Question 1

A price ceiling is _____ if it is set _____ the market price.

Accepted Answer

A)  effective; above 
B)  effective; below 
C)  efficient; above 
D)  efficient; below 
A)  effective; above 
B)  effective; below 
C)  efficient; above 
D)  efficient; below B

Question 2

(Figure: Determining Surplus 4) In the graph, consumer surplus equals _______.

Accepted Answer

A)  $40 
B)  $80 
C)  $130 
D)  $160 
A)  $40 
B)  $80 
C)  $130 
D)  $160 A

Question 3

(Figure: Determining Surplus) In the graph, what is the formula for producer surplus?

Accepted Answer

A)  (h - i) × (k - i) 
B)  (i - j) × (k - i) 
C)  0.5 × (h - j) × (k - i) 
D)  0.5 × (i - j) × (k - i) 
A)  (h - i) × (k - i) 
B)  (i - j) × (k - i) 
C)  0.5 × (h - j) × (k - i) 
D)  0.5 × (i - j) × (k - i) D

Question 4

Jason purchased a new printer for $150 although he was willing to pay $175. The minimum price acceptable to the seller, Jasmine, was $145. The results of this transaction are a consumer surplus of:

Accepted Answer

A)  $325 and a producer surplus of $295. 
B)  $25 and a producer surplus of $5. 
C)  $175 and a producer surplus of $145. 
D)  $150 and a producer surplus of $150. 
A)  $325 and a producer surplus of $295. 
B)  $25 and a producer surplus of $5. 
C)  $175 and a producer surplus of $145. 
D)  $150 and a producer surplus of $150.

Question 5

The lack of easy entry into a market tends to depress prices.

Accepted Answer

A) True 
 B)False

Question 6

Jonathan purchased coffee for $5 at Jennifer's coffee shop; however, he was willing to pay $9. Jennifer was willing to accept $3 for the coffee. The results of this transaction are a consumer surplus of:

Accepted Answer

A)  $12 and a producer surplus of $10. 
B)  $10 and a producer surplus of $12. 
C)  $2 and a producer surplus of $4. 
D)  $4 and a producer surplus of $2. 
A)  $12 and a producer surplus of $10. 
B)  $10 and a producer surplus of $12. 
C)  $2 and a producer surplus of $4. 
D)  $4 and a producer surplus of $2.

Question 7

(Figure: Determining Surplus and Loss) In the graph, how much is producer surplus at a price of $5?

Accepted Answer

A)  $30 
B)  $90 
C)  $170 
D)  $300 
A)  $30 
B)  $90 
C)  $170 
D)  $300

Question 8

Which activity typically generates an external cost?

Accepted Answer

A)  flu vaccine 
B)  traffic congestion 
C)  public education 
D)  scientific research 
A)  flu vaccine 
B)  traffic congestion 
C)  public education 
D)  scientific research

Question 9

(Figure: Determining Surplus 4) In the graph, producer surplus equals _______.

Accepted Answer

A)  $8 
B)  $5 
C)  $10 
D)  $25 
A)  $8 
B)  $5 
C)  $10 
D)  $25

Question 10

In the graph, if a price floor on soybeans is set at $2 per bushel, the amount of surplus in this market would be _____.

Accepted Answer

A)  0 bushels 
B)  10 bushels 
C)  40 bushels 
D)  50 bushels 
A)  0 bushels 
B)  10 bushels 
C)  40 bushels 
D)  50 bushels

Question 11

Which good is typically considered a public good?

Accepted Answer

A)  automobiles 
B)  bottled water 
C)  clean air 
D)  french fries 
A)  automobiles 
B)  bottled water 
C)  clean air 
D)  french fries

Question 12

If there is only one provider of electricity in a city, then that market is likely to fail due to:

Accepted Answer

A)  public ownership of resources. 
B)  external benefits. 
C)  lack of competition. 
D)  asymmetric information. 
A)  public ownership of resources. 
B)  external benefits. 
C)  lack of competition. 
D)  asymmetric information.

Question 13

In a market, consumers get extra benefits called _____, while businesses receive extra benefits known as _____.

Accepted Answer

A)  producer surplus; consumer surplus 
B)  consumer surplus; producer surplus 
C)  opportunity cost; marginal cost 
D)  demand; supply 
A)  producer surplus; consumer surplus 
B)  consumer surplus; producer surplus 
C)  opportunity cost; marginal cost 
D)  demand; supply

Question 14

Total surplus is maximized at a price of $0.

Accepted Answer

A) True 
 B)False

Question 15

In the graph, calculate the value of consumer surplus in this market.

Accepted Answer

A)  $5 
B)  $50 
C)  $100 
D)  $240 
A)  $5 
B)  $50 
C)  $100 
D)  $240

Question 16

Suppose the market price is $5. There are three consumers in the market. The consumer who purchases the first unit of output is willing to pay $12; the consumer purchasing the second unit of output is willing to pay $8; and the consumer buying the third unit of output is willing to pay $7. Total consumer surplus across these three consumers is:

Accepted Answer

A)  $27. 
B)  $11. 
C)  $12. 
D)  $32. 
A)  $27. 
B)  $11. 
C)  $12. 
D)  $32.

Question 17

(Figure: Determining Surplus and Loss) In the graph, a price of $5 would allow for an effective price floor.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that a major hurricane hits Florida, causing widespread damage to homes and businesses. If the legislature imposes price controls in order to keep reconstruction costs reasonable, which of these is the MOST likely result?

Accepted Answer

A)  a shortage of building materials 
B)  a faster recovery from the storm 
C)  a surplus of building materials 
D)  rapid service at lumberyards 
A)  a shortage of building materials 
B)  a faster recovery from the storm 
C)  a surplus of building materials 
D)  rapid service at lumberyards

Question 19

(Figure: Understanding Price Ceilings and Floors) In the graph, a price of $50 would allow for an effective price ceiling.

Accepted Answer

A) True 
 B)False

Question 20

(Figure: Determining Surplus 6) Using the graph, we can calculate the maximum possible consumer surplus as:

Accepted Answer

A)  $10,000. 
B)  $20,000. 
C)  $40,000. 
D)  $80,000. 
A)  $10,000. 
B)  $20,000. 
C)  $40,000. 
D)  $80,000.

A price ceiling is _ if it is set _ the market price.

(Figure: Determining Surplus 4) In the graph, consumer surplus equals _______.

(Figure: Determining Surplus) In the graph, what is the formula for producer surplus?

Jason purchased a new printer for $150 although he was willing to pay $175. The minimum price acceptable to the seller, Jasmine, was $145. The results of this transaction are a consumer surplus of:

The lack of easy entry into a market tends to depress prices.

Jonathan purchased coffee for $5 at Jennifer's coffee shop; however, he was willing to pay $9. Jennifer was willing to accept $3 for the coffee. The results of this transaction are a consumer surplus of:

(Figure: Determining Surplus and Loss) In the graph, how much is producer surplus at a price of $5?

Which activity typically generates an external cost?

(Figure: Determining Surplus 4) In the graph, producer surplus equals _______.

In the graph, if a price floor on soybeans is set at $2 per bushel, the amount of surplus in this market would be _____.

Which good is typically considered a public good?

If there is only one provider of electricity in a city, then that market is likely to fail due to:

In a market, consumers get extra benefits called _, while businesses receive extra benefits known as _.

Total surplus is maximized at a price of $0.

In the graph, calculate the value of consumer surplus in this market.

(Figure: Determining Surplus and Loss) In the graph, a price of $5 would allow for an effective price floor.

Suppose that a major hurricane hits Florida, causing widespread damage to homes and businesses. If the legislature imposes price controls in order to keep reconstruction costs reasonable, which of these is the MOST likely result?

(Figure: Understanding Price Ceilings and Floors) In the graph, a price of $50 would allow for an effective price ceiling.

(Figure: Determining Surplus 6) Using the graph, we can calculate the maximum possible consumer surplus as:

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Exam 4: Markets and Government

A price ceiling is _____ if it is set _____ the market price.

(Figure: Determining Surplus 4) In the graph, consumer surplus equals _______.

(Figure: Determining Surplus) In the graph, what is the formula for producer surplus?

Jason purchased a new printer for $150 although he was willing to pay $175. The minimum price acceptable to the seller, Jasmine, was $145. The results of this transaction are a consumer surplus of:

The lack of easy entry into a market tends to depress prices.

Jonathan purchased coffee for $5 at Jennifer's coffee shop; however, he was willing to pay $9. Jennifer was willing to accept $3 for the coffee. The results of this transaction are a consumer surplus of:

(Figure: Determining Surplus and Loss) In the graph, how much is producer surplus at a price of $5?

Which activity typically generates an external cost?

(Figure: Determining Surplus 4) In the graph, producer surplus equals _______.

In the graph, if a price floor on soybeans is set at $2 per bushel, the amount of surplus in this market would be _____.

Which good is typically considered a public good?

If there is only one provider of electricity in a city, then that market is likely to fail due to:

In a market, consumers get extra benefits called _____, while businesses receive extra benefits known as _____.

Total surplus is maximized at a price of $0.

In the graph, calculate the value of consumer surplus in this market.

(Figure: Determining Surplus and Loss) In the graph, a price of $5 would allow for an effective price floor.

Suppose that a major hurricane hits Florida, causing widespread damage to homes and businesses. If the legislature imposes price controls in order to keep reconstruction costs reasonable, which of these is the MOST likely result?

(Figure: Understanding Price Ceilings and Floors) In the graph, a price of $50 would allow for an effective price ceiling.

(Figure: Determining Surplus 6) Using the graph, we can calculate the maximum possible consumer surplus as:

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

A price ceiling is _ if it is set _ the market price.

In a market, consumers get extra benefits called _, while businesses receive extra benefits known as _.