Question 1

The sum of consumer surplus and producer surplus is equal to

Accepted Answer

A) the deadweight loss. 
B) the economic surplus. 
C) zero. 
D) total profit. 
A) the deadweight loss. 
B) the economic surplus. 
C) zero. 
D) total profit.

Question 2

If,in a competitive market,marginal benefit is greater than marginal cost

Accepted Answer

A) the net benefit to consumers from participating in the market is greater than the net benefit to producers. 
B) the government must force producers to lower price in order to achieve economic efficiency. 
C) the quantity sold is greater than the equilibrium quantity. 
D) the quantity sold is less than the equilibrium quantity. 
A) the net benefit to consumers from participating in the market is greater than the net benefit to producers. 
B) the government must force producers to lower price in order to achieve economic efficiency. 
C) the quantity sold is greater than the equilibrium quantity. 
D) the quantity sold is less than the equilibrium quantity.

Question 3

The area above the market supply curve and below the market price

Accepted Answer

A) is equal to the total amount of producer surplus in a market. 
B) is equal to the marginal cost of the last unit produced. 
C) is equal to the total amount of economic surplus in a market. 
D) is equal to the total cost of production. 
A) is equal to the total amount of producer surplus in a market. 
B) is equal to the marginal cost of the last unit produced. 
C) is equal to the total amount of economic surplus in a market. 
D) is equal to the total cost of production.

Question 4

Table 4-6
  
-Refer to Table 4-6.The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion.The equilibrium price and quantity for Aunt Maud's lotion are $20 and 30 thousand units.What is the value of economic surplus in this market?

Accepted Answer

A) $600 thousand 
B) $1,050 thousand 
C) $1,500 thousand 
D) $2,100 thousand 
A) $600 thousand 
B) $1,050 thousand 
C) $1,500 thousand 
D) $2,100 thousand

Question 5

Table 4-4
   Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.
-Refer to Table 4-4.If a minimum wage of $10.50 is mandated there will be a

Accepted Answer

A) shortage of 30,000 units of labor. 
B) surplus of 30,000 units of labor. 
C) shortage of 60,000 units of labor. 
D) surplus of 60,000 units of labor. 
A) shortage of 30,000 units of labor. 
B) surplus of 30,000 units of labor. 
C) shortage of 60,000 units of labor. 
D) surplus of 60,000 units of labor.

Question 6

Tax incidence is the actual division of the

Accepted Answer

A) burden of the tax between buyers and sellers in a market. 
B) tax revenues between government agencies. 
C) tax revenues between the federal government and state governments. 
D) population into different tax brackets. 
A) burden of the tax between buyers and sellers in a market. 
B) tax revenues between government agencies. 
C) tax revenues between the federal government and state governments. 
D) population into different tax brackets.

Question 7

Figure 4-9   Figure 4-9 shows the market for cigarettes.The government plans to impose a unit tax in this market.
-Refer to Figure 4-9.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 8

In cities with rent controls,the actual rents paid can be ________ than the legal maximum.One explanation for this is because there is a ________ of apartments,tenants are ________.

Accepted Answer

A) higher;shortage;often willing to pay rents higher than the law allows 
B) higher;surplus;often forced to pay rents higher than the law allows 
C) lower;surplus;never willing to pay rents below the legal maximum 
D) lower;shortage;rarely willing to pay rents lower than the law allows 
A) higher;shortage;often willing to pay rents higher than the law allows 
B) higher;surplus;often forced to pay rents higher than the law allows 
C) lower;surplus;never willing to pay rents below the legal maximum 
D) lower;shortage;rarely willing to pay rents lower than the law allows

Question 9

Figure 4-3   Figure 4-3 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 4-3.At the price P2,consumers are willing to buy the Q2 pounds of granola.Is this an economically efficient quantity?

Accepted Answer

A) No,the marginal benefit of the last unit (Q2)exceeds the marginal cost of that last unit. 
B) Yes,otherwise consumers would not buy Q2 units. 
C) Yes,because the price P2 shows what consumers are willing to pay for the product. 
D) No,the marginal cost of the last unit (Q2)exceeds the marginal benefit of the last unit. 
A) No,the marginal benefit of the last unit (Q2)exceeds the marginal cost of that last unit. 
B) Yes,otherwise consumers would not buy Q2 units. 
C) Yes,because the price P2 shows what consumers are willing to pay for the product. 
D) No,the marginal cost of the last unit (Q2)exceeds the marginal benefit of the last unit.

Question 10

In a competitive market equilibrium the ________ equals the ________ of the last unit sold.

Accepted Answer

A) total profit;marginal benefit 
B) total cost;marginal cost 
C) profit;selling price 
D) marginal benefit;marginal cost 
A) total profit;marginal benefit 
B) total cost;marginal cost 
C) profit;selling price 
D) marginal benefit;marginal cost

Question 11

Economists have shown that the burden of a tax is

Accepted Answer

A) greater on the buyer when the tax is collected from the buyer. 
B) greater on the seller when the tax is collected from the seller. 
C) greater on the buyer when the tax is collected from the seller and greater on the seller when the tax is collected from the buyer. 
D) the same whether the tax is collected from the buyer or the seller. 
A) greater on the buyer when the tax is collected from the buyer. 
B) greater on the seller when the tax is collected from the seller. 
C) greater on the buyer when the tax is collected from the seller and greater on the seller when the tax is collected from the buyer. 
D) the same whether the tax is collected from the buyer or the seller.

Question 12

There is a shortage of every good that is scarce.

Accepted Answer

A) True 
 B)False

Question 13

In the market for gasoline,an increase in the federal excise tax on gasoline would shift the supply curve up.

Accepted Answer

A) True 
 B)False

Question 14

Figure 4-3   Figure 4-3 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 4-3.What area represents consumer surplus at P2?

Accepted Answer

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

Question 15

Figure 4-5   Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R0.
-Refer to Figure 4-5.Suppose that instead of a price ceiling,the government imposed a price floor of R1.What is the area representing the portion of consumer surplus transferred to producers as a result of the price floor?

Accepted Answer

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

Question 16

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 17

Is there a difference between the "true burden" of a tax and who is legally required to pay a tax? Briefly explain.

Accepted Answer

There is a difference.The true burden of

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Table 4-7
  
-Refer to Table 4-7.The equations above describe the demand and supply for Pauline's Pickled Pomegranates.The equilibrium price and quantity for Pauline's Pickled Pomegranates are $30 and 15 thousand units.What is the value of economic surplus in this market?

Accepted Answer

A) $50 thousand 
B) $112.5 thousand 
C) $225 thousand 
D) $337.5 thousand 
A) $50 thousand 
B) $112.5 thousand 
C) $225 thousand 
D) $337.5 thousand

Question 20

If the government implements a price ceiling on insulin,this will

Accepted Answer

A) increase the price consumers will pay for insulin. 
B) decrease the quantity of insulin the manufacturers will be willing to supply. 
C) have to be set above the market equilibrium price to be effective. 
D) encourage manufacturers to produce and sell more insulin to increase their profits. 
A) increase the price consumers will pay for insulin. 
B) decrease the quantity of insulin the manufacturers will be willing to supply. 
C) have to be set above the market equilibrium price to be effective. 
D) encourage manufacturers to produce and sell more insulin to increase their profits.

The sum of consumer surplus and producer surplus is equal to

If,in a competitive market,marginal benefit is greater than marginal cost

The area above the market supply curve and below the market price

Table 4-6 -Refer to Table 4-6.The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion.The equilibrium price and quantity for Aunt Maud's lotion are $20 and 30 thousand units.What is the value of economic surplus in this market?

Table 4-4 Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-4.If a minimum wage of $10.50 is mandated there will be a

Tax incidence is the actual division of the

Figure 4-9 Figure 4-9 shows the market for cigarettes.The government plans to impose a unit tax in this market. -Refer to Figure 4-9.How much of the tax is paid by producers?

In cities with rent controls,the actual rents paid can be than the legal maximum.One explanation for this is because there is a of apartments,tenants are .

In a competitive market equilibrium the equals the of the last unit sold.

Economists have shown that the burden of a tax is

There is a shortage of every good that is scarce.

In the market for gasoline,an increase in the federal excise tax on gasoline would shift the supply curve up.

Figure 4-3 Figure 4-3 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 4-3.What area represents consumer surplus at P2?

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

Is there a difference between the "true burden" of a tax and who is legally required to pay a tax? Briefly explain.

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

Table 4-7 -Refer to Table 4-7.The equations above describe the demand and supply for Pauline's Pickled Pomegranates.The equilibrium price and quantity for Pauline's Pickled Pomegranates are $30 and 15 thousand units.What is the value of economic surplus in this market?

If the government implements a price ceiling on insulin,this will

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

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

The sum of consumer surplus and producer surplus is equal to

If,in a competitive market,marginal benefit is greater than marginal cost

The area above the market supply curve and below the market price

Table 4-6 -Refer to Table 4-6.The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion.The equilibrium price and quantity for Aunt Maud's lotion are $20 and 30 thousand units.What is the value of economic surplus in this market?

Table 4-4 Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-4.If a minimum wage of $10.50 is mandated there will be a

Tax incidence is the actual division of the

Figure 4-9 Figure 4-9 shows the market for cigarettes.The government plans to impose a unit tax in this market. -Refer to Figure 4-9.How much of the tax is paid by producers?

In cities with rent controls,the actual rents paid can be ________ than the legal maximum.One explanation for this is because there is a ________ of apartments,tenants are ________.

In a competitive market equilibrium the ________ equals the ________ of the last unit sold.

Economists have shown that the burden of a tax is

There is a shortage of every good that is scarce.

In the market for gasoline,an increase in the federal excise tax on gasoline would shift the supply curve up.

Figure 4-3 Figure 4-3 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 4-3.What area represents consumer surplus at P2?

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

Is there a difference between the "true burden" of a tax and who is legally required to pay a tax? Briefly explain.

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

Table 4-7 -Refer to Table 4-7.The equations above describe the demand and supply for Pauline's Pickled Pomegranates.The equilibrium price and quantity for Pauline's Pickled Pomegranates are $30 and 15 thousand units.What is the value of economic surplus in this market?

If the government implements a price ceiling on insulin,this will

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

In cities with rent controls,the actual rents paid can be than the legal maximum.One explanation for this is because there is a of apartments,tenants are .

In a competitive market equilibrium the equals the of the last unit sold.