Question 1

In the market for CDs, the producer surplus will decrease if ________.

Accepted Answer

A)  the supply of CDs increases 
B)  the price of a CD decreases 
C)  the marginal cost of a CD decreases 
D)  the price of a CD increases 
A)  the supply of CDs increases 
B)  the price of a CD decreases 
C)  the marginal cost of a CD decreases 
D)  the price of a CD increases

Question 2

In May 2008, Switzerland co-hosted the international soccer tournament Euro 2008. At that time, the Swiss potato industry association had been warning there could be a fry shortage because there was a potato shortage. The shortage meant that in the French fry market

Accepted Answer

A)  the price for French fries would be higher. 
B)  the price for French fries would be lower. 
C)  if the efficient quantity of fries is produced, total surplus would be minimized. 
D)  if the inefficient quantity of fries is produced, total surplus would be maximized. 
A)  the price for French fries would be higher. 
B)  the price for French fries would be lower. 
C)  if the efficient quantity of fries is produced, total surplus would be minimized. 
D)  if the inefficient quantity of fries is produced, total surplus would be maximized.

Question 3

Consider a market that has linear supply and demand curves, and is in equilibrium. The area above the price line and below the demand curve is

Accepted Answer

A)  consumer surplus. 
B)  producer surplus. 
C)  marginal cost. 
D)  marginal benefit. 
A)  consumer surplus. 
B)  producer surplus. 
C)  marginal cost. 
D)  marginal benefit.

Question 4

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the consumer surplus?

Accepted Answer

A)  $30 
B)  $9,000 
C)  $18,000 
D)  $16,000 
A)  $30 
B)  $9,000 
C)  $18,000 
D)  $16,000

Question 5

-In the above figure, the marginal cost of the second ton of wheat is

Accepted Answer

A)  $25. 
B)  $50. 
C)  $75. 
D)  none of the above 
A)  $25. 
B)  $50. 
C)  $75. 
D)  none of the above

Question 6

A deadweight loss

Accepted Answer

A)  is possible only if the good is underproduced but is not possible if the good is overproduced. 
B)  subtracts only from producer surplus. 
C)  is a loss to consumers and a gain to producers. 
D)  is a loss inflicted on the entire society. 
A)  is possible only if the good is underproduced but is not possible if the good is overproduced. 
B)  subtracts only from producer surplus. 
C)  is a loss to consumers and a gain to producers. 
D)  is a loss inflicted on the entire society.

Question 7

What is the marginal cost of a good?

Accepted Answer

The marginal cost of a good is the oppor

Question 8

What is consumer surplus?

Accepted Answer

Consumer surplus equals the difference b

Question 9

-In the above figure, what is the marginal social cost to the economy of producing the four-hundredth pretzel?

Accepted Answer

A)  $0 
B)  $2.00 
C)  $4.00 
D)  None of the above answers are correct. 
A)  $0 
B)  $2.00 
C)  $4.00 
D)  None of the above answers are correct.

Question 10

The table below shows the supply schedules for Fred's Pizza and Johnny's Pizza, the only sellers of pizza in the market.  
-Using the table, Johnny's marginal cost of the 600th slice of pizza is

Accepted Answer

A)  $3.50. 
B)  $12.50. 
C)  zero. 
D)  $1.50. 
A)  $3.50. 
B)  $12.50. 
C)  zero. 
D)  $1.50.

Question 11

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. At Kaffenia's efficient quantity of doughnuts

Accepted Answer

A)  total consumer surplus is zero. 
B)  total producer surplus is zero. 
C)  consumer surplus exceeds producer surplus by the greatest possible amount. 
D)  the sum of consumer surplus and producer surplus is maximized. 
A)  total consumer surplus is zero. 
B)  total producer surplus is zero. 
C)  consumer surplus exceeds producer surplus by the greatest possible amount. 
D)  the sum of consumer surplus and producer surplus is maximized.

Question 12

-Jason wants to hire Maria to tutor him in economics. Jason is willing to pay $30 for the first hour of tutoring, $25 for the second, $20 for the third, $15 for the fourth, and $10 for the fifth. Maria has an opportunity cost per hour of $6 for the first, $9 for the second, $12 for the third, $15 for the fourth, and $18 for the fifth. The initial equilibrium price for tutoring is $15 an hour and hence Maria tutors Jason for 4 hours. Now, Maria realizes that she is the only economics tutor because all the other tutors have graduated. Because she is the only tutor, she has a monopoly and, as a monopolist, Maria decides to charge a price of $25 instead of $15 an hour.
a) At the price of $25 an hour, how many hours will Maria tutor Jason?
b) At the initial equilibrium price of $15 an hour, what was Jason's total consumer surplus and Maria's total producer surplus?
c) At the price of $25 an hour, what is Jason's total consumer surplus and Maria's total producer surplus?
d) How does the sum of Jason's consumer surplus plus Maria's producer surplus compare at the initial equilibrium price of $15 an hour (part b) and at the new price of $25 an hour (part c)? Comment on any difference.

Accepted Answer

a) Maria will tutor Jason for 2 hours.
b

Question 13

Resource use is efficient when

Accepted Answer

A)  marginal social benefit exceeds marginal social cost. 
B)  marginal social cost is decreasing. 
C)  marginal social benefit equals marginal social cost. 
D)  marginal social benefit is increasing. 
A)  marginal social benefit exceeds marginal social cost. 
B)  marginal social cost is decreasing. 
C)  marginal social benefit equals marginal social cost. 
D)  marginal social benefit is increasing.

Question 14

The Wii is a wildly popular home video game console released by Nintendo. The Wii system was first available in the U.S. in November, 2006 and has sold more than 30 million units as of August 2010. The Wii retails for $199. Suppose Ahmed is willing to pay $230, Lana is willing to pay $175, and Bodie is willing to pay $300 for a Wii. What is the value of Lana's consumer surplus?

Accepted Answer

A)  No consumer surplus is generated because Lana will not buy the Wii. 
B)  $249 
C)  $225 
D)  $24 
A)  No consumer surplus is generated because Lana will not buy the Wii. 
B)  $249 
C)  $225 
D)  $24

Question 15

-Using the above figure, which of the following quantities of CDs has the largest deadweight loss?

Accepted Answer

A)  3 million CDs 
B)  4 million CDs 
C)  7 million CDs 
D)  The deadweight losses associated with the three quantities given above are all equal. 
A)  3 million CDs 
B)  4 million CDs 
C)  7 million CDs 
D)  The deadweight losses associated with the three quantities given above are all equal.

Question 16

At the current quantity of pizza, the marginal social benefit is greater than the marginal social cost. Then

Accepted Answer

A)  the number of pizzas produced is efficient. 
B)  more pizzas must be produced to reach the efficient level. 
C)  fewer pizzas must be produced to reach the efficient level. 
D)  revenue for pizza producers is maximized. 
A)  the number of pizzas produced is efficient. 
B)  more pizzas must be produced to reach the efficient level. 
C)  fewer pizzas must be produced to reach the efficient level. 
D)  revenue for pizza producers is maximized.

Question 17

-The figure above shows the market for coffee. If the efficient quantity of coffee is produced, the consumer surplus is

Accepted Answer

A)  $10 million. 
B)  $20 million. 
C)  $60 million. 
D)  zero. 
A)  $10 million. 
B)  $20 million. 
C)  $60 million. 
D)  zero.

Question 18

Charlene is willing to pay $5.00 for a sandwich. If Charlene must pay ________ for a sandwich, she ________.

Accepted Answer

A)  $4.00; does not receive consumer surplus 
B)  $4.00; receives consumer surplus 
C)  $6.00; receives consumer surplus 
D)  $6.00; receives a marginal cost 
A)  $4.00; does not receive consumer surplus 
B)  $4.00; receives consumer surplus 
C)  $6.00; receives consumer surplus 
D)  $6.00; receives a marginal cost

Question 19

Four people each have a different willingness to pay for one unit of a good: George will pay $15, Glen will pay $12, Tom will pay $10, and Peter will pay $8. If price is equal to $9 per unit then the quantity demanded in the market will be ________ and the consumer surplus for this unit will be ________.

Accepted Answer

A)  3; $10 
B)  3; $37 
C)  3; $36 
D)  4; $8 
A)  3; $10 
B)  3; $37 
C)  3; $36 
D)  4; $8

Question 20

-The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then Dana's consumer surplus from the 4th gallon

Accepted Answer

A)  is greater than her consumer surplus from the 8th gallon. 
B)  is the same as her consumer surplus from the 8th gallon. 
C)  is less than her consumer surplus from the 8th gallon. 
D)  could be greater than, equal to, or less than the consumer surplus from the 8th gallon. 
A)  is greater than her consumer surplus from the 8th gallon. 
B)  is the same as her consumer surplus from the 8th gallon. 
C)  is less than her consumer surplus from the 8th gallon. 
D)  could be greater than, equal to, or less than the consumer surplus from the 8th gallon.

In the market for CDs, the producer surplus will decrease if ________.

In May 2008, Switzerland co-hosted the international soccer tournament Euro 2008. At that time, the Swiss potato industry association had been warning there could be a fry shortage because there was a potato shortage. The shortage meant that in the French fry market

Consider a market that has linear supply and demand curves, and is in equilibrium. The area above the price line and below the demand curve is

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the consumer surplus?

-In the above figure, the marginal cost of the second ton of wheat is

A deadweight loss

What is the marginal cost of a good?

What is consumer surplus?

-In the above figure, what is the marginal social cost to the economy of producing the four-hundredth pretzel?

The table below shows the supply schedules for Fred's Pizza and Johnny's Pizza, the only sellers of pizza in the market. -Using the table, Johnny's marginal cost of the 600th slice of pizza is

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. At Kaffenia's efficient quantity of doughnuts

Resource use is efficient when

-Using the above figure, which of the following quantities of CDs has the largest deadweight loss?

At the current quantity of pizza, the marginal social benefit is greater than the marginal social cost. Then

-The figure above shows the market for coffee. If the efficient quantity of coffee is produced, the consumer surplus is

Charlene is willing to pay $5.00 for a sandwich. If Charlene must pay for a sandwich, she .

Four people each have a different willingness to pay for one unit of a good: George will pay $15, Glen will pay $12, Tom will pay $10, and Peter will pay $8. If price is equal to $9 per unit then the quantity demanded in the market will be and the consumer surplus for this unit will be .

-The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then Dana's consumer surplus from the 4th gallon

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 5: Efficiency and Equity

In the market for CDs, the producer surplus will decrease if ________.

In May 2008, Switzerland co-hosted the international soccer tournament Euro 2008. At that time, the Swiss potato industry association had been warning there could be a fry shortage because there was a potato shortage. The shortage meant that in the French fry market

Consider a market that has linear supply and demand curves, and is in equilibrium. The area above the price line and below the demand curve is

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the consumer surplus?

-In the above figure, the marginal cost of the second ton of wheat is

A deadweight loss

What is the marginal cost of a good?

What is consumer surplus?

-In the above figure, what is the marginal social cost to the economy of producing the four-hundredth pretzel?

The table below shows the supply schedules for Fred's Pizza and Johnny's Pizza, the only sellers of pizza in the market. -Using the table, Johnny's marginal cost of the 600th slice of pizza is

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. At Kaffenia's efficient quantity of doughnuts

Resource use is efficient when

-Using the above figure, which of the following quantities of CDs has the largest deadweight loss?

At the current quantity of pizza, the marginal social benefit is greater than the marginal social cost. Then

-The figure above shows the market for coffee. If the efficient quantity of coffee is produced, the consumer surplus is

Charlene is willing to pay $5.00 for a sandwich. If Charlene must pay ________ for a sandwich, she ________.

-The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then Dana's consumer surplus from the 4th gallon

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Charlene is willing to pay $5.00 for a sandwich. If Charlene must pay for a sandwich, she .