Question 1

Total surplus is defined as

Accepted Answer

A)  consumer surplus + producer surplus. 
B)  consumer surplus - producer surplus. 
C)  another word for profit. 
D)  another word for total revenue. 
A)  consumer surplus + producer surplus. 
B)  consumer surplus - producer surplus. 
C)  another word for profit. 
D)  another word for total revenue.

Question 2

-In the above figure, if the production of gloves was restricted to 2,000 a day, then the deadweight loss would equal

Accepted Answer

A)  $0, because 2,000 gloves per day is an efficient quantity of gloves to produce. 
B)  $2,000. 
C)  $5,000. 
D)  $10,000. 
A)  $0, because 2,000 gloves per day is an efficient quantity of gloves to produce. 
B)  $2,000. 
C)  $5,000. 
D)  $10,000.

Question 3

Marginal benefit

Accepted Answer

A)  is the same as the total benefit received from consuming a good. 
B)  is the maximum amount a person is willing to pay for one more unit of a good. 
C)  increases as consumption increases. 
D)  is the difference between total benefit and total cost. 
A)  is the same as the total benefit received from consuming a good. 
B)  is the maximum amount a person is willing to pay for one more unit of a good. 
C)  increases as consumption increases. 
D)  is the difference between total benefit and total cost.

Question 4

The Wii is a wildly popular home video game console released by Nintendo. The Wii system was first available in the U.S. in November, 2006 and has sold more than 30 million units as of August 2010. The Wii retails for $199. Suppose Ahmed is willing to pay $230, Lana is willing to pay $175, and Bodie is willing to pay $300 for a Wii. What is the value of Ahmed's consumer surplus?

Accepted Answer

A)  $31 
B)  $280 
C)  $249 
D)  No consumer surplus is generated because Ahmed will not buy the Wii. 
A)  $31 
B)  $280 
C)  $249 
D)  No consumer surplus is generated because Ahmed will not buy the Wii.

Question 5

The decrease in consumer surplus and producer surplus that results from an inefficient level of production is called the

Accepted Answer

A)  external cost. 
B)  external benefit. 
C)  deadweight loss. 
D)  big tradeoff. 
A)  external cost. 
B)  external benefit. 
C)  deadweight loss. 
D)  big tradeoff.

Question 6

-The above figure shows Dana's marginal benefit curve for ice cream. If the market price is $2 per gallon, then Dana's consumer surplus from the 4th gallon of ice cream is

Accepted Answer

A)  $0. 
B)  $2. 
C)  $3. 
D)  $10. 
A)  $0. 
B)  $2. 
C)  $3. 
D)  $10.

Question 7

-The figure above shows the market for coffee. If 10 million pounds of coffee a month are available, the ________ price that consumers are willing to pay for the last pound is ________.

Accepted Answer

A)  maximum; $2.00 
B)  maximum; $3.50 
C)  minimum; $2.00 
D)  minimum; $3.50 
A)  maximum; $2.00 
B)  maximum; $3.50 
C)  minimum; $2.00 
D)  minimum; $3.50

Question 8

-In the above figure, what is the efficient quantity of pretzels to produce each day?

Accepted Answer

A)  one hundred 
B)  two hundred 
C)  three hundred 
D)  four hundred 
A)  one hundred 
B)  two hundred 
C)  three hundred 
D)  four hundred

Question 9

The requirement that people in similar situations be treated similarly is called

Accepted Answer

A)  the big tradeoff. 
B)  the symmetry principle. 
C)  utilitarianism. 
D)  efficiency. 
A)  the big tradeoff. 
B)  the symmetry principle. 
C)  utilitarianism. 
D)  efficiency.

Question 10

-In the above figure, when the efficient quantity of gloves is produced, the total producer surplus is

Accepted Answer

A)  $3,000. 
B)  $15,000. 
C)  $22,500. 
D)  $45,000. 
A)  $3,000. 
B)  $15,000. 
C)  $22,500. 
D)  $45,000.

Question 11

Utilitarianism is the idea that only

Accepted Answer

A)  competition brings efficiency. 
B)  efficiency brings equality. 
C)  income equality is fair. 
D)  efficiency is fair. 
A)  competition brings efficiency. 
B)  efficiency brings equality. 
C)  income equality is fair. 
D)  efficiency is fair.

Question 12

A firm that is the only seller of a product and is in sole control of a market has a

Accepted Answer

A)  monopoly. 
B)  quantity regulations. 
C)  subsidy. 
D)  public good. 
A)  monopoly. 
B)  quantity regulations. 
C)  subsidy. 
D)  public good.

Question 13

The market supply curve shows the

Accepted Answer

A)  minimum price suppliers must receive in order to produce another unit of the good. 
B)  maximum price suppliers must receive in order to produce another unit of the good. 
C)  amount of producer surplus suppliers receive. 
D)  profit that suppliers receive from producing another unit of the good. 
A)  minimum price suppliers must receive in order to produce another unit of the good. 
B)  maximum price suppliers must receive in order to produce another unit of the good. 
C)  amount of producer surplus suppliers receive. 
D)  profit that suppliers receive from producing another unit of the good.

Question 14

-In the above table, the efficient quantity of brownies is produced when the price of a brownie is equal to

Accepted Answer

A)  0. 
B)  40¢. 
C)  60¢. 
D)  80¢. 
A)  0. 
B)  40¢. 
C)  60¢. 
D)  80¢.

Question 15

In May 2008, Switzerland co-hosted the international soccer tournament Euro 2008. At that time, the Swiss potato industry association had been warning there could be a fry shortage because there was a potato shortage. The shortage meant that in the French fry market

Accepted Answer

A)  the price for French fries would be higher. 
B)  the price for French fries would be lower. 
C)  if the efficient quantity of fries is produced, total surplus would be minimized. 
D)  if the inefficient quantity of fries is produced, total surplus would be maximized. 
A)  the price for French fries would be higher. 
B)  the price for French fries would be lower. 
C)  if the efficient quantity of fries is produced, total surplus would be minimized. 
D)  if the inefficient quantity of fries is produced, total surplus would be maximized.

Question 16

-The figure above shows the demand curve for DVDs. Use it to illustrate the consumer surplus if the price of a DVD is $15.

Accepted Answer

@#IMG-DLM& The consumer surplus is the a

Question 17

If the hot dog vendors at Yankee Stadium are earning a producer surplus on each hot dog they sell, then baseball fans cannot be gaining any consumer surplus on the hot dogs they buy.

Accepted Answer

A) True 
 B)False

Question 18

-The figure illustrates the market for bagels. If the number of bagels is cut from 20 to 10 an hour, the deadweight loss is ________.

Accepted Answer

A)  $0.50 a bagel 
B)  -$5.00 an hour 
C)  $0 an hour 
D)  $5.00 an hour 
A)  $0.50 a bagel 
B)  -$5.00 an hour 
C)  $0 an hour 
D)  $5.00 an hour

Question 19

-In the above figure, if output were restricted to 300 million pounds of turkey, then

Accepted Answer

A)  the marginal social benefit would exceed the marginal social cost on the last pound of turkey traded by $0.80. 
B)  there would be a deadweight loss of $40 million. 
C)  there would be inefficient underproduction of turkey. 
D)  All of the above answers are correct. 
A)  the marginal social benefit would exceed the marginal social cost on the last pound of turkey traded by $0.80. 
B)  there would be a deadweight loss of $40 million. 
C)  there would be inefficient underproduction of turkey. 
D)  All of the above answers are correct.

Question 20

The market demand curve is constructed by adding the

Accepted Answer

A)  quantities demanded by each individual at each price. 
B)  prices that each individual is willing to pay at each quantity. 
C)  Neither answer A nor answer B is correct. 
D)  Both answer A and answer B are correct. 
A)  quantities demanded by each individual at each price. 
B)  prices that each individual is willing to pay at each quantity. 
C)  Neither answer A nor answer B is correct. 
D)  Both answer A and answer B are correct.

Exam 5: Efficiency and Equity

Total surplus is defined as

-In the above figure, if the production of gloves was restricted to 2,000 a day, then the deadweight loss would equal

Marginal benefit

The decrease in consumer surplus and producer surplus that results from an inefficient level of production is called the

-The above figure shows Dana's marginal benefit curve for ice cream. If the market price is $2 per gallon, then Dana's consumer surplus from the 4th gallon of ice cream is

-The figure above shows the market for coffee. If 10 million pounds of coffee a month are available, the ________ price that consumers are willing to pay for the last pound is ________.

-In the above figure, what is the efficient quantity of pretzels to produce each day?

The requirement that people in similar situations be treated similarly is called

-In the above figure, when the efficient quantity of gloves is produced, the total producer surplus is

Utilitarianism is the idea that only

A firm that is the only seller of a product and is in sole control of a market has a

The market supply curve shows the

-In the above table, the efficient quantity of brownies is produced when the price of a brownie is equal to

In May 2008, Switzerland co-hosted the international soccer tournament Euro 2008. At that time, the Swiss potato industry association had been warning there could be a fry shortage because there was a potato shortage. The shortage meant that in the French fry market

-The figure above shows the demand curve for DVDs. Use it to illustrate the consumer surplus if the price of a DVD is $15.

If the hot dog vendors at Yankee Stadium are earning a producer surplus on each hot dog they sell, then baseball fans cannot be gaining any consumer surplus on the hot dogs they buy.

-The figure illustrates the market for bagels. If the number of bagels is cut from 20 to 10 an hour, the deadweight loss is ________.

-In the above figure, if output were restricted to 300 million pounds of turkey, then

The market demand curve is constructed by adding the

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

-The figure above shows the market for coffee. If 10 million pounds of coffee a month are available, the price that consumers are willing to pay for the last pound is .