Question 1

Which of the following is a result of imposing a rent ceiling?

Accepted Answer

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

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 8.00 & 350,000 & 390,000 \
\hline 8.50 & 360,000 & 380,000 \
\hline 9.00 & 370,000 & 370,000 \
\hline 9.50 & 380,000 & 360,000 \
\hline 10.00 & 390,000 & 350,000 \
\hline 10.50 & 400,000 & 340,000 \
\hline
\end{array}$$ 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.Suppose that the quantity of labor demanded decreases by 40,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Accepted Answer

A) W = $10.00;Q = 390,000 
B) W = $9.50;Q = 380,000 
C) W = $8.50;Q = 340,000 
D) W = $8.00;Q = 350,000 
A) W = $10.00;Q = 390,000 
B) W = $9.50;Q = 380,000 
C) W = $8.50;Q = 340,000 
D) W = $8.00;Q = 350,000

Question 4

Assume the market price for tangerines is $18.00 per bushel.At the market price,tangerine growers are willing to supply a quantity of 12,000 bushels per week.The quantity supplied drops to zero when the price falls to $5.00 per bushel.Construct a graph showing this data,calculate the total producer surplus in the market for tangerines,and show the total producer surplus on the graph.

Accepted Answer

@#IMG-DLM& The total producer

Question 5

What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price,where must price ceilings and price floors be set to have an effect on the market.

Accepted Answer

A price ceiling is a legally determined

Question 6

If the market price is at equilibrium,the deadweight loss is maximized.

Accepted Answer

A) True 
 B)False

Question 7

Figure 4-3 shows Kendra's demand curve for ice cream cones.
-Refer to Figure 4-3.What is the total amount that Kendra is willing to pay for 2 ice cream cones?

Accepted Answer

A) $1.50 
B) $3.00 
C) $5.50 
D) $6.50 
A) $1.50 
B) $3.00 
C) $5.50 
D) $6.50

Question 8

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 or service. 
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 or service. 
D) the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept.

Question 9

Each point on a demand curve shows

Accepted Answer

A) the willingness of consumers to purchase a product at different prices. 
B) the consumer surplus received from purchasing a given quantity of a product. 
C) the economic surplus received from purchasing a given quantity of a product. 
D) the legally determined maximum price that sellers may charge for a given quantity of a product. 
A) the willingness of consumers to purchase a product at different prices. 
B) the consumer surplus received from purchasing a given quantity of a product. 
C) the economic surplus received from purchasing a given quantity of a product. 
D) the legally determined maximum price that sellers may charge for a given quantity of a product.

Question 10

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

Accepted Answer

A) demand 
B) supply 
C) production possibilities 
D) marginal cost 
A) demand 
B) supply 
C) production possibilities 
D) marginal cost

Question 11

Figure 4-8 shows the market for apartments in Springfield.Recently,the government imposed a rent ceiling of $1,000 per month.
-Refer to Figure 4-8.What is the value of the deadweight loss after the imposition of the ceiling?

Accepted Answer

A) $50,000 
B) $125,000 
C) $175,000 
D) $260,000 
A) $50,000 
B) $125,000 
C) $175,000 
D) $260,000

Question 12

Figure 4-6 shows the market for granola.The market is initially in equilibrium at a price of P1 and a quantity of Q1.Now suppose producers decide to cut output to Q2 in order to raise the price to P2.
-Refer to Figure 4-6.What area represents the deadweight loss at the equilibrium price of P1?

Accepted Answer

A) C + E + H 
B) G + H 
C) C + E 
D) There is no deadweight loss at the price of P1. 
A) C + E + H 
B) G + H 
C) C + E 
D) There is no deadweight loss at the price of P1.

Question 13

Figure 4-8 shows the market for apartments in Springfield.Recently,the government imposed a rent ceiling of $1,000 per month.
-Refer to Figure 4-8.What is the value of consumer surplus after the imposition of the ceiling?

Accepted Answer

A) $120,000 
B) $230,000 
C) $270,000 
D) $430,000 
A) $120,000 
B) $230,000 
C) $270,000 
D) $430,000

Question 14

In a competitive market equilibrium

Accepted Answer

A) total consumer surplus equals total producer surplus. 
B) marginal benefit and marginal cost are maximized. 
C) consumers and producers benefit equally. 
D) the marginal benefit equals the marginal cost of the last unit sold. 
A) total consumer surplus equals total producer surplus. 
B) marginal benefit and marginal cost are maximized. 
C) consumers and producers benefit equally. 
D) the marginal benefit equals the marginal cost of the last unit sold.

Question 15

Figure 4-11 shows the demand and supply curves for the coffee market.The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at $7.00.
-Refer to Figure 4-11.What is the value of the portion of consumer surplus that has been transferred to producer surplus as a result of the price floor?

Accepted Answer

A) $1,200 
B) $1,500 
C) $1,800 
D) $3,000 
A) $1,200 
B) $1,500 
C) $1,800 
D) $3,000

Question 16

Arthur buys a new cell phone for $150.He receives consumer surplus of $150 from the purchase.What value does Arthur place on his cell phone?

Accepted Answer

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

Question 17

Suppose an excise tax of $0.75 is imposed on every pack of cigarettes sold and sellers are responsible for paying this tax.How would the imposition of the tax be illustrated in a graph?

Accepted Answer

A) The supply curve for cigarettes would shift to the left by $0.75. 
B) The supply curve for cigarettes would shift to the left by less than $0.75. 
C) The supply curve for cigarettes would shift to the left by more than $0.75. 
D) The supply curve for cigarettes would shift to the right by $0.75. 
A) The supply curve for cigarettes would shift to the left by $0.75. 
B) The supply curve for cigarettes would shift to the left by less than $0.75. 
C) The supply curve for cigarettes would shift to the left by more than $0.75. 
D) The supply curve for cigarettes would shift to the right by $0.75.

Question 18

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

Accepted Answer

A) $0. 
B) $1.00. 
C) $2.50. 
D) $3.00. 
A) $0. 
B) $1.00. 
C) $2.50. 
D) $3.00.

Question 19

Figure 4-3 shows Kendra's demand curve for ice cream cones.
-Refer to Figure 4-3.Kendra's marginal benefit from consuming the first ice cream cone is

Accepted Answer

A) $9.00. 
B) $7.50. 
C) $3.50. 
D) $0.50. 
A) $9.00. 
B) $7.50. 
C) $3.50. 
D) $0.50.

Question 20

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Hourly Wage } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Supplied }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Labor } \
\text { Demanded }
\end{array} \
\hline \$ 7.50 & 530,000 & 650,000 \
\hline 8.50 & 550,000 & 630,000 \
\hline 9.50 & 570,000 & 610,000 \
\hline 10.50 & 590,000 & 590,000 \
\hline 11.50 & 610,000 & 570,000 \
\hline 12.50 & 630,000 & 550,000 \
\hline
\end{array}$$ Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7.What is the equilibrium hourly wage (W*)and the equilibrium quantity of labor (Q*)?

Accepted Answer

A) W* = $10.50;Q* = 590,000 
B) W* = $11.50;Q* = 570,000 
C) W* = $9.50;Q* = 570,000 
D) W* = $10.50;Q* = 1,180,000 
A) W* = $10.50;Q* = 590,000 
B) W* = $11.50;Q* = 570,000 
C) W* = $9.50;Q* = 570,000 
D) W* = $10.50;Q* = 1,180,000

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

Which of the following is a result of imposing a rent ceiling?

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

What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price,where must price ceilings and price floors be set to have an effect on the market.

If the market price is at equilibrium,the deadweight loss is maximized.

Figure 4-3 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-3.What is the total amount that Kendra is willing to pay for 2 ice cream cones?

Willingness to pay measures

Each point on a demand curve shows

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

Figure 4-8 shows the market for apartments in Springfield.Recently,the government imposed a rent ceiling of $1,000 per month. -Refer to Figure 4-8.What is the value of the deadweight loss after the imposition of the ceiling?

Figure 4-6 shows the market for granola.The market is initially in equilibrium at a price of P1 and a quantity of Q1.Now suppose producers decide to cut output to Q2 in order to raise the price to P2. -Refer to Figure 4-6.What area represents the deadweight loss at the equilibrium price of P1?

Figure 4-8 shows the market for apartments in Springfield.Recently,the government imposed a rent ceiling of $1,000 per month. -Refer to Figure 4-8.What is the value of consumer surplus after the imposition of the ceiling?

In a competitive market equilibrium

Arthur buys a new cell phone for $150.He receives consumer surplus of $150 from the purchase.What value does Arthur place on his cell phone?

Suppose an excise tax of $0.75 is imposed on every pack of cigarettes sold and sellers are responsible for paying this tax.How would the imposition of the tax be illustrated in a graph?

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

Figure 4-3 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-3.Kendra's marginal benefit from consuming the first ice cream cone is

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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