Question 1

The area ________ the market supply curve and ________ the market price is equal to the total amount of producer surplus in a market.

Accepted Answer

A)   above; above
B)   above; below
C)   below; above
D)   below; belowE) B) and C)
F) B) and D)

Question 2

Deadweight loss refers to

Accepted Answer

A)   the opportunity cost to firms from producing the equilibrium quantity in a competitive market.
B)   the sum of consumer and producer surplus.
C)   the loss of economic surplus when the marginal benefit equals the marginal cost of the last unit produced.
D)   the reduction in economic surplus resulting from not being in competitive equilibrium.E) A) and D)
F) B) and C)

Question 3

Figure 4-8  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. Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000 per month for apartments. What is the value of consumer surplus after the imposition of the price floor?

Accepted Answer

A)   $25,000
B)   $50,000
C)   $200,000
D)   $250,000E) A) and B)
F) A) and D)

Question 4

The willingness of consumers to buy a product at different prices is shown on a

Accepted Answer

A)   demand curve.
B)   supply curve.
C)   production possibilities frontier.
D)   marginal cost curve.E) B) and D)
F) B) and C)

Question 5

________ dictates the lowest wage that firms may pay for labor.

Accepted Answer

A)   A maximum wage requirement
B)   A minimum wage law
C)   The black-market wage
D)   A price-ceiling wageE) C) and D)
F) A) and D)

Question 6

When Congress passed a law that imposed a tax designed to fund its Social Security and Medicare programs it wanted employers and workers to share the burden of the tax equally. Most economists who have studied the incidence of the tax have concluded

Accepted Answer

A)   the tax is not high enough to cover the future costs of Social Security and Medicare.
B)   the tax on employers is too high because it reduces the employment of low-skilled workers.
C)   the burden of the tax falls almost entirely on workers.
D)   the tax rate should be greater for high-income workers than for low-income workers.E) C) and D)
F) A) and D)

Question 7

Which of the following statements is true?

Accepted Answer

A)   Consumer surplus measures the total benefit from participating in a market.
B)   When a market is in equilibrium consumer surplus equals producer surplus.
C)   Consumer surplus measures the net benefit from participating in a market.
D)   Producer surplus measures the total benefit received by producers from participating in a market.E) B) and C)
F) B) and D)

Question 8

If the price of toothpaste is represented by equation P = 40 - .5QD, then the corresponding quantity of toothpaste demanded is represented by the equation

Accepted Answer

A)   QD = 20 - .5P. 
B)   QD = 40 - P. 
C)   QD = 80 - 2P. 
D)   QD = -20 + P.E) B) and C)
F) None of the above

Question 9

A minimum wage law dictates

Accepted Answer

A)   the minimum quantity of labor that a firm must employ.
B)   the lowest wage that firms may pay for labor.
C)   the highest wage that firms must pay for labor.
D)   the minimum qualifications for labor.E) A) and C)
F) A) and B)

Question 10

Figure 4-3  Figure 4-3 shows Kendra's demand curve for ice cream cones.
-Refer to Figure 4-3. If the market price is $2.50, what is Kendra's consumer surplus?

Accepted Answer

A)   $9.00
B)   $7.50
C)   $1.50
D)   $0E) None of the above
F) C) and D)

Question 11

Table 4-8
  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 $9.50 an hour is mandated, what is the quantity of labor supplied?

Accepted Answer

A)   390,000
B)   380,000
C)   370,000
D)   340,000E) A) and C)
F) A) and B)

Question 12

The following equations represent the demand and supply for kumquats. QD = 60 - 3P
QS = -20 + 5P
What is the equilibrium price (P)  and quantity (Q - in thousands)  of kumquats?

Accepted Answer

A)   P = $5; Q = 20 thousand
B)   P = $30; Q = 5 thousand
C)   P = $20; Q = 10 thousand
D)   P = $10; Q = 30 thousandE) A) and B)
F) A) and D)

Question 13

Producer surplus is the difference between the lowest price a firm is willing to accept for a product and the price it actually receives for the product.

Accepted Answer

A) True 
 B)False

Question 14

Marginal cost is

Accepted Answer

A)   the total cost of producing one unit of a good or service.
B)   the average cost of producing a good or service.
C)   the difference between the lowest price a firm would have been willing to accept and the price it actually receives.
D)   the additional cost to a firm of producing one more unit of a good or service.E) B) and C)
F) All of the above

Question 15

Table 4-8
  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 supplied 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 = $9.00; Q = 330,000
B)   W = $9.50; Q = 370,000
C)   W = $10.00; Q = 350,000
D)   W = $8.00; Q = 390,000E) A) and B)
F) A) and C)

Question 16

Figure 4-1  Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1. If the market price is $1.50, what is Arnold's consumer surplus?

Accepted Answer

A)   $1.50
B)   $2.25
C)   $3.00
D)   $4.75E) A) and C)
F) All of the above

Question 17

Figure 4-1  Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1. If the market price is $1.50, what is the consumer surplus on the first burrito?

Accepted Answer

A)   $0.50
B)   $1.00
C)   $1.50
D)   $7.50E) None of the above
F) All of the above

Question 18

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

Accepted Answer

A)   $0.50
B)   $1.00
C)   $1.50
D)   $3.00E) None of the above
F) C) and D)

Question 19

Figure 4-4  in order to raise the price to $18. -Refer to Figure 4-4. At a price of $18 consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity? A)  No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit. B)  Yes, otherwise consumers would not buy 40 units. C)  Yes, because $18 shows what consumers are willing to pay for the product. D)  No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th unit." class="answers-bank-image d-inline" rel="preload" > Figure 4-4 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18.
-Refer to Figure 4-4. At a price of $18 consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity?

Accepted Answer

A)   No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit.
B)   Yes, otherwise consumers would not buy 40 units.
C)   Yes, because $18 shows what consumers are willing to pay for the product.
D)   No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th unit.E) A) and D)
F) All of the above

Question 20

Figure 4-15  Figure 4-15 shows the market for beer. The government plans to impose a per-unit tax in this market.
-Refer to Figure 4-15. How much of the tax is paid by sellers?

Accepted Answer

A)   $2
B)   $5
C)   $7
D)   $12E) All of the above
F) C) and D)

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

Deadweight loss refers to

Correct Answer
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A minimum wage law dictates

Correct Answer
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The following equations represent the demand and supply for kumquats. Q_D = 60 - 3P Q_S = -20 + 5P What is the equilibrium price (P) and quantity (Q - in thousands) of kumquats?

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

Correct Answer
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________ dictates the lowest wage that firms may pay for labor.

Correct Answer
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The willingness of consumers to buy a product at different prices is shown on a

Correct Answer
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Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-3. If the market price is $2.50, what is Kendra's consumer surplus?

Correct Answer
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Marginal cost is

Correct Answer
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Producer surplus is the difference between the lowest price a firm is willing to accept for a product and the price it actually receives for the product.

Correct Answer
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Figure 4-15 Figure 4-15 shows the market for beer. The government plans to impose a per-unit tax in this market. -Refer to Figure 4-15. How much of the tax is paid by sellers?

Correct Answer
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Table 4-8 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 $9.50 an hour is mandated, what is the quantity of labor supplied?

Correct Answer
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Which of the following statements is true?

Correct Answer
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If the price of toothpaste is represented by equation P = 40 - .5Q_D, then the corresponding quantity of toothpaste demanded is represented by the equation

Correct Answer
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Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1. If the market price is $1.50, what is Arnold's consumer surplus?

Correct Answer
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Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1. If the market price is $1.50, what is the consumer surplus on the first burrito?

Correct Answer
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When Congress passed a law that imposed a tax designed to fund its Social Security and Medicare programs it wanted employers and workers to share the burden of the tax equally. Most economists who have studied the incidence of the tax have concluded

Correct Answer
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The area the market supply curve and the market price is equal to the total amount of producer surplus in a market.

Correct Answer
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Correct Answer
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Exam 4: Economic Efficiency, Government Price Setting, and Taxes

Deadweight loss refers to

Correct AnswerverifiedShow Answer

A minimum wage law dictates

Correct AnswerverifiedShow Answer

The following equations represent the demand and supply for kumquats. QD = 60 - 3P QS = -20 + 5P What is the equilibrium price (P) and quantity (Q - in thousands) of kumquats?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

________ dictates the lowest wage that firms may pay for labor.

Correct AnswerverifiedShow Answer

The willingness of consumers to buy a product at different prices is shown on a

Correct AnswerverifiedShow Answer

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-3. If the market price is $2.50, what is Kendra's consumer surplus?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Marginal cost is

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Producer surplus is the difference between the lowest price a firm is willing to accept for a product and the price it actually receives for the product.

Correct AnswerverifiedShow Answer

Figure 4-15 Figure 4-15 shows the market for beer. The government plans to impose a per-unit tax in this market. -Refer to Figure 4-15. How much of the tax is paid by sellers?

Correct AnswerverifiedShow Answer

Table 4-8 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 $9.50 an hour is mandated, what is the quantity of labor supplied?

Correct AnswerverifiedShow Answer

Which of the following statements is true?

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If the price of toothpaste is represented by equation P = 40 - .5QD, then the corresponding quantity of toothpaste demanded is represented by the equation

Correct AnswerverifiedShow Answer

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1. If the market price is $1.50, what is Arnold's consumer surplus?

Correct AnswerverifiedShow Answer

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1. If the market price is $1.50, what is the consumer surplus on the first burrito?

Correct AnswerverifiedShow Answer

When Congress passed a law that imposed a tax designed to fund its Social Security and Medicare programs it wanted employers and workers to share the burden of the tax equally. Most economists who have studied the incidence of the tax have concluded

Correct AnswerverifiedShow Answer

The area ________ the market supply curve and ________ the market price is equal to the total amount of producer surplus in a market.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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The following equations represent the demand and supply for kumquats. Q_D = 60 - 3P Q_S = -20 + 5P What is the equilibrium price (P) and quantity (Q - in thousands) of kumquats?

Correct Answer
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If the price of toothpaste is represented by equation P = 40 - .5Q_D, then the corresponding quantity of toothpaste demanded is represented by the equation

Correct Answer
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The area the market supply curve and the market price is equal to the total amount of producer surplus in a market.

Correct Answer
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