Question 1

(Figure: Market for Ammunition I) In the free market result, the consumer surplus is:

Accepted Answer

A)  A + B + E. 
B)  A. 
C)  C + D + F. 
D)  B + C + D. 
A)  A + B + E. 
B)  A. 
C)  C + D + F. 
D)  B + C + D.

Question 2

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. The producer surplus with the price ceiling is:

Accepted Answer

A)  $26.25. 
B)  $12. 
C)  $6.25. 
D)  $1.25. 
A)  $26.25. 
B)  $12. 
C)  $6.25. 
D)  $1.25.

Question 3

(Figure: Market for Grapefruits I) 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 4

Suppose the demand and supply curves for units of university credits are given by
QD = 5,000 - P
QS = -1,000 + 4P
where QD is the quantity of credits demanded, QS is the quantity supplied, and P is the price in dollars for each unit.
a. Calculate the equilibrium price and quantity.
b. Calculate the consumer surplus at the equilibrium price.

Accepted Answer

a. First, solve for the equilibrium pric

Question 5

Suppose that the demand curve for brown rice is given by 50,000 - 3Q2 and supply is P = -10,000 + 3Q2.
a. Find the equilibrium price and quantity.
b. Calculate the consumer surplus at the equilibrium price.
c. Calculate the producer surplus at the equilibrium price.

Accepted Answer

a. The equilibrium condition i

Question 6

(Figure: Market for Socks I) Refer to Figure: Market for Socks I to answer the following questions.   
a. What is the area of consumer surplus before the increase in supply?
b. What is the area of producer surplus before the increase in supply?
c. What is the area of consumer surplus after the increase in supply?
d. What is the area of producer surplus after the increase in supply?
e. What is the area of the deadweight loss after the increase in supply?

Accepted Answer

a. A
b. B
c. A + B +

Question 7

(Figure: Health Care Visits I) In Figure: Health Care Visits I, Spriv represents the supply of health care visits at private clinics and Stotal represents the total supply of health care visits at private and government-operated clinics.   
a. How many health care visits are provided by government-operated clinics?
b. Without government-operated clinics, how many health care visits are provided by the private sector?
c. With government-operated clinics, how many health care visits are provided by the private sector?
d. Does the presence of government-operated clinics cause crowding out? Explain.

Accepted Answer

a. 160
b. 70
c. 30
d. Yes, the

Question 8

(Figure: Market for Ammunition I) Assuming the government implements the quota of 200 boxes/week, the producer surplus is:

Accepted Answer

A)  A + B + E. 
B)  D. 
C)  C + D + F. 
D)  B + C + D. 
A)  A + B + E. 
B)  D. 
C)  C + D + F. 
D)  B + C + D.

Question 9

In the market for used cars, the demand and supply equations are given by QD = 12,000 - 0.4P and QS = 0.1P + 5,000, where P is the price per car and Q measures the quantity of cars. What is the size of the deadweight loss at a price floor of $15,000?

Accepted Answer

A)  $250,000 
B)  $500,000 
C)  $750,000 
D)  $1 million 
A)  $250,000 
B)  $500,000 
C)  $750,000 
D)  $1 million

Question 10

(Figure: Market for Good X II) In this example, the subsidy is ____ for each quantity produced.

Accepted Answer

A)  $4.00 
B)  $10.00 
C)  $8.00 
D)  $6.00 
A)  $4.00 
B)  $10.00 
C)  $8.00 
D)  $6.00

Question 11

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

Question 12

(Figure: Price and Quantity IV) Suppose the government mandates a price ceiling of $8 per pound. Consumer surplus:

Accepted Answer

A)  increases by $700. 
B)  increases by $800. 
C)  increases by $300. 
D)  decreases by $150. 
A)  increases by $700. 
B)  increases by $800. 
C)  increases by $300. 
D)  decreases by $150.

Question 13

To calculate consumer surplus:

Accepted Answer

A)  integrate the area under the demand curve and above the equilibrium price. 
B)  integrate the area under the demand curve and above the supply curve. 
C)  take the derivative of quantity demanded with respect to price. 
D)  take the derivative of quantity demanded with respect to income. 
A)  integrate the area under the demand curve and above the equilibrium price. 
B)  integrate the area under the demand curve and above the supply curve. 
C)  take the derivative of quantity demanded with respect to price. 
D)  take the derivative of quantity demanded with respect to income.

Question 14

The supply and demand for squash are given by QD = 200,000 - 50,000P and QS = 90,000P - 80,000, where P is price per pound and Q measures pounds of squash.
a. What is the level of consumer surplus at the equilibrium price?
b. What is the level of producer surplus at the equilibrium price?

Accepted Answer

a. To solve for the equilibrium price, s

Question 15

(Figure: Market for Tickets II) Before the tax, consumers pay the price ____ and after the tax, consumers pay the price ____.

Accepted Answer

A)  $5.50; $6.00 
B)  $5.50; $6.50 
C)  $6.00; $5.50 
D)  $5.00; $6.00 
A)  $5.50; $6.00 
B)  $5.50; $6.50 
C)  $6.00; $5.50 
D)  $5.00; $6.00

Question 16

Nancy paid $55 for car mats but was willing to pay $80. What is Nancy's consumer surplus?

Accepted Answer

A)  $80 
B)  $15 
C)  $25 
D)  $135 
A)  $80 
B)  $15 
C)  $25 
D)  $135

Question 17

The demand and supply of ethanol (a renewable fuel from plant materials) are given by QD = 8,000 - 2,000P and QS = 1,000P - 1,000, where P is price per gallon and Q measures gallons per minute. If the government subsidizes ethanol by $0.30 per gallon, what is the deadweight loss?

Accepted Answer

A)  $30 
B)  $7,800 
C)  $440 
D)  $119 
A)  $30 
B)  $7,800 
C)  $440 
D)  $119

Question 18

The supply curve for pizza on the local college campus is represented by QS = -2,500 + 210P. At a price of $14, the total producer surplus for the college campus would be $_____.

Accepted Answer

To calculate total producer surplus when

Question 19

Answer the following questions regarding taxes.
a. Suppose the demand for insulin pumps is QD = 2,000 and the supply of insulin pumps is QS = 0.5P - 1,000. What is the price that sellers receive per pump? Suppose the government imposes a tax of $400 per pump on sellers. What after-tax price per pump do sellers receive?
b. In the market for organic fruit, the elasticity of supply is 0.75 and the elasticity of demand is -1.25. If there is a tax of $2 per unit on organic fruit, what share of the tax is paid by buyers and what share is paid by sellers?

Accepted Answer

a. Q^D = Q^S 2,000 = 0.5P - 1,000 3,000 = 0.

Question 20

(Figure: Market for Boxes I) Suppose the government sets a price ceiling of $10.   
a. What are the values of consumer surplus before and after the price change?
b. What are the values of producer surplus before and after the price change?
c. What is the value of the deadweight loss?

Accepted Answer

a. The quantity axis is measured in hund

(Figure: Market for Ammunition I) In the free market result, the consumer surplus is:

(Figure: Market for Grapefruits I) At a market price of $4, what is total consumer surplus?

Suppose that the demand curve for brown rice is given by 50,000 - 3Q² and supply is P = -10,000 + 3Q². a. Find the equilibrium price and quantity. b. Calculate the consumer surplus at the equilibrium price. c. Calculate the producer surplus at the equilibrium price.

(Figure: Market for Ammunition I) Assuming the government implements the quota of 200 boxes/week, the producer surplus is:

In the market for used cars, the demand and supply equations are given by Q^D = 12,000 - 0.4P and Q^S = 0.1P + 5,000, where P is the price per car and Q measures the quantity of cars. What is the size of the deadweight loss at a price floor of $15,000?

(Figure: Market for Good X II) In this example, the subsidy is ____ for each quantity produced.

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

(Figure: Price and Quantity IV) Suppose the government mandates a price ceiling of $8 per pound. Consumer surplus:

To calculate consumer surplus:

The supply and demand for squash are given by Q^D = 200,000 - 50,000P and Q^S = 90,000P - 80,000, where P is price per pound and Q measures pounds of squash. a. What is the level of consumer surplus at the equilibrium price? b. What is the level of producer surplus at the equilibrium price?

(Figure: Market for Tickets II) Before the tax, consumers pay the price and after the tax, consumers pay the price .

Nancy paid $55 for car mats but was willing to pay $80. What is Nancy's consumer surplus?

The demand and supply of ethanol (a renewable fuel from plant materials) are given by Q^D = 8,000 - 2,000P and Q^S = 1,000P - 1,000, where P is price per gallon and Q measures gallons per minute. If the government subsidizes ethanol by $0.30 per gallon, what is the deadweight loss?

The supply curve for pizza on the local college campus is represented by Q^S = -2,500 + 210P. At a price of $14, the total producer surplus for the college campus would be $_____.

(Figure: Market for Boxes I) Suppose the government sets a price ceiling of $10. a. What are the values of consumer surplus before and after the price change? b. What are the values of producer surplus before and after the price change? c. What is the value of the deadweight loss?

Adventures in Microeconomics

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

(Figure: Market for Ammunition I) In the free market result, the consumer surplus is:

(Figure: Market for Grapefruits I) At a market price of $4, what is total consumer surplus?

Suppose that the demand curve for brown rice is given by 50,000 - 3Q2 and supply is P = -10,000 + 3Q2. a. Find the equilibrium price and quantity. b. Calculate the consumer surplus at the equilibrium price. c. Calculate the producer surplus at the equilibrium price.

(Figure: Market for Ammunition I) Assuming the government implements the quota of 200 boxes/week, the producer surplus is:

In the market for used cars, the demand and supply equations are given by QD = 12,000 - 0.4P and QS = 0.1P + 5,000, where P is the price per car and Q measures the quantity of cars. What is the size of the deadweight loss at a price floor of $15,000?

(Figure: Market for Good X II) In this example, the subsidy is ____ for each quantity produced.

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

(Figure: Price and Quantity IV) Suppose the government mandates a price ceiling of $8 per pound. Consumer surplus:

To calculate consumer surplus:

The supply and demand for squash are given by QD = 200,000 - 50,000P and QS = 90,000P - 80,000, where P is price per pound and Q measures pounds of squash. a. What is the level of consumer surplus at the equilibrium price? b. What is the level of producer surplus at the equilibrium price?

(Figure: Market for Tickets II) Before the tax, consumers pay the price ____ and after the tax, consumers pay the price ____.

Nancy paid $55 for car mats but was willing to pay $80. What is Nancy's consumer surplus?

The demand and supply of ethanol (a renewable fuel from plant materials) are given by QD = 8,000 - 2,000P and QS = 1,000P - 1,000, where P is price per gallon and Q measures gallons per minute. If the government subsidizes ethanol by $0.30 per gallon, what is the deadweight loss?

The supply curve for pizza on the local college campus is represented by QS = -2,500 + 210P. At a price of $14, the total producer surplus for the college campus would be $_____.

(Figure: Market for Boxes I) Suppose the government sets a price ceiling of $10. a. What are the values of consumer surplus before and after the price change? b. What are the values of producer surplus before and after the price change? c. What is the value of the deadweight loss?

Adventures in Microeconomics

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

Suppose that the demand curve for brown rice is given by 50,000 - 3Q² and supply is P = -10,000 + 3Q². a. Find the equilibrium price and quantity. b. Calculate the consumer surplus at the equilibrium price. c. Calculate the producer surplus at the equilibrium price.

In the market for used cars, the demand and supply equations are given by Q^D = 12,000 - 0.4P and Q^S = 0.1P + 5,000, where P is the price per car and Q measures the quantity of cars. What is the size of the deadweight loss at a price floor of $15,000?

The supply and demand for squash are given by Q^D = 200,000 - 50,000P and Q^S = 90,000P - 80,000, where P is price per pound and Q measures pounds of squash. a. What is the level of consumer surplus at the equilibrium price? b. What is the level of producer surplus at the equilibrium price?

(Figure: Market for Tickets II) Before the tax, consumers pay the price and after the tax, consumers pay the price .

The demand and supply of ethanol (a renewable fuel from plant materials) are given by Q^D = 8,000 - 2,000P and Q^S = 1,000P - 1,000, where P is price per gallon and Q measures gallons per minute. If the government subsidizes ethanol by $0.30 per gallon, what is the deadweight loss?

The supply curve for pizza on the local college campus is represented by Q^S = -2,500 + 210P. At a price of $14, the total producer surplus for the college campus would be $_____.