Question 1

If a city decides to lift restrictions of how many taxi cabs can operate,social welfare will increase.

Accepted Answer

A) True 
 B)False

Question 2

The United States and many other countries often impose trade sanctions on other countries.These sanctions

Accepted Answer

A)  decrease producer and consumer surplus in both the sanctioned and sanctioning countries. 
B)  tend to increase total welfare. 
C)  tend to decrease the deadweight loss. 
D)  tend to decrease consumer and producer surplus only in the sanctioned country. 
A)  decrease producer and consumer surplus in both the sanctioned and sanctioning countries. 
B)  tend to increase total welfare. 
C)  tend to decrease the deadweight loss. 
D)  tend to decrease consumer and producer surplus only in the sanctioned country.

Question 3

The cost of lobbying for an import quota in a perfectly competitive market

Accepted Answer

A)  increases the welfare loss of the quota. 
B)  decreases the deadweight loss of the quota. 
C)  shifts the supply curve of the good to the left. 
D)  increases the consumer surplus. 
A)  increases the welfare loss of the quota. 
B)  decreases the deadweight loss of the quota. 
C)  shifts the supply curve of the good to the left. 
D)  increases the consumer surplus.

Question 4

The welfare loss from an import quota is greater than that of an equivalent tariff because

Accepted Answer

A)  tariff revenues can be used to society's benefit. 
B)  the loss in consumer surplus is not as large. 
C)  domestic producers gain more from a quota than from a tariff. 
D)  tariff revenues represent an additional deadweight loss. 
A)  tariff revenues can be used to society's benefit. 
B)  the loss in consumer surplus is not as large. 
C)  domestic producers gain more from a quota than from a tariff. 
D)  tariff revenues represent an additional deadweight loss.

Question 5

-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 6

The services of real estate brokers are provided in a competitive market.If the state Board of Realtors enacts several requirements that limit the number of real estate brokers,which of the following is most likely to occur?

Accepted Answer

A)  Consumer surplus will increase. 
B)  Producer surplus will increase. 
C)  Entry of new brokers will increase. 
D)  Social welfare will increase. 
A)  Consumer surplus will increase. 
B)  Producer surplus will increase. 
C)  Entry of new brokers will increase. 
D)  Social welfare will increase.

Question 7

-The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone).The current price is $0.35 per minute.If the price were to increase by ten cents per minute,consumer surplus would

Accepted Answer

A)  fall to $820. 
B)  fall by $84. 
C)  fall by $58. 
D)  fall to $369. 
A)  fall to $820. 
B)  fall by $84. 
C)  fall by $58. 
D)  fall to $369.

Question 8

-The above figure shows supply and demand curves for apartment units in a large city.At the unregulated equilibrium,producer surplus will be

Accepted Answer

A)  d. 
B)  d + e. 
C)  d + g. 
D)  d + c + g. 
A)  d. 
B)  d + e. 
C)  d + g. 
D)  d + c + g.

Question 9

-The above figure shows supply and demand curves for milk.In an effort to help farms,the government passes a law that establishes a $3 per gallon price support,but allows farmers to decide how much milk to produce.The government then provides a deficiency payment to guarantee that the farmers receive $3 per gallon.The welfare loss of this price support is

Accepted Answer

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

Question 10

-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

Accepted Answer

A)  increases. 
B)  decreases. 
C)  stays the same. 
D)  changes in a direction that cannot be determined from the information given. 
A)  increases. 
B)  decreases. 
C)  stays the same. 
D)  changes in a direction that cannot be determined from the information given.

Question 11

Assume a consumer has a horizontal demand curve for a product.His consumer surplus from buying the product

Accepted Answer

A)  is maximized. 
B)  can't be calculated. 
C)  equals zero. 
D)  Need more information. 
A)  is maximized. 
B)  can't be calculated. 
C)  equals zero. 
D)  Need more information.

Question 12

-The domestic demand curve,domestic supply curve,and world supply curves for a good are given in the above figure.All the curves are linear.Initially,the country allows imports.Then imports are banned.Calculate how consumer and producer surplus change because of the ban.Is the country better off with the ban on imports? Why?

Accepted Answer

Consumer surplus before the ban equals .

Question 13

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 14

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 15

-The above figure shows supply and demand curves for milk.In an effort to help farmers,the government passes a law that establishes a $3 per gallon price support.To maintain the price support,government must purchase

Accepted Answer

A)  Q1 gallons. 
B)  Q2 gallons. 
C)  Q1 - Q2 gallons. 
D)  Q2 - Q1 gallons. 
A)  Q1 gallons. 
B)  Q2 gallons. 
C)  Q1 - Q2 gallons. 
D)  Q2 - Q1 gallons.

Question 16

-The above figure shows supply and demand curves for apartment units in a large city.The area "e" represents

Accepted Answer

A)  the loss in producer surplus if a rent ceiling of $350 is imposed. 
B)  the total variable cost of supplying Q1 units. 
C)  the marginal cost of supplying Q1 units. 
D)  the total revenue received by supplying Q1 units. 
A)  the loss in producer surplus if a rent ceiling of $350 is imposed. 
B)  the total variable cost of supplying Q1 units. 
C)  the marginal cost of supplying Q1 units. 
D)  the total revenue received by supplying Q1 units.

Question 17

Before the DVD,the VCR was a popular format for taping and replaying video.When the DVD was introduced,which of the following most accurately describes the long-run adjustment process in the VCR industry?

Accepted Answer

A)  Costs increased, price increased, demand decreased, quantity decreased, profit decreased. 
B)  Demand increased, costs increased, price increased, quantity increased, profit decreased. 
C)  Demand decreased, quantity decreased, price decreased, profit decreased. 
D)  Demand decreased, price decreased, quantity decreased, profit decreased. 
A)  Costs increased, price increased, demand decreased, quantity decreased, profit decreased. 
B)  Demand increased, costs increased, price increased, quantity increased, profit decreased. 
C)  Demand decreased, quantity decreased, price decreased, profit decreased. 
D)  Demand decreased, price decreased, quantity decreased, profit decreased.

Question 18

What is one reason existing firms might lobby the government to increase regulation in their industry?

Accepted Answer

A)  It increases entry and exit costs, thereby reducing producer surplus to existing firms. 
B)  It increases entry and exit costs, thereby potentially increasing producer surplus to existing firms. 
C)  It increases entry and exit costs, but has no impact on producer surplus. 
D)  Firms cannot be trusted to treat their customers fairly and ethically. 
A)  It increases entry and exit costs, thereby reducing producer surplus to existing firms. 
B)  It increases entry and exit costs, thereby potentially increasing producer surplus to existing firms. 
C)  It increases entry and exit costs, but has no impact on producer surplus. 
D)  Firms cannot be trusted to treat their customers fairly and ethically.

Question 19

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 20

The owners of sports franchises often complain that free-agency (open bidding for player services)threatens their profitability and thus their long-run viability.Given your knowledge of perfect competition,which of the following is correct?

Accepted Answer

A)  Team owners might be correct in as much as free-agency bids up the price of players so that economic profits from those players equal zero. 
B)  Team owners might be correct in as much as free-agency bids up the price of players so that economic profits from those players is negative. 
C)  Team owners are lying, as free-agent salaries are still much too low. 
D)  Team owners are telling the truth, as free-agent salaries are much too high. 
A)  Team owners might be correct in as much as free-agency bids up the price of players so that economic profits from those players equal zero. 
B)  Team owners might be correct in as much as free-agency bids up the price of players so that economic profits from those players is negative. 
C)  Team owners are lying, as free-agent salaries are still much too low. 
D)  Team owners are telling the truth, as free-agent salaries are much too high.

If a city decides to lift restrictions of how many taxi cabs can operate,social welfare will increase.

The United States and many other countries often impose trade sanctions on other countries.These sanctions

The cost of lobbying for an import quota in a perfectly competitive market

The welfare loss from an import quota is greater than that of an equivalent tariff because

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

The services of real estate brokers are provided in a competitive market.If the state Board of Realtors enacts several requirements that limit the number of real estate brokers,which of the following is most likely to occur?

-The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone).The current price is $0.35 per minute.If the price were to increase by ten cents per minute,consumer surplus would

-The above figure shows supply and demand curves for apartment units in a large city.At the unregulated equilibrium,producer surplus will be

-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

Assume a consumer has a horizontal demand curve for a product.His consumer surplus from buying the product

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

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

-The above figure shows supply and demand curves for milk.In an effort to help farmers,the government passes a law that establishes a $3 per gallon price support.To maintain the price support,government must purchase

-The above figure shows supply and demand curves for apartment units in a large city.The area "e" represents

Before the DVD,the VCR was a popular format for taping and replaying video.When the DVD was introduced,which of the following most accurately describes the long-run adjustment process in the VCR industry?

What is one reason existing firms might lobby the government to increase regulation in their industry?

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

The owners of sports franchises often complain that free-agency (open bidding for player services)threatens their profitability and thus their long-run viability.Given your knowledge of perfect competition,which of the following is correct?

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

If a city decides to lift restrictions of how many taxi cabs can operate,social welfare will increase.

The United States and many other countries often impose trade sanctions on other countries.These sanctions

The cost of lobbying for an import quota in a perfectly competitive market

The welfare loss from an import quota is greater than that of an equivalent tariff because

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

The services of real estate brokers are provided in a competitive market.If the state Board of Realtors enacts several requirements that limit the number of real estate brokers,which of the following is most likely to occur?

-The above figure shows the market demand curve for telecommunication while driving one's car (time spent on the car phone).The current price is $0.35 per minute.If the price were to increase by ten cents per minute,consumer surplus would

-The above figure shows supply and demand curves for apartment units in a large city.At the unregulated equilibrium,producer surplus will be

-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

Assume a consumer has a horizontal demand curve for a product.His consumer surplus from buying the product

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

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

-The above figure shows supply and demand curves for milk.In an effort to help farmers,the government passes a law that establishes a $3 per gallon price support.To maintain the price support,government must purchase

-The above figure shows supply and demand curves for apartment units in a large city.The area "e" represents

Before the DVD,the VCR was a popular format for taping and replaying video.When the DVD was introduced,which of the following most accurately describes the long-run adjustment process in the VCR industry?

What is one reason existing firms might lobby the government to increase regulation in their industry?

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

The owners of sports franchises often complain that free-agency (open bidding for player services)threatens their profitability and thus their long-run viability.Given your knowledge of perfect competition,which of the following is correct?

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