Question 1

​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, society suffers a deadweight loss equal to area:

Accepted Answer

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

Question 2

As a result of the imposition of a tax on a product:​

Accepted Answer

A) ​some consumer surplus is transferred from buyers to producers. 
B) ​some producer surplus is transferred from sellers to consumers. 
C) ​some consumer and producer surplus is transferred from buyers and sellers to the government. 
D) ​there is no change in either consumer or producer surplus.

Question 3

​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, sellers lose producer surplus equal to area:

Accepted Answer

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

Question 4

If the world supply of diamonds increases, the market price of diamonds decreases, and the consumer surplus derived by diamond consumers increases.

Accepted Answer

A) True 
 B)False

Question 5

Total welfare gains from trade to the economy can be measured:​

Accepted Answer

A) ​as the sum of consumer and producer surpluses. 
B) ​as the difference between producer surplus and consumer surplus. 
C) ​as the sum of consumer and producer surpluses minus taxes 
D) ​as the net gain in consumer surplus that results from an action that alters a market equilibrium.

Question 6

​Exhibit 7-13 
-Refer to Exhibit 7-13. Under this program, the producers will sell all they can at ____.

Accepted Answer

A) ​P2 
B) ​P1 
C) ​PM 
D) ​none of the above

Question 7

The net loss to society from a tax on a product can be measured as:​

Accepted Answer

A) ​the loss in consumer surplus. 
B) ​the loss in producer surplus. 
C) ​the loss in both consumer and producer surplus. 
D) ​the difference between the loss in consumer and producer surplus and the gain in tax revenue.

Question 8

​Exhibit 7-14 
-Refer to Exhibit 7-14. Identify the deadweight loss in the above diagram when a price floor equal to $30 is imposed.

Accepted Answer

The answer of ​Exhibit 7-14 
-Refer to Exhibit 7-14. Identify...

Question 9

Fred's demand schedule for movie DVDs is as follows: At $60, he would buy 1; at $50, he would buy two; at $30, he would buy 3; and at $20, he would buy 4. If the price of movie DVDs equals $40, the consumer surplus Fred receives from purchasing movie DVDs would be:

Accepted Answer

A) ​$20. 
B) ​$30. 
C) ​$40. 
D) ​$110.

Question 10

​Exhibit 7-8 
-Refer to Exhibit 7-8. When the price falls from P2 to P1, producer surplus:​

Accepted Answer

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

Question 11

​Exhibit 7-11 
-Refer to Exhibit 7-11. The producer surplus after the price ceiling is area

Accepted Answer

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

Question 12

If Stephanie buys a laptop for $700 and the maximum she would have paid was $1,000, which of the following is true?

Accepted Answer

A) ​Stephanie received consumer surplus of $1,000. 
B) ​Stephanie received producer surplus of $700. 
C) ​Stephanie received a consumer surplus of $700. 
D) ​Stephanie received a consumer surplus of $300.

Question 13

​Exhibit 7-10 
-Refer to Exhibit 7-10. The deadweight loss from the subsidy is area

Accepted Answer

A) ​e + f + g 
B) ​b + e + f + c + g 
C) ​f 
D) ​zero

Question 14

A subsidy in an industry would be likely to increase the consumer surplus for buyers in that industry and increase the producer surplus for sellers in that industry.

Accepted Answer

A) True 
 B)False

Question 15

Consumer surplus increases whenever the price of a good increases.
​

Accepted Answer

A) True 
 B)False

Question 16

Which of the following best explains the source of consumer surplus for Good A?

Accepted Answer

A) ​Many consumers pay prices that are greater than the equilibrium price of Good A. 
B) ​Many consumers would be willing to pay more than the market price for some units of Good A. 
C) ​Many consumers think the market price of Good A is greater than its cost. 
D) ​Many consumers of Good A place a value on it that is less than the market price.

Question 17

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

Accepted Answer

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

Question 18

Phil and Kelly have always wanted to take a cruise. Although willing to pay $5,000 for a Caribbean cruise for two, they were able to purchase a cruise vacation for two for $3,500. Their total consumer surplus amounted to:

Accepted Answer

A) ​$750. 
B) ​$5,000. 
C) ​$1,500. 
D) ​$3,500.

Question 19

Which of the following statements is always true?

Accepted Answer

A) ​An increase in price will lead to an increase in producer surplus along a supply curve. 
B) ​An increase in price will lead to an increase in consumer surplus along a demand curve. 
C) ​A price ceiling will lead to an increase in consumer surplus. 
D) ​A price floor will lead to an increase in consumer surplus.

Question 20

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

Accepted Answer

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

Exam 7: Market Efficiency and Welfare

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, society suffers a deadweight loss equal to area:

As a result of the imposition of a tax on a product:

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, sellers lose producer surplus equal to area:

If the world supply of diamonds increases, the market price of diamonds decreases, and the consumer surplus derived by diamond consumers increases.

Total welfare gains from trade to the economy can be measured:

Exhibit 7-13 -Refer to Exhibit 7-13. Under this program, the producers will sell all they can at ____.

The net loss to society from a tax on a product can be measured as:

Exhibit 7-14 -Refer to Exhibit 7-14. Identify the deadweight loss in the above diagram when a price floor equal to $30 is imposed.

Fred's demand schedule for movie DVDs is as follows: At $60, he would buy 1; at $50, he would buy two; at $30, he would buy 3; and at $20, he would buy 4. If the price of movie DVDs equals $40, the consumer surplus Fred receives from purchasing movie DVDs would be:

Exhibit 7-8 -Refer to Exhibit 7-8. When the price falls from P₂ to P₁, producer surplus:

Exhibit 7-11 -Refer to Exhibit 7-11. The producer surplus after the price ceiling is area

If Stephanie buys a laptop for $700 and the maximum she would have paid was $1,000, which of the following is true?

Exhibit 7-10 -Refer to Exhibit 7-10. The deadweight loss from the subsidy is area

A subsidy in an industry would be likely to increase the consumer surplus for buyers in that industry and increase the producer surplus for sellers in that industry.

Consumer surplus increases whenever the price of a good increases.

Which of the following best explains the source of consumer surplus for Good A?

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

Phil and Kelly have always wanted to take a cruise. Although willing to pay $5,000 for a Caribbean cruise for two, they were able to purchase a cruise vacation for two for $3,500. Their total consumer surplus amounted to:

Which of the following statements is always true?

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

Exam 7: Market Efficiency and Welfare

​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, society suffers a deadweight loss equal to area:

As a result of the imposition of a tax on a product:​

​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, sellers lose producer surplus equal to area:

If the world supply of diamonds increases, the market price of diamonds decreases, and the consumer surplus derived by diamond consumers increases.

Total welfare gains from trade to the economy can be measured:​

​Exhibit 7-13 -Refer to Exhibit 7-13. Under this program, the producers will sell all they can at ____.

The net loss to society from a tax on a product can be measured as:​

​Exhibit 7-14 -Refer to Exhibit 7-14. Identify the deadweight loss in the above diagram when a price floor equal to $30 is imposed.

Fred's demand schedule for movie DVDs is as follows: At $60, he would buy 1; at $50, he would buy two; at $30, he would buy 3; and at $20, he would buy 4. If the price of movie DVDs equals $40, the consumer surplus Fred receives from purchasing movie DVDs would be:

​Exhibit 7-8 -Refer to Exhibit 7-8. When the price falls from P2 to P1, producer surplus:​

​Exhibit 7-11 -Refer to Exhibit 7-11. The producer surplus after the price ceiling is area

If Stephanie buys a laptop for $700 and the maximum she would have paid was $1,000, which of the following is true?

​Exhibit 7-10 -Refer to Exhibit 7-10. The deadweight loss from the subsidy is area

A subsidy in an industry would be likely to increase the consumer surplus for buyers in that industry and increase the producer surplus for sellers in that industry.

Consumer surplus increases whenever the price of a good increases. ​

Which of the following best explains the source of consumer surplus for Good A?

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

Phil and Kelly have always wanted to take a cruise. Although willing to pay $5,000 for a Caribbean cruise for two, they were able to purchase a cruise vacation for two for $3,500. Their total consumer surplus amounted to:

Which of the following statements is always true?

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

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, society suffers a deadweight loss equal to area:

As a result of the imposition of a tax on a product:

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, sellers lose producer surplus equal to area:

Total welfare gains from trade to the economy can be measured:

Exhibit 7-13 -Refer to Exhibit 7-13. Under this program, the producers will sell all they can at ____.

The net loss to society from a tax on a product can be measured as:

Exhibit 7-14 -Refer to Exhibit 7-14. Identify the deadweight loss in the above diagram when a price floor equal to $30 is imposed.

Exhibit 7-8 -Refer to Exhibit 7-8. When the price falls from P₂ to P₁, producer surplus:

Exhibit 7-11 -Refer to Exhibit 7-11. The producer surplus after the price ceiling is area

Exhibit 7-10 -Refer to Exhibit 7-10. The deadweight loss from the subsidy is area

Consumer surplus increases whenever the price of a good increases.

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

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