Question 1

When demand and supply are linear, consumer surplus is equal to:

Accepted Answer

A)  the area between the demand curve and the price, out to the quantity that is exchanged. 
B)  the area between the supply curve and the price, out to the quantity that is exchanged. 
C)  the entire area between the demand curve and the price. See Section 3.1. 
D)  the entire area between the supply curve and the price. 
A)  the area between the demand curve and the price, out to the quantity that is exchanged. 
B)  the area between the supply curve and the price, out to the quantity that is exchanged. 
C)  the entire area between the demand curve and the price. See Section 3.1. 
D)  the entire area between the supply curve and the price.

Question 2

The government wants to transfer welfare from buyers to sellers by collecting a $1 tax on a good from buyers and subsidizing sellers $1 for each unit of the good sold. This policy will:

Accepted Answer

A)  decrease the equilibrium price. 
B)  increase the equilibrium price. 
C)  decrease the equilibrium quantity. 
D)  increase the equilibrium quantity. 
A)  decrease the equilibrium price. 
B)  increase the equilibrium price. 
C)  decrease the equilibrium quantity. 
D)  increase the equilibrium quantity.

Question 3

Use the following to answer question:
Figure 3.11  
-(Figure 3.11) The supply equation in the adult magazine market is given by QS = 2P - 4, where P is the price per magazine and Q measures the number of magazines in thousands. Which supply curve reflects a government quota of 6,000 magazines?

Accepted Answer

A)  panel (a) 
B)  panel (b) 
C)  panel (c) 
D)  panel (d) 
A)  panel (a) 
B)  panel (b) 
C)  panel (c) 
D)  panel (d)

Question 4

If the government subsidizes the production of a good:

Accepted Answer

A)  deadweight loss results because not enough of the good is exchanged. 
B)  deadweight loss results because too much of the good is exchanged. 
C)  consumer surplus and producer surplus both fall. 
D)  total surplus is higher than it would have been without the subsidy. 
A)  deadweight loss results because not enough of the good is exchanged. 
B)  deadweight loss results because too much of the good is exchanged. 
C)  consumer surplus and producer surplus both fall. 
D)  total surplus is higher than it would have been without the subsidy.

Question 5

Suppose that a maximum price (price ceiling) is legislated. To calculate consumer surplus:

Accepted Answer

A)  integrate the area under the demand curve and above the free-market equilibrium price. 
B)  integrate the area under the demand curve and above the ceiling price between zero quantity and the free-market equilibrium quantity. 
C)  integrate the area under the demand curve and above the ceiling price between zero quantity and the quantity resulting from the price ceiling. 
D)  integrate the area under the demand curve and above the supply curve between zero quantity and the quantity resulting from the price ceiling. 
A)  integrate the area under the demand curve and above the free-market equilibrium price. 
B)  integrate the area under the demand curve and above the ceiling price between zero quantity and the free-market equilibrium quantity. 
C)  integrate the area under the demand curve and above the ceiling price between zero quantity and the quantity resulting from the price ceiling. 
D)  integrate the area under the demand curve and above the supply curve between zero quantity and the quantity resulting from the price ceiling.

Question 6

Many U.S. states have minimum price laws for cigarettes. Assume that the demand equation for cigarettes is QD = 4,000 - 300P and the supply equation is QS = -1,000 + 200P, with quantity in thousands of packs. The number of cigarette packs actually sold when a binding price floor of $12 is applied to this market will be _____.

Accepted Answer

Question 7

The demand and supply of movie tickets are given by QD = 30 - 3P and QS = 4P - 19, where P is the price per ticket and Q is in thousands of tickets. If the government places a $1 tax on each ticket, the prices that consumers pay with and without the tax are _____ and _____, respectively.

Accepted Answer

A)  $8; $7 
B)  $7.57; $7 
C)  $7.50; $6.80 
D)  $4.30; $3.80 
A)  $8; $7 
B)  $7.57; $7 
C)  $7.50; $6.80 
D)  $4.30; $3.80

Question 8

Suppose the demand and supply curves for shampoo are given by
QD = 18 - 5P
QS = -3 + 2P
where QD is the quantity of shampoo demanded (in thousands of bottles), QS is the quantity supplied, and P is the price of shampoo (in dollars per bottle). Calculate producer surplus at the equilibrium price using calculus.

Accepted Answer

Using some results f

Question 9

Suppose that the market demand curve for residential water is:
QD = 10 - 2.25P
and the market supply curve is:
QS = -10 + 2.75P
where the quantity is measured in millions of gallons per month and the price is in dollars per thousand gallons. Calculate the producer surplus at the equilibrium price.

Accepted Answer

Using some results f

Question 10

The first snow blower was sold in 1927. How did the sale of the snow blower affect on the demand curve and the consumer surplus for snow shovels?

Accepted Answer

The demand curve for snow shovels would

Question 11

Use the following to answer question:
Figure 3.3  
-(Figure 3.3) The decrease in supply from S1 to S2 will cause consumer surplus to _____ and producer surplus to _____.

Accepted Answer

A)  decrease by $10.50; decrease by $4.50 
B)  decrease by $5.50; increase by $3 
C)  increase by $6; decrease by $18 
D)  increase by $8.75; increase by $6.67 
A)  decrease by $10.50; decrease by $4.50 
B)  decrease by $5.50; increase by $3 
C)  increase by $6; decrease by $18 
D)  increase by $8.75; increase by $6.67

Question 12

In the market for cotton, the quantity demanded and quantity supplied are expressed mathematically as QD = 400 - 250P and QS = 250P - 100, where P is the price per pound of cotton and Q measures pounds of cotton. Suppose the government sets a price ceiling of $0.50 per pound of cotton.

Accepted Answer

a. Q^D = 400 - 250(0.50) = 275; Q^S = 250(0.

Question 13

Answer the following questions regarding taxes.

Accepted Answer

The answer of Answer the following questions regarding taxes. ...

Question 14

The price elasticity of demand is -1.25, and the share of the tax borne by consumers is 0.80. What is the price elasticity of supply?

Accepted Answer

A)  6 
B)  5 
C)  1.56 
D)  1. 
A)  6 
B)  5 
C)  1.56 
D)  1.

Question 15

Use the following to answer question:
Figure 3.1  
-(Figure 3.1) At a market price of $4, what is total consumer surplus?

Accepted Answer

A)  $120 
B)  $320 
C)  $160 
D)  $80 
A)  $120 
B)  $320 
C)  $160 
D)  $80

Question 16

Use the following to answer questions 39-40:
Figure 3.14  
-(Figure 3.14) Which of the following statements is (are) TRUE?

Accepted Answer

A)  I and III 
B)  II and III 
C)  II 
D)  I, II, and III 
A)  I and III 
B)  II and III 
C)  II 
D)  I, II, and III

Question 17

Use the following to answer question:
Figure 3.6  
-(Figure 3.6) An increase in demand caused consumer surplus to change from _____ to _____.

Accepted Answer

A)  $16; $36 
B)  $8; $12 
C)  $8,000; $12,000 
D)  $4,000; $9,000 
A)  $16; $36 
B)  $8; $12 
C)  $8,000; $12,000 
D)  $4,000; $9,000

Question 18

In 2007, Hawaii began providing universal health care coverage to all children, but the Hawaiian government ended the program in just 7 months. Government officials claimed that most of the children who received government coverage dropped their private insurance to become eligible for the program. As a government official stated, "People who were already able to afford health care began to stop paying for it so they could get it for free." In this example, Hawaii's universal health care coverage caused:

Accepted Answer

A)  crowding out. 
B)  expansion drift. 
C)  impure prevalence. 
D)  supplier-induced demand. 
A)  crowding out. 
B)  expansion drift. 
C)  impure prevalence. 
D)  supplier-induced demand.

Question 19

In a small country, the demand and supply of kidneys are represented by QD = 10,000 - 0.25P and QS = 0.5P + 4,000. Which of the following statements is (are) TRUE?

Accepted Answer

A)  I, II, and III 
B)  II and III (because the demand curve shifts out, pushing up the price) 
C)  I and II 
D)  III 
A)  I, II, and III 
B)  II and III (because the demand curve shifts out, pushing up the price) 
C)  I and II 
D)  III

Question 20

Which of the following payroll taxes would be most beneficial for workers (e.g., provide the highest after-tax wage)?

Accepted Answer

A)  5% on workers and 10% on employers 
B)  9% on workers and 6% on employers 
C)  12% on workers and 1% on employers 
D)  2% on workers and 14% on employers 
A)  5% on workers and 10% on employers 
B)  9% on workers and 6% on employers 
C)  12% on workers and 1% on employers 
D)  2% on workers and 14% on employers

When demand and supply are linear, consumer surplus is equal to:

The government wants to transfer welfare from buyers to sellers by collecting a $1 tax on a good from buyers and subsidizing sellers $1 for each unit of the good sold. This policy will:

Use the following to answer question: Figure 3.11 -(Figure 3.11) The supply equation in the adult magazine market is given by Q^S = 2P - 4, where P is the price per magazine and Q measures the number of magazines in thousands. Which supply curve reflects a government quota of 6,000 magazines?

If the government subsidizes the production of a good:

Suppose that a maximum price (price ceiling) is legislated. To calculate consumer surplus:

The demand and supply of movie tickets are given by Q^D = 30 - 3P and Q^S = 4P - 19, where P is the price per ticket and Q is in thousands of tickets. If the government places a $1 tax on each ticket, the prices that consumers pay with and without the tax are _ and _, respectively.

Suppose that the market demand curve for residential water is: Q^D = 10 - 2.25P and the market supply curve is: Q^S = -10 + 2.75P where the quantity is measured in millions of gallons per month and the price is in dollars per thousand gallons. Calculate the producer surplus at the equilibrium price.

The first snow blower was sold in 1927. How did the sale of the snow blower affect on the demand curve and the consumer surplus for snow shovels?

Use the following to answer question: Figure 3.3 -(Figure 3.3) The decrease in supply from S₁ to S₂ will cause consumer surplus to _ and producer surplus to _.

In the market for cotton, the quantity demanded and quantity supplied are expressed mathematically as Q^D = 400 - 250P and Q^S = 250P - 100, where P is the price per pound of cotton and Q measures pounds of cotton. Suppose the government sets a price ceiling of $0.50 per pound of cotton.

Answer the following questions regarding taxes.

The price elasticity of demand is -1.25, and the share of the tax borne by consumers is 0.80. What is the price elasticity of supply?

Use the following to answer question: Figure 3.1 -(Figure 3.1) At a market price of $4, what is total consumer surplus?

Use the following to answer questions 39-40: Figure 3.14 -(Figure 3.14) Which of the following statements is (are) TRUE?

Use the following to answer question: Figure 3.6 -(Figure 3.6) An increase in demand caused consumer surplus to change from _ to _.

In a small country, the demand and supply of kidneys are represented by Q^D = 10,000 - 0.25P and Q^S = 0.5P + 4,000. Which of the following statements is (are) TRUE?

Which of the following payroll taxes would be most beneficial for workers (e.g., provide the highest after-tax wage)?

Supply and Demand

Consumer Behavior

Individual and Market Demand

Producer Behavior

Costs

Supply in a Competitive Market

Market Power and Monopoly

Market Power and Pricing Strategies

Imperfect Competition

Game Theory

Factor Markets

Investment, Time, and Insurance

General Equilibrium

Asymmetric Information

Externalities and Public Goods

Behavioral and Experimental Economics

Filters

Exam 3: Using Supply and Demand to Analyze Markets

When demand and supply are linear, consumer surplus is equal to:

The government wants to transfer welfare from buyers to sellers by collecting a $1 tax on a good from buyers and subsidizing sellers $1 for each unit of the good sold. This policy will:

Use the following to answer question: Figure 3.11 -(Figure 3.11) The supply equation in the adult magazine market is given by QS = 2P - 4, where P is the price per magazine and Q measures the number of magazines in thousands. Which supply curve reflects a government quota of 6,000 magazines?

If the government subsidizes the production of a good:

Suppose that a maximum price (price ceiling) is legislated. To calculate consumer surplus:

The demand and supply of movie tickets are given by QD = 30 - 3P and QS = 4P - 19, where P is the price per ticket and Q is in thousands of tickets. If the government places a $1 tax on each ticket, the prices that consumers pay with and without the tax are _____ and _____, respectively.

Suppose that the market demand curve for residential water is: QD = 10 - 2.25P and the market supply curve is: QS = -10 + 2.75P where the quantity is measured in millions of gallons per month and the price is in dollars per thousand gallons. Calculate the producer surplus at the equilibrium price.

The first snow blower was sold in 1927. How did the sale of the snow blower affect on the demand curve and the consumer surplus for snow shovels?

Use the following to answer question: Figure 3.3 -(Figure 3.3) The decrease in supply from S1 to S2 will cause consumer surplus to _____ and producer surplus to _____.

In the market for cotton, the quantity demanded and quantity supplied are expressed mathematically as QD = 400 - 250P and QS = 250P - 100, where P is the price per pound of cotton and Q measures pounds of cotton. Suppose the government sets a price ceiling of $0.50 per pound of cotton.

Answer the following questions regarding taxes.

The price elasticity of demand is -1.25, and the share of the tax borne by consumers is 0.80. What is the price elasticity of supply?

Use the following to answer question: Figure 3.1 -(Figure 3.1) At a market price of $4, what is total consumer surplus?

Use the following to answer questions 39-40: Figure 3.14 -(Figure 3.14) Which of the following statements is (are) TRUE?

Use the following to answer question: Figure 3.6 -(Figure 3.6) An increase in demand caused consumer surplus to change from _____ to _____.

In a small country, the demand and supply of kidneys are represented by QD = 10,000 - 0.25P and QS = 0.5P + 4,000. Which of the following statements is (are) TRUE?

Which of the following payroll taxes would be most beneficial for workers (e.g., provide the highest after-tax wage)?

Supply and Demand

Consumer Behavior

Individual and Market Demand

Producer Behavior

Costs

Supply in a Competitive Market

Market Power and Monopoly

Market Power and Pricing Strategies

Imperfect Competition

Game Theory

Factor Markets

Investment, Time, and Insurance

General Equilibrium

Asymmetric Information

Externalities and Public Goods

Behavioral and Experimental Economics

Filters

Use the following to answer question: Figure 3.11 -(Figure 3.11) The supply equation in the adult magazine market is given by Q^S = 2P - 4, where P is the price per magazine and Q measures the number of magazines in thousands. Which supply curve reflects a government quota of 6,000 magazines?

The demand and supply of movie tickets are given by Q^D = 30 - 3P and Q^S = 4P - 19, where P is the price per ticket and Q is in thousands of tickets. If the government places a $1 tax on each ticket, the prices that consumers pay with and without the tax are _ and _, respectively.

Use the following to answer question: Figure 3.3 -(Figure 3.3) The decrease in supply from S₁ to S₂ will cause consumer surplus to _ and producer surplus to _.

In the market for cotton, the quantity demanded and quantity supplied are expressed mathematically as Q^D = 400 - 250P and Q^S = 250P - 100, where P is the price per pound of cotton and Q measures pounds of cotton. Suppose the government sets a price ceiling of $0.50 per pound of cotton.

Use the following to answer question: Figure 3.6 -(Figure 3.6) An increase in demand caused consumer surplus to change from _ to _.

In a small country, the demand and supply of kidneys are represented by Q^D = 10,000 - 0.25P and Q^S = 0.5P + 4,000. Which of the following statements is (are) TRUE?