Question 1

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. A

Question 2

The difference between producer surplus and profit is always the associated with

Accepted Answer

A)  opportunity costs. 
B)  total costs. 
C)  variable costs. 
D)  fixed costs. 
A)  opportunity costs. 
B)  total costs. 
C)  variable costs. 
D)  fixed costs. D

Question 3

Rent seeking in the form of lobbying for an increase in import tariffs by domestic producers

Accepted Answer

A)  increases consumer surplus. 
B)  increases total welfare. 
C)  increases the deadweight loss. 
D)  None of the above. 
A)  increases consumer surplus. 
B)  increases total welfare. 
C)  increases the deadweight loss. 
D)  None of the above. C

Question 4

Which of the following characterizes long-run equilibrium in perfect competition?

Accepted Answer

A)  P = MC = ATC 
B)  P = MC  MC = ATC 
D)  P = MC > ATC 
A)  P = MC = ATC 
B)  P = MC  MC = ATC 
D)  P = MC > ATC

Question 5

Sally is shopping for textbooks at the beginning of the semester.What is one reason she might decide to not purchase a textbook?

Accepted Answer

A)  Her expected producer surplus is positive. 
B)  Her expected consumer surplus is negative. 
C)  Her expected consumer surplus is positive. 
D)  Her expected profits are positive. 
A)  Her expected producer surplus is positive. 
B)  Her expected consumer surplus is negative. 
C)  Her expected consumer surplus is positive. 
D)  Her expected profits are positive.

Question 6

Suppose the market supply curve is p = 5 + Q.At a price of 10,producer surplus equals

Accepted Answer

A)  50. 
B)  25. 
C)  12.50. 
D)  10. 
A)  50. 
B)  25. 
C)  12.50. 
D)  10.

Question 7

Without restrictions,the market supply curve is horizontal at P = 5,and the inverse demand curve for taxi cab rides is P = 20 - Q in a competitive market.Subsequently,only 10 taxi cabs are allowed in the market.After the market adjusts to the restricted supply,

Accepted Answer

A)  there will be a decrease in consumer surplus. 
B)  the remaining taxi cab drivers will make positive economic profits. 
C)  there will be an increase in producer surplus. 
D)  All of the above. 
A)  there will be a decrease in consumer surplus. 
B)  the remaining taxi cab drivers will make positive economic profits. 
C)  there will be an increase in producer surplus. 
D)  All of the above.

Question 8

In the long run,firms in a competitive market make zero economic profit.This induces most firms to leave the industry.

Accepted Answer

A) True 
 B)False

Question 9

-The above figure shows supply and demand curves for milk.If the government passes a $2 per gallon specific tax,the tax revenue is

Accepted Answer

A)  $2 ∗ Q1. 
B)  $2 ∗ Q2. 
C)  $2 ∗ (Q2 - Q1). 
D)  $2. 
A)  $2 ∗ Q1. 
B)  $2 ∗ Q2. 
C)  $2 ∗ (Q2 - Q1). 
D)  $2.

Question 10

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 11

-The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone).At the current price of $0.35 per minute,consumer surplus equals

Accepted Answer

A)  $301.00. 
B)  $924.50. 
C)  $1,225.50. 
D)  $1,250.00. 
A)  $301.00. 
B)  $924.50. 
C)  $1,225.50. 
D)  $1,250.00.

Question 12

In a competitive market,the demand and supply curves are Q = 12 - P and Q = 5P,respectively.If output is fixed at Q = 5,what is the amount of the resulting deadweight loss?

Accepted Answer

A)  0 
B)  5 
C)  10 
D)  It cannot be determined without more information. 
A)  0 
B)  5 
C)  10 
D)  It cannot be determined without more information.

Question 13

Measuring society's welfare as 2*CS + 0.5*PS

Accepted Answer

A)  gives heavier weight to consumer gains. 
B)  gives heavier weight to producer gains. 
C)  treats the gains to consumers and producers equally. 
D)  treats gains and losses with different weight. 
A)  gives heavier weight to consumer gains. 
B)  gives heavier weight to producer gains. 
C)  treats the gains to consumers and producers equally. 
D)  treats gains and losses with different weight.

Question 14

Sarah's demand curve for shoes has the same slope as Pete's; however,it lies to the right of Pete's.An increase in the price of shoes will cause

Accepted Answer

A)  Sarah to incur a greater loss of consumer surplus than Pete will. 
B)  Pete to incur a greater loss of consumer surplus than Sarah will. 
C)  Sarah and Pete to incur the same loss of consumer surplus. 
D)  Sarah's demand curve to shift closer to Pete's. 
A)  Sarah to incur a greater loss of consumer surplus than Pete will. 
B)  Pete to incur a greater loss of consumer surplus than Sarah will. 
C)  Sarah and Pete to incur the same loss of consumer surplus. 
D)  Sarah's demand curve to shift closer to Pete's.

Question 15

-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 deadweight loss.

Accepted Answer

DWL = .5(4

Question 16

-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.Currently Q1 units are imported.The loss from shifting production from foreign to domestic producers equals

Accepted Answer

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

Question 17

-The above figure shows supply and demand curves for apartment units in a large city.If the city government passes a law that establishes $350 per month as the legal maximum rent,producer surplus decreases by

Accepted Answer

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

Question 18

A per unit subsidy increases both consumer and producer surplus,but results in a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 19

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 20

-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.

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

The difference between producer surplus and profit is always the associated with

Rent seeking in the form of lobbying for an increase in import tariffs by domestic producers

Which of the following characterizes long-run equilibrium in perfect competition?

Sally is shopping for textbooks at the beginning of the semester.What is one reason she might decide to not purchase a textbook?

Suppose the market supply curve is p = 5 + Q.At a price of 10,producer surplus equals

Without restrictions,the market supply curve is horizontal at P = 5,and the inverse demand curve for taxi cab rides is P = 20 - Q in a competitive market.Subsequently,only 10 taxi cabs are allowed in the market.After the market adjusts to the restricted supply,

In the long run,firms in a competitive market make zero economic profit.This induces most firms to leave the industry.

-The above figure shows supply and demand curves for milk.If the government passes a $2 per gallon specific tax,the tax revenue is

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

-The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone).At the current price of $0.35 per minute,consumer surplus equals

In a competitive market,the demand and supply curves are Q = 12 - P and Q = 5P,respectively.If output is fixed at Q = 5,what is the amount of the resulting deadweight loss?

Measuring society's welfare as 2CS + 0.5PS

Sarah's demand curve for shoes has the same slope as Pete's; however,it lies to the right of Pete's.An increase in the price of shoes will cause

-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 deadweight loss.

-The above figure shows supply and demand curves for apartment units in a large city.If the city government passes a law that establishes $350 per month as the legal maximum rent,producer surplus decreases by

A per unit subsidy increases both consumer and producer surplus,but results in a deadweight loss.

In the long-run equilibrium in perfect competition,

-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

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

The difference between producer surplus and profit is always the associated with

Rent seeking in the form of lobbying for an increase in import tariffs by domestic producers

Which of the following characterizes long-run equilibrium in perfect competition?

Sally is shopping for textbooks at the beginning of the semester.What is one reason she might decide to not purchase a textbook?

Suppose the market supply curve is p = 5 + Q.At a price of 10,producer surplus equals

Without restrictions,the market supply curve is horizontal at P = 5,and the inverse demand curve for taxi cab rides is P = 20 - Q in a competitive market.Subsequently,only 10 taxi cabs are allowed in the market.After the market adjusts to the restricted supply,

In the long run,firms in a competitive market make zero economic profit.This induces most firms to leave the industry.

-The above figure shows supply and demand curves for milk.If the government passes a $2 per gallon specific tax,the tax revenue is

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

-The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone).At the current price of $0.35 per minute,consumer surplus equals

In a competitive market,the demand and supply curves are Q = 12 - P and Q = 5P,respectively.If output is fixed at Q = 5,what is the amount of the resulting deadweight loss?

Measuring society's welfare as 2*CS + 0.5*PS

Sarah's demand curve for shoes has the same slope as Pete's; however,it lies to the right of Pete's.An increase in the price of shoes will cause

-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 deadweight loss.

-The above figure shows supply and demand curves for apartment units in a large city.If the city government passes a law that establishes $350 per month as the legal maximum rent,producer surplus decreases by

A per unit subsidy increases both consumer and producer surplus,but results in a deadweight loss.

In the long-run equilibrium in perfect competition,

-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

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

Measuring society's welfare as 2CS + 0.5PS