Question 1

Figure 9.4.3
-Refer to Figure 9.4.3 above. Because of the policy, consumer surplus fell by:

Accepted Answer

A)  $10. 
B)  $20. 
C)  $12,500. 
D)  $25,000. 
E)  $45,000. 
A)  $10. 
B)  $20. 
C)  $12,500. 
D)  $25,000. 
E)  $45,000. D

Question 2

Figure 9.1.3
-Refer to Figure 9.1.3 above. If the government establishes a price ceiling of $1.00, the resulting deadweight loss will be:

Accepted Answer

A)  $1.50. 
B)  $200. 
C)  $150. 
D)  $300. 
E)  $600. 
A)  $1.50. 
B)  $200. 
C)  $150. 
D)  $300. 
E)  $600. C

Question 3

Figure 9.1.3
-Refer to Figure 9.1.3 above. If the market is in equilibrium, total consumer and producer surplus is:

Accepted Answer

A)  $0. 
B)  $4. 
C)  $5. 
D)  $600. 
E)  $800. 
A)  $0. 
B)  $4. 
C)  $5. 
D)  $600. 
E)  $800. D

Question 4

Under a binding price ceiling, what does the change in producer surplus represent?

Accepted Answer

A)  The gain in surplus for those sellers who are still willing to supply the product at the lower price. 
B)  The loss in surplus associated with those units that used to be produced at the higher price but are no longer produced at the lower price. 
C)  The gain in surplus associated with the excess demand created by the price ceiling policy. 
D)  Both A and B are correct. 
E)  Both A and C are correct. 
A)  The gain in surplus for those sellers who are still willing to supply the product at the lower price. 
B)  The loss in surplus associated with those units that used to be produced at the higher price but are no longer produced at the lower price. 
C)  The gain in surplus associated with the excess demand created by the price ceiling policy. 
D)  Both A and B are correct. 
E)  Both A and C are correct.

Question 5

The price elasticity of demand is -1.5. The price elasticity of supply is 1.5. The fraction of a specific tax that is borne by producers is:

Accepted Answer

A)  0 
B)  0.25 
C)  0.5 
D)  0.75 
E)  1 
A)  0 
B)  0.25 
C)  0.5 
D)  0.75 
E)  1

Question 6

Where Es is the elasticity of supply and Ed is the own price elasticity of demand, the fraction of the tax passed on to consumers in the form of higher prices is:

Accepted Answer

A)  Es/(Es-Ed). 
B)  Ed/(Es-Ed). 
C)  Es/(Ed-Es). 
D)  Ed/(Ed-Es). 
E)  Ed/Es. 
A)  Es/(Es-Ed). 
B)  Ed/(Es-Ed). 
C)  Es/(Ed-Es). 
D)  Ed/(Ed-Es). 
E)  Ed/Es.

Question 7

Figure 9.4.3
-Refer to Figure 9.4.3 above. After the policy, consumer surplus became:

Accepted Answer

A)  $0. 
B)  $10. 
C)  $20. 
D)  $20,000. 
E)  $40,000. 
A)  $0. 
B)  $10. 
C)  $20. 
D)  $20,000. 
E)  $40,000.

Question 8

Figure 9.4.3
-Refer to Figure 9.4.3 above. Before the policy was implemented, producer surplus was:

Accepted Answer

A)  $30. 
B)  $60. 
C)  $45,000. 
D)  $90,000. 
E)  $180,000. 
A)  $30. 
B)  $60. 
C)  $45,000. 
D)  $90,000. 
E)  $180,000.

Question 9

Figure 9.5.2
-Refer to Figure 9.5.2 above. Now suppose an import quota of 3000 trucks is imposed. If the government wanted to cut off all international trade without changing the quota, it could allow the quota amount of 3000 trucks in at no tariff and then charge a tariff on all imports above the quota amount. What tariff would accomplish the goal?

Accepted Answer

A)  $0 
B)  $5,000 
C)  $7,500 
D)  $10,000 
E)  $20,000 
A)  $0 
B)  $5,000 
C)  $7,500 
D)  $10,000 
E)  $20,000

Question 10

The market demand and supply functions for pizza are:   and   Calculate the consumer and producer surplus. Suppose the local community charges a $1 per pizza tax. Calculate the new levels of consumer and producer surplus. Does the gain in tax revenue offset the losses in consumer and producer surplus associated with the tax?

Accepted Answer

First we must determine the market equil

Question 11

Figure 9.1.1
-Refer to Figure 9.1.1 above. If the market is in equilibrium, the consumer surplus earned by the buyer of the 1st unit is:

Accepted Answer

A)  $5.00. 
B)  $15.00. 
C)  $22.50. 
D)  $40.00. 
A)  $5.00. 
B)  $15.00. 
C)  $22.50. 
D)  $40.00.

Question 12

Although rice is a staple of the Japanese diet, the Japanese government has long restricted the importation of rice into Japan. The result of this import quota is:

Accepted Answer

A)  to decrease the price of rice to the Japanese people. 
B)  to decrease the consumer surplus of Japanese rice consumers. 
C)  to decrease the producer surplus of Japanese rice producers. 
D)  a welfare gain for the Japanese people. 
E)  to increase the consumption of rice by the Japanese people. 
A)  to decrease the price of rice to the Japanese people. 
B)  to decrease the consumer surplus of Japanese rice consumers. 
C)  to decrease the producer surplus of Japanese rice producers. 
D)  a welfare gain for the Japanese people. 
E)  to increase the consumption of rice by the Japanese people.

Question 13

Eliminating price supports for all U.S. agricultural producers will hurt the farmers who cultivate products that have:

Accepted Answer

A)  a high own price elasticity of demand and a high price elasticity of market supply. 
B)  a high own price elasticity of demand and a low price elasticity of market supply. 
C)  a low own price elasticity of demand and a high price elasticity of market supply. 
D)  a low own price elasticity of demand and a low price elasticity of market supply. 
A)  a high own price elasticity of demand and a high price elasticity of market supply. 
B)  a high own price elasticity of demand and a low price elasticity of market supply. 
C)  a low own price elasticity of demand and a high price elasticity of market supply. 
D)  a low own price elasticity of demand and a low price elasticity of market supply.

Question 14

The demand and supply functions for oil on the world market are given as:   and   Calculate consumer surplus. If the Clinton Administration puts a price ceiling of $20 per unit, calculate the resulting consumer surplus. Are consumers better off?

Accepted Answer

First we must determine the market equil

Question 15

In an unregulated, competitive market, consumer surplus exists because some:

Accepted Answer

A)  sellers are willing to take a lower price than the equilibrium price. 
B)  consumers are willing to pay more than the equilibrium price. 
C)  sellers will only sell at prices above equilibrium price (or actual price). 
D)  consumers are willing to make purchases only if the price is below the actual price. 
A)  sellers are willing to take a lower price than the equilibrium price. 
B)  consumers are willing to pay more than the equilibrium price. 
C)  sellers will only sell at prices above equilibrium price (or actual price). 
D)  consumers are willing to make purchases only if the price is below the actual price.

Question 16

The market demand and supply functions for milk are:   If a price floor of $1.75 is implemented, calculate the change in producer surplus. How many surplus units of milk are being produced? If the government purchases all the excess units at $1.75, calculate the milk expenditures by government? Does the increase in producer surplus due to the price floor exceed government spending on excess milk?

Accepted Answer

First we must determine the market equil

Question 17

Figure 9.4.3
-The policy shown in Figure 9.4.3 is a:

Accepted Answer

A)  price floor of $50. 
B)  price support of $50. 
C)  price ceiling of $30. 
D)  quota of 2000. 
E)  quota of 4000. 
A)  price floor of $50. 
B)  price support of $50. 
C)  price ceiling of $30. 
D)  quota of 2000. 
E)  quota of 4000.

Question 18

Use the following statements to answer this question: I. When the market price is held above the competitive price level, it is possible for the loss in consumer surplus to be fully captured by producers.
II) When the market price is held above the competitive level, there is no deadweight loss because producer gains exactly equal consumer losses.

Accepted Answer

A)  I and II are true. 
B)  I is true and II is false. 
C)  II is true and I is false. 
D)  I and II are false. 
A)  I and II are true. 
B)  I is true and II is false. 
C)  II is true and I is false. 
D)  I and II are false.

Question 19

The market supply curve for music downloads is Q = 135(P-1) where Q is millions of downloads and P is the price in dollars per track. If the current price is $1.20 per download, what is the change in producer surplus if the price increases by $0.20 per track?

Accepted Answer

A)  $5.4 million 
B)  $8.1 million 
C)  $10.8 million 
D)  $27 million 
A)  $5.4 million 
B)  $8.1 million 
C)  $10.8 million 
D)  $27 million

Question 20

When the federal government installs a price support program that requires the government to purchase all of a good not bought in the private economy at the support price, the impact on total welfare is the:

Accepted Answer

A)  change in consumer surplus. 
B)  change in consumer surplus + the change in producer surplus + the cost to government. 
C)  change in consumer surplus + the change in producer surplus - the cost to government. 
D)  change in consumer surplus + the change in producer surplus. 
A)  change in consumer surplus. 
B)  change in consumer surplus + the change in producer surplus + the cost to government. 
C)  change in consumer surplus + the change in producer surplus - the cost to government. 
D)  change in consumer surplus + the change in producer surplus.

Figure 9.4.3 -Refer to Figure 9.4.3 above. Because of the policy, consumer surplus fell by:

Figure 9.1.3 -Refer to Figure 9.1.3 above. If the government establishes a price ceiling of $1.00, the resulting deadweight loss will be:

Figure 9.1.3 -Refer to Figure 9.1.3 above. If the market is in equilibrium, total consumer and producer surplus is:

Under a binding price ceiling, what does the change in producer surplus represent?

The price elasticity of demand is -1.5. The price elasticity of supply is 1.5. The fraction of a specific tax that is borne by producers is:

Where Es is the elasticity of supply and Ed is the own price elasticity of demand, the fraction of the tax passed on to consumers in the form of higher prices is:

Figure 9.4.3 -Refer to Figure 9.4.3 above. After the policy, consumer surplus became:

Figure 9.4.3 -Refer to Figure 9.4.3 above. Before the policy was implemented, producer surplus was:

Figure 9.1.1 -Refer to Figure 9.1.1 above. If the market is in equilibrium, the consumer surplus earned by the buyer of the 1st unit is:

Although rice is a staple of the Japanese diet, the Japanese government has long restricted the importation of rice into Japan. The result of this import quota is:

Eliminating price supports for all U.S. agricultural producers will hurt the farmers who cultivate products that have:

The demand and supply functions for oil on the world market are given as: and Calculate consumer surplus. If the Clinton Administration puts a price ceiling of $20 per unit, calculate the resulting consumer surplus. Are consumers better off?

In an unregulated, competitive market, consumer surplus exists because some:

Figure 9.4.3 -The policy shown in Figure 9.4.3 is a:

The market supply curve for music downloads is Q = 135(P-1) where Q is millions of downloads and P is the price in dollars per track. If the current price is $1.20 per download, what is the change in producer surplus if the price increases by $0.20 per track?

When the federal government installs a price support program that requires the government to purchase all of a good not bought in the private economy at the support price, the impact on total welfare is the:

Preliminaries

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Exam 9: The Analysis of Competitive Markets

Figure 9.4.3 -Refer to Figure 9.4.3 above. Because of the policy, consumer surplus fell by:

Figure 9.1.3 -Refer to Figure 9.1.3 above. If the government establishes a price ceiling of $1.00, the resulting deadweight loss will be:

Figure 9.1.3 -Refer to Figure 9.1.3 above. If the market is in equilibrium, total consumer and producer surplus is:

Under a binding price ceiling, what does the change in producer surplus represent?

The price elasticity of demand is -1.5. The price elasticity of supply is 1.5. The fraction of a specific tax that is borne by producers is:

Where Es is the elasticity of supply and Ed is the own price elasticity of demand, the fraction of the tax passed on to consumers in the form of higher prices is:

Figure 9.4.3 -Refer to Figure 9.4.3 above. After the policy, consumer surplus became:

Figure 9.4.3 -Refer to Figure 9.4.3 above. Before the policy was implemented, producer surplus was:

Figure 9.1.1 -Refer to Figure 9.1.1 above. If the market is in equilibrium, the consumer surplus earned by the buyer of the 1st unit is:

Although rice is a staple of the Japanese diet, the Japanese government has long restricted the importation of rice into Japan. The result of this import quota is:

Eliminating price supports for all U.S. agricultural producers will hurt the farmers who cultivate products that have:

The demand and supply functions for oil on the world market are given as: and Calculate consumer surplus. If the Clinton Administration puts a price ceiling of $20 per unit, calculate the resulting consumer surplus. Are consumers better off?

In an unregulated, competitive market, consumer surplus exists because some:

Figure 9.4.3 -The policy shown in Figure 9.4.3 is a:

The market supply curve for music downloads is Q = 135(P-1) where Q is millions of downloads and P is the price in dollars per track. If the current price is $1.20 per download, what is the change in producer surplus if the price increases by $0.20 per track?

When the federal government installs a price support program that requires the government to purchase all of a good not bought in the private economy at the support price, the impact on total welfare is the:

Preliminaries

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters