Question 1

Consumers seek to

Accepted Answer

A) maximize profits. 
B) maximize expected consumer surplus. 
C) minimize expenditures. 
D) maximize choice. 
A) maximize profits. 
B) maximize expected consumer surplus. 
C) minimize expenditures. 
D) maximize choice.

Question 2

If a city government enacts a maximum price on rent,

Accepted Answer

A) quantity supplied will decrease. 
B) quantity demanded will increase. 
C) allocational problems develop. 
D) All of the above. 
A) quantity supplied will decrease. 
B) quantity demanded will increase. 
C) allocational problems develop. 
D) All of the above.

Question 3

-The above figure shows the market for rice in Japan where price is expressed in dollars. S represents the domestic supply curve, and the horizontal line at P = $1 represents the world supply curve. If a $1 tariff is imposed on imported rice, the loss in social welfare is

Accepted Answer

A) b + c + d + e. 
B) a. 
C) i. 
D) a + c + d + e. 
A) b + c + d + e. 
B) a. 
C) i. 
D) a + c + d + e.

Question 4

Assume government policy increases the demand for corn.

Accepted Answer

A) The consumer surplus of corn buyers will increase. 
B) The producer surplus of corn growers will decrease. 
C) The producer surplus of corn growers will increase. 
D) The producer surplus of corn growers will not change. 
A) The consumer surplus of corn buyers will increase. 
B) The producer surplus of corn growers will decrease. 
C) The producer surplus of corn growers will increase. 
D) The producer surplus of corn growers will not change.

Question 5

In the long-run equilibrium in perfect competition,

Accepted Answer

A) producer surplus is positive. 
B) producer surplus is negative. 
C) producer surplus is greater than consumer surplus. 
D) producer surplus is less than consumer surplus. 
A) producer surplus is positive. 
B) producer surplus is negative. 
C) producer surplus is greater than consumer surplus. 
D) producer surplus is less than consumer surplus.

Question 6

In economics, welfare analysis focuses on

Accepted Answer

A) income transfer programs. 
B) food stamp programs. 
C) international aid programs. 
D) None of the above. 
A) income transfer programs. 
B) food stamp programs. 
C) international aid programs. 
D) None of the above.

Question 7

-The above figure shows supply and demand curves for milk. If the government passes a $2 per gallon specific tax, the loss in producer surplus will equal

Accepted Answer

A) b + c + f + g. 
B) f + g. 
C) b + f. 
D) c + g. 
A) b + c + f + g. 
B) f + g. 
C) b + f. 
D) c + g.

Question 8

Giving presents at Christmas does NOT generate a deadweight loss if

Accepted Answer

A) all gift are money. 
B) everybody gets exactly what they want. 
C) nobody can be made better off by returning the gift and purchasing a different one. 
D) All of the above. 
A) all gift are money. 
B) everybody gets exactly what they want. 
C) nobody can be made better off by returning the gift and purchasing a different one. 
D) All of the above.

Question 9

-The above figure shows the demand and supply curves in the market for milk. If the government imposes a quota at 500 gallons, calculate the change in the consumer surplus.

Accepted Answer

A) △CS = -250 
B) △CS = -150 
C) △CS = -500 
D) △CS = 200 
A) △CS = -250 
B) △CS = -150 
C) △CS = -500 
D) △CS = 200

Question 10

-The above figure shows the demand and supply curves in the market for milk. Currently the market is in equilibrium. If the government establishes a $2 per gallon price ceiling to ensure that children are nourished, estimate the change in p, Q, and social welfare.

Accepted Answer

At a price of $2, only 500 gal

Question 11

You enter a store and buy a bottle of soda. Do you usually receive consumer surplus?

Accepted Answer

A) Yes, because you wouldn't buy the soda if your willingness to pay would be less than the price. 
B) Yes, because you are thirsty. 
C) No, because you value other drinks more. 
D) No, because you have less money after the transaction. 
A) Yes, because you wouldn't buy the soda if your willingness to pay would be less than the price. 
B) Yes, because you are thirsty. 
C) No, because you value other drinks more. 
D) No, because you have less money after the transaction.

Question 12

Tariffs and quotas create a loss in social welfare because

Accepted Answer

A) producer surplus declines. 
B) revenues from tariffs are misspent. 
C) consumer surplus declines. 
D) All of the above. 
A) producer surplus declines. 
B) revenues from tariffs are misspent. 
C) consumer surplus declines. 
D) All of the above.

Question 13

-The above figure shows the market for rice in Japan. S represents the domestic supply curve, and the horizontal line at P =1 represents the world supply curve. If imported rice is banned, the loss in social welfare is

Accepted Answer

A) a + b + c + d + e. 
B) a. 
C) c + e. 
D) i. 
A) a + b + c + d + e. 
B) a. 
C) c + e. 
D) i.

Question 14

Consumers often purchase products that, afterward, they regret purchasing. This can be explained by

Accepted Answer

A) consumers trying products to determine if their consumer surplus increases. 
B) consumers trying products to determine if firm advertising is honest. 
C) consumers trying to minimize expenditures. 
D) consumers trying to maximize choice. 
A) consumers trying products to determine if their consumer surplus increases. 
B) consumers trying products to determine if firm advertising is honest. 
C) consumers trying to minimize expenditures. 
D) consumers trying to maximize choice.

Question 15

Economists claim that measuring society's welfare as CS + PS

Accepted Answer

A) is inappropriate since ultimately everyone is a consumer. 
B) is valid only when the same person could be either a consumer or a producer. 
C) treats the gains to consumers and producers equally. 
D) is not commonly accepted. 
A) is inappropriate since ultimately everyone is a consumer. 
B) is valid only when the same person could be either a consumer or a producer. 
C) treats the gains to consumers and producers equally. 
D) is not commonly accepted.

Question 16

An increase in the deadweight loss (DWL)means

Accepted Answer

A) an additional reduction in welfare by one group that is not offset by a gain to another group. 
B) an additional reduction in welfare by one group that is offset by a gain to another group. 
C) an additional increase in welfare by one group that is not offset by a gain to another group. 
D) an additional increase in welfare by one group that is offset by a gain to another group. 
A) an additional reduction in welfare by one group that is not offset by a gain to another group. 
B) an additional reduction in welfare by one group that is offset by a gain to another group. 
C) an additional increase in welfare by one group that is not offset by a gain to another group. 
D) an additional increase in welfare by one group that is offset by a gain to another group.

Question 17

Mary purchased a stuffed animal toy for $5. After a few weeks, someone offered her $100 for the toy. Mary refused. One can conclude that Mary's consumer surplus from the toy is

Accepted Answer

A) less than $5. 
B) at least $95. 
C) at least $100. 
D) $105. 
A) less than $5. 
B) at least $95. 
C) at least $100. 
D) $105.

Question 18

-The above figure shows supply and demand curves for milk. If amount Q2 is produced in the market,

Accepted Answer

A) producer surplus is maximized. 
B) consumer surplus is minimized. 
C) a deadweight loss is generated. 
D) All of the above. 
A) producer surplus is maximized. 
B) consumer surplus is minimized. 
C) a deadweight loss is generated. 
D) All of the above.

Question 19

-The above figure shows the market for rice in Japan where price is expressed in dollars. S represents the domestic supply curve, and the horizontal line at P = 1 represents the world supply curve. Suppose a free market exists. The smallest tariff necessary to completely eliminate imported rice is

Accepted Answer

A) $0.50 per unit. 
B) $1.00 per unit. 
C) $1.50 per unit. 
D) $2.00 per unit. 
A) $0.50 per unit. 
B) $1.00 per unit. 
C) $1.50 per unit. 
D) $2.00 per unit.

Question 20

As the price of a good increases, the loss in consumer surplus is larger,

Accepted Answer

A) the more elastic demand is. 
B) the more money previously spent on the good. 
C) the less money previously spent on the good. 
D) the smaller the price increase. 
A) the more elastic demand is. 
B) the more money previously spent on the good. 
C) the less money previously spent on the good. 
D) the smaller the price increase.

Consumers seek to

If a city government enacts a maximum price on rent,

-The above figure shows the market for rice in Japan where price is expressed in dollars. S represents the domestic supply curve, and the horizontal line at P = $1 represents the world supply curve. If a $1 tariff is imposed on imported rice, the loss in social welfare is

Assume government policy increases the demand for corn.

In the long-run equilibrium in perfect competition,

In economics, welfare analysis focuses on

-The above figure shows supply and demand curves for milk. If the government passes a $2 per gallon specific tax, the loss in producer surplus will equal

Giving presents at Christmas does NOT generate a deadweight loss if

-The above figure shows the demand and supply curves in the market for milk. If the government imposes a quota at 500 gallons, calculate the change in the consumer surplus.

-The above figure shows the demand and supply curves in the market for milk. Currently the market is in equilibrium. If the government establishes a $2 per gallon price ceiling to ensure that children are nourished, estimate the change in p, Q, and social welfare.

You enter a store and buy a bottle of soda. Do you usually receive consumer surplus?

Tariffs and quotas create a loss in social welfare because

-The above figure shows the market for rice in Japan. S represents the domestic supply curve, and the horizontal line at P =1 represents the world supply curve. If imported rice is banned, the loss in social welfare is

Consumers often purchase products that, afterward, they regret purchasing. This can be explained by

Economists claim that measuring society's welfare as CS + PS

An increase in the deadweight loss (DWL)means

Mary purchased a stuffed animal toy for $5. After a few weeks, someone offered her $100 for the toy. Mary refused. One can conclude that Mary's consumer surplus from the toy is

-The above figure shows supply and demand curves for milk. If amount Q2 is produced in the market,

-The above figure shows the market for rice in Japan where price is expressed in dollars. S represents the domestic supply curve, and the horizontal line at P = 1 represents the world supply curve. Suppose a free market exists. The smallest tariff necessary to completely eliminate imported rice is

As the price of a good increases, the loss in consumer surplus is larger,

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 9: Applying the Competitive Model

Consumers seek to

If a city government enacts a maximum price on rent,

-The above figure shows the market for rice in Japan where price is expressed in dollars. S represents the domestic supply curve, and the horizontal line at P = $1 represents the world supply curve. If a $1 tariff is imposed on imported rice, the loss in social welfare is

Assume government policy increases the demand for corn.

In the long-run equilibrium in perfect competition,

In economics, welfare analysis focuses on

-The above figure shows supply and demand curves for milk. If the government passes a $2 per gallon specific tax, the loss in producer surplus will equal

Giving presents at Christmas does NOT generate a deadweight loss if

-The above figure shows the demand and supply curves in the market for milk. If the government imposes a quota at 500 gallons, calculate the change in the consumer surplus.

-The above figure shows the demand and supply curves in the market for milk. Currently the market is in equilibrium. If the government establishes a $2 per gallon price ceiling to ensure that children are nourished, estimate the change in p, Q, and social welfare.

You enter a store and buy a bottle of soda. Do you usually receive consumer surplus?

Tariffs and quotas create a loss in social welfare because

-The above figure shows the market for rice in Japan. S represents the domestic supply curve, and the horizontal line at P =1 represents the world supply curve. If imported rice is banned, the loss in social welfare is

Consumers often purchase products that, afterward, they regret purchasing. This can be explained by

Economists claim that measuring society's welfare as CS + PS

An increase in the deadweight loss (DWL)means

Mary purchased a stuffed animal toy for $5. After a few weeks, someone offered her $100 for the toy. Mary refused. One can conclude that Mary's consumer surplus from the toy is

-The above figure shows supply and demand curves for milk. If amount Q2 is produced in the market,

-The above figure shows the market for rice in Japan where price is expressed in dollars. S represents the domestic supply curve, and the horizontal line at P = 1 represents the world supply curve. Suppose a free market exists. The smallest tariff necessary to completely eliminate imported rice is

As the price of a good increases, the loss in consumer surplus is larger,

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters