Question 1

Figure 4-2  
-Refer to Figure 4-2.What area represents the decrease in producer surplus when the market price falls from P2 to P1?

Accepted Answer

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

Question 2

Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $2.00,what is the consumer surplus on the second burrito?

Accepted Answer

A) $0 
B) $1.00 
C) $2.00 
D) $4.50 
A) $0 
B) $1.00 
C) $2.00 
D) $4.50

Question 3

Figure 4-9 shows the demand and supply curves for the almond market.The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf.
-Refer to Figure 4-9.What area represents consumer surplus after the imposition of the price floor?

Accepted Answer

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

Question 4

Figure 4-9 shows the demand and supply curves for the almond market.The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf.
-Refer to Figure 4-9.What area represents the deadweight loss after the imposition of the price floor?

Accepted Answer

A) C + D + G 
B) F + G 
C) C + D 
D) C + D + F + G 
A) C + D + G 
B) F + G 
C) C + D 
D) C + D + F + G

Question 5

If the quantity of donuts supplied is represented by the supply equation QS = -15 + 5P,then to solve for the price of donuts,the equation would be rewritten as

Accepted Answer

A) P = 0.2QS + 3. 
B) P = 5QS + 75. 
C) P = QS - 7.5. 
D) P = 15 - 0.5QS. 
A) P = 0.2QS + 3. 
B) P = 5QS + 75. 
C) P = QS - 7.5. 
D) P = 15 - 0.5QS.

Question 6

Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.Arnold's marginal benefit from consuming the second burrito is

Accepted Answer

A) $1.00. 
B) $1.50. 
C) $2.00. 
D) $4.50. 
A) $1.00. 
B) $1.50. 
C) $2.00. 
D) $4.50.

Question 7

Monique buys a new television for $795.She receives consumer surplus of $355 from the purchase.How much does Monique value her television?

Accepted Answer

A) $355 
B) $440 
C) $795 
D) $1150 
A) $355 
B) $440 
C) $795 
D) $1150

Question 8

If the quantity of sunglasses supplied is represented by the supply equation QS = -60 + 4P,then to solve for the price of sunglasses,the equation would be rewritten as

Accepted Answer

A) P = 0.25QS + 15. 
B) P = 15QS + 240. 
C) P = QS - 7.5. 
D) P = 12 - 0.4QS. 
A) P = 0.25QS + 15. 
B) P = 15QS + 240. 
C) P = QS - 7.5. 
D) P = 12 - 0.4QS.

Question 9

Table 4-12
 $$\begin{array} { | l | l | } 
\hline \text { Demand } & \text { Supply } \
\hline P = 50 - 2 Q ^ { \mathrm { D } } & P = 35 + Q ^ { \mathrm { S } } \
\hline Q ^ { \mathrm { D } }= 25 - 0.5 P  & Q ^ { \mathrm { S } } = P - 35 \
\hline
\end{array}$$
-Refer to Table 4-12.The equations above describe the demand and supply for Bubba's Fried Jellybeans.The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units.What is the value of consumer surplus?

Accepted Answer

A) $5 thousand 
B) $12.5 thousand 
C) $25 thousand 
D) $37.5 thousand 
A) $5 thousand 
B) $12.5 thousand 
C) $25 thousand 
D) $37.5 thousand

Question 10

Figure 4-5  
-Refer to Figure 4-5.The figure above represents the market for pecans.Assume that this is a competitive market.If 4,000 pounds of pecans are sold

Accepted Answer

A) the deadweight loss is equal to $12,000. 
B) consumer surplus equals zero. 
C) the marginal benefit of each of the 4,000 pounds of pecans equals $3. 
D) marginal benefit is equal to marginal cost. 
A) the deadweight loss is equal to $12,000. 
B) consumer surplus equals zero. 
C) the marginal benefit of each of the 4,000 pounds of pecans equals $3. 
D) marginal benefit is equal to marginal cost.

Question 11

Economic efficiency is achieved when there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and

Accepted Answer

A) economic surplus plus consumer surplus equals producer surplus. 
B) consumer surplus plus producer surplus is maximized. 
C) economic surplus is minimized. 
D) the difference between consumer surplus and producer surplus is maximized. 
A) economic surplus plus consumer surplus equals producer surplus. 
B) consumer surplus plus producer surplus is maximized. 
C) economic surplus is minimized. 
D) the difference between consumer surplus and producer surplus is maximized.

Question 12

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia.What will be the likely effect on the market for sparkling wine in Vinyardia?

Accepted Answer

A) Consumer surplus will increase. 
B) Producer surplus will increase. 
C) Deadweight loss will increase. 
D) Market efficiency will increase. 
A) Consumer surplus will increase. 
B) Producer surplus will increase. 
C) Deadweight loss will increase. 
D) Market efficiency will increase.

Question 13

Figure 4-18 shows the market for cigarettes.The government plans to impose a unit tax in this market.
-Refer to Figure 4-18.How much of the tax is paid by producers?

Accepted Answer

A) $45 
B) $8 
C) $3 
D) $2 
A) $45 
B) $8 
C) $3 
D) $2

Question 14

Figure 4-5  
-Refer to Figure 4-5.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 4,000 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 4,000 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 15

Economic surplus

Accepted Answer

A) does not exist when a competitive market is in equilibrium. 
B) is equal to the sum of consumer surplus and producer surplus. 
C) is the difference between quantity demanded and quantity supplied when the market price for a product is greater than the equilibrium price. 
D) is equal to the difference between consumer surplus and producer surplus. 
A) does not exist when a competitive market is in equilibrium. 
B) is equal to the sum of consumer surplus and producer surplus. 
C) is the difference between quantity demanded and quantity supplied when the market price for a product is greater than the equilibrium price. 
D) is equal to the difference between consumer surplus and producer surplus.

Question 16

Because minimum wage is a price floor

Accepted Answer

A) it will be set below the market equilibrium price. 
B) it will create a deadweight loss. 
C) it will increase the number of jobs available in the labor market. 
D) it will maximize consumer surplus. 
A) it will be set below the market equilibrium price. 
B) it will create a deadweight loss. 
C) it will increase the number of jobs available in the labor market. 
D) it will maximize consumer surplus.

Question 17

________ is maximized in a competitive market when marginal benefit equals marginal cost.

Accepted Answer

A) Deadweight loss 
B) Marginal profit 
C) Economic surplus 
D) Selling price 
A) Deadweight loss 
B) Marginal profit 
C) Economic surplus 
D) Selling price

Question 18

By charging the equilibrium price for shared rides as opposed to the government-regulated price charged by traditional taxi companies,Uber has

Accepted Answer

A) decreased consumer surplus. 
B) increased consumer surplus. 
C) increased deadweight loss. 
D) decreased producer surplus. 
A) decreased consumer surplus. 
B) increased consumer surplus. 
C) increased deadweight loss. 
D) decreased producer surplus.

Question 19

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 8.00 & 350,000 & 390,000 \
\hline 8.50 & 360,000 & 380,000 \
\hline 9.00 & 370,000 & 370,000 \
\hline 9.50 & 380,000 & 360,000 \
\hline 10.00 & 390,000 & 350,000 \
\hline 10.50 & 400,000 & 340,000 \
\hline
\end{array}$$ Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.
-Refer to Table 4-8.If a minimum wage of $10.50 an hour is mandated,what is the quantity of labor supplied?

Accepted Answer

A) 400,000 
B) 370,000 
C) 340,000 
D) 60,000 
A) 400,000 
B) 370,000 
C) 340,000 
D) 60,000

Question 20

-Refer to Figure 4-12 which shows the market for vitamins.Suppose the government imposes a price ceiling of Pv.How will the price ceiling affect the quantity supplied,quantity demanded,and quantity exchanged?

Accepted Answer

The price ceiling will have no effect on

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

Figure 4-2 -Refer to Figure 4-2.What area represents the decrease in producer surplus when the market price falls from P2 to P1?

Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $2.00,what is the consumer surplus on the second burrito?

Figure 4-9 shows the demand and supply curves for the almond market.The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. -Refer to Figure 4-9.What area represents consumer surplus after the imposition of the price floor?

Figure 4-9 shows the demand and supply curves for the almond market.The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. -Refer to Figure 4-9.What area represents the deadweight loss after the imposition of the price floor?

If the quantity of donuts supplied is represented by the supply equation QS = -15 + 5P,then to solve for the price of donuts,the equation would be rewritten as

Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.Arnold's marginal benefit from consuming the second burrito is

Monique buys a new television for $795.She receives consumer surplus of $355 from the purchase.How much does Monique value her television?

If the quantity of sunglasses supplied is represented by the supply equation QS = -60 + 4P,then to solve for the price of sunglasses,the equation would be rewritten as

Table 4-12 Demand Supply P=50-2 P=35+ =25-0.5P =P-35 -Refer to Table 4-12.The equations above describe the demand and supply for Bubba's Fried Jellybeans.The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units.What is the value of consumer surplus?

Figure 4-5 -Refer to Figure 4-5.The figure above represents the market for pecans.Assume that this is a competitive market.If 4,000 pounds of pecans are sold

Economic efficiency is achieved when there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia.What will be the likely effect on the market for sparkling wine in Vinyardia?

Figure 4-18 shows the market for cigarettes.The government plans to impose a unit tax in this market. -Refer to Figure 4-18.How much of the tax is paid by producers?

Figure 4-5 -Refer to Figure 4-5.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following is true?

Economic surplus

Because minimum wage is a price floor

________ is maximized in a competitive market when marginal benefit equals marginal cost.

By charging the equilibrium price for shared rides as opposed to the government-regulated price charged by traditional taxi companies,Uber has

-Refer to Figure 4-12 which shows the market for vitamins.Suppose the government imposes a price ceiling of Pv.How will the price ceiling affect the quantity supplied,quantity demanded,and quantity exchanged?

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

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