Question 6

Goods that are heavily taxed, such as alcohol and cigarettes, often have:

Accepted Answer

A) ​relatively inelastic demand, such that the tax burden falls primarily on sellers and the deadweight loss associated with the tax is smaller than if demand were elastic. 
B) ​relatively elastic demand, such that the tax burden falls primarily on sellers and the deadweight loss associated with the tax is smaller than if demand were inelastic. 
C) ​relatively inelastic demand, such that the tax burden falls primarily on buyers and the deadweight loss associated with the tax is smaller than if demand were elastic. 
D) ​relatively elastic demand, such that the tax burden falls primarily on buyers and the deadweight loss associated with the tax is smaller than if demand were inelastic. 
A) ​relatively inelastic demand, such that the tax burden falls primarily on sellers and the deadweight loss associated with the tax is smaller than if demand were elastic. 
B) ​relatively elastic demand, such that the tax burden falls primarily on sellers and the deadweight loss associated with the tax is smaller than if demand were inelastic. 
C) ​relatively inelastic demand, such that the tax burden falls primarily on buyers and the deadweight loss associated with the tax is smaller than if demand were elastic. 
D) ​relatively elastic demand, such that the tax burden falls primarily on buyers and the deadweight loss associated with the tax is smaller than if demand were inelastic.

Question 7

​Exhibit 7-11  
-Refer to Exhibit 7-11. The consumer surplus before the price ceiling is area:

Accepted Answer

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

Question 8

​Exhibit 7-9  
-Refer to Exhibit 7-9. Deadweight loss occurs because:​

Accepted Answer

A) ​the price to buyers is lower than before the tax. 
B) ​quantity exchanged increases to Q1. 
C) ​the tax reduces the quantity exchanged below the original output level. 
D) ​the size of the total surplus realized from trade increases. 
A) ​the price to buyers is lower than before the tax. 
B) ​quantity exchanged increases to Q1. 
C) ​the tax reduces the quantity exchanged below the original output level. 
D) ​the size of the total surplus realized from trade increases.

Question 9

How does the size of the deadweight loss from a tax depend on the price elasticities of supply and demand?

Accepted Answer

Other things being equal, the less elast

Question 10

Total welfare gains from trade to the economy can be measured by the sum of consumer and producer surplus.​

Accepted Answer

A) True 
 B)False

Question 11

​Exhibit 7-14  
-Refer to Exhibit 7-14. Identify the areas of consumer and producer surplus when the market price equals $20.​

Accepted Answer

Consumer surplus equ

Question 12

​Exhibit 7-10  
-Refer to Exhibit 7-10. The consumer surplus before the subsidy is area​

Accepted Answer

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

Question 13

​Exhibit 7-3  
-Refer to Exhibit 7-3. What is the consumer 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 14

​Exhibit 7-9  
-Refer to Exhibit 7-9. The amount of consumer surplus after the tax is area:

Accepted Answer

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

Question 15

​Exhibit 7-7  
-Refer to Exhibit 7-7. When the price rises from P1 to P2, consumer surplus​

Accepted Answer

A) ​increases by area D + E 
B) ​increases by area B + C 
C) ​decreases by area B + C 
D) ​decreases by area C 
A) ​increases by area D + E 
B) ​increases by area B + C 
C) ​decreases by area B + C 
D) ​decreases by area C

Question 16

​Exhibit 7-14  
-Refer to Exhibit 7-14. Identify the deadweight loss in the above diagram when a price ceiling equal to $10 is imposed.

Accepted Answer

The deadweight loss

Question 17

​Exhibit 7-6  
-Refer to Exhibit 7-6. If the market is in equilibrium and then the government imposes a price ceiling equal to P3, buyers lose consumer surplus equal to area ____, but gain consumer surplus equal to area ____.

Accepted Answer

A) ​F; C 
B) ​E; C 
C) ​E + F; C 
D) ​D; C + F 
A) ​F; C 
B) ​E; C 
C) ​E + F; C 
D) ​D; C + F

Question 18

​Exhibit 7-12  
-Refer to Exhibit 7-12. Consumer surplus after the price floor is area​

Accepted Answer

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

Question 19

Graphically, consumer surplus is measured by:

Accepted Answer

A) ​the area below the demand curve. 
B) ​the area below the demand curve, but above the upward-sloping supply curve. 
C) ​the area below the demand curve, but above the market price. 
D) ​the area below the market demand curve, but above the supply curve. 
A) ​the area below the demand curve. 
B) ​the area below the demand curve, but above the upward-sloping supply curve. 
C) ​the area below the demand curve, but above the market price. 
D) ​the area below the market demand curve, but above the supply curve.

Question 20

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

Accepted Answer

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

Exam 7: Market Efficiency and Welfare

If the government wanted a tax to reduce the quantity exchanged a large amount but not raise much in tax revenue, it would want to tax an industry with

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

Other things equal, a price ceiling will increase consumer surplus by allowing customers to buy more at the lower price.

A price ceiling imposed below equilibrium price causes a deadweight loss for society because:​

​Exhibit 7-13 -Refer to Exhibit 7-13. With the deficiency payment program, producers will supply ____ output.

Goods that are heavily taxed, such as alcohol and cigarettes, often have:

​Exhibit 7-11 -Refer to Exhibit 7-11. The consumer surplus before the price ceiling is area:

​Exhibit 7-9 -Refer to Exhibit 7-9. Deadweight loss occurs because:​

How does the size of the deadweight loss from a tax depend on the price elasticities of supply and demand?

Total welfare gains from trade to the economy can be measured by the sum of consumer and producer surplus.​

​Exhibit 7-14 -Refer to Exhibit 7-14. Identify the areas of consumer and producer surplus when the market price equals $20.​

​Exhibit 7-10 -Refer to Exhibit 7-10. The consumer surplus before the subsidy is area​

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

​Exhibit 7-9 -Refer to Exhibit 7-9. The amount of consumer surplus after the tax is area:

​Exhibit 7-7 -Refer to Exhibit 7-7. When the price rises from P1 to P2, consumer surplus​

​Exhibit 7-14 -Refer to Exhibit 7-14. Identify the deadweight loss in the above diagram when a price ceiling equal to $10 is imposed.

​Exhibit 7-6 -Refer to Exhibit 7-6. If the market is in equilibrium and then the government imposes a price ceiling equal to P3, buyers lose consumer surplus equal to area ____, but gain consumer surplus equal to area ____.

​Exhibit 7-12 -Refer to Exhibit 7-12. Consumer surplus after the price floor is area​

Graphically, consumer surplus is measured by:

​Exhibit 7-12 -Refer to Exhibit 7-12. Consumer surplus before the price floor is 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 7-3 -Refer to Exhibit 7-3. What is the sum of consumer surplus and producer surplus for the 10^th unit bought/sold?

A price ceiling imposed below equilibrium price causes a deadweight loss for society because:

Exhibit 7-13 -Refer to Exhibit 7-13. With the deficiency payment program, producers will supply ____ output.

Exhibit 7-11 -Refer to Exhibit 7-11. The consumer surplus before the price ceiling is area:

Exhibit 7-9 -Refer to Exhibit 7-9. Deadweight loss occurs because:

Total welfare gains from trade to the economy can be measured by the sum of consumer and producer surplus.

Exhibit 7-14 -Refer to Exhibit 7-14. Identify the areas of consumer and producer surplus when the market price equals $20.

Exhibit 7-10 -Refer to Exhibit 7-10. The consumer surplus before the subsidy is area

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

Exhibit 7-9 -Refer to Exhibit 7-9. The amount of consumer surplus after the tax is area:

Exhibit 7-7 -Refer to Exhibit 7-7. When the price rises from P₁ to P₂, consumer surplus

Exhibit 7-14 -Refer to Exhibit 7-14. Identify the deadweight loss in the above diagram when a price ceiling equal to $10 is imposed.

Exhibit 7-6 -Refer to Exhibit 7-6. If the market is in equilibrium and then the government imposes a price ceiling equal to P₃, buyers lose consumer surplus equal to area , but gain consumer surplus equal to area .

Exhibit 7-12 -Refer to Exhibit 7-12. Consumer surplus after the price floor is area

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