Question 1

If,in a competitive market,marginal benefit is less than marginal cost,

Accepted Answer

A) the net benefit to consumers from participating in the market is less than the net benefit to producers. 
B) the government must force producers to raise prices in order to achieve economic efficiency. 
C) the quantity sold is greater than the equilibrium quantity. 
D) the quantity sold is less than the equilibrium quantity. 
A) the net benefit to consumers from participating in the market is less than the net benefit to producers. 
B) the government must force producers to raise prices in order to achieve economic efficiency. 
C) the quantity sold is greater than the equilibrium quantity. 
D) the quantity sold is less than the equilibrium quantity.

Question 2

A minimum wage law dictates

Accepted Answer

A) the minimum quantity of labour that a firm must employ. 
B) the lowest wage that firms may pay for labour. 
C) the highest wage that firms must pay for labour. 
D) the minimum qualifications for labour. 
A) the minimum quantity of labour that a firm must employ. 
B) the lowest wage that firms may pay for labour. 
C) the highest wage that firms must pay for labour. 
D) the minimum qualifications for labour.

Question 3

Suppose the demand curve for a product is horizontal and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

Accepted Answer

A) sellers bear the entire burden of the tax. 
B) the tax burden will be shared among the government,buyers and sellers. 
C) buyers bear the entire burden of the tax. 
D) the tax burden will be shared by buyers and sellers. 
A) sellers bear the entire burden of the tax. 
B) the tax burden will be shared among the government,buyers and sellers. 
C) buyers bear the entire burden of the tax. 
D) the tax burden will be shared by buyers and sellers.

Question 4

Figure 5-4  
-Refer to Figure 5-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9,

Accepted Answer

A) economic surplus is maximised. 
B) too many consumers want to buy pecans. 
C) the quantity supplied is greater than the economically efficient quantity. 
D) the quantity demanded is economically efficient,but the quantity supplied is economically inefficient. 
A) economic surplus is maximised. 
B) too many consumers want to buy pecans. 
C) the quantity supplied is greater than the economically efficient quantity. 
D) the quantity demanded is economically efficient,but the quantity supplied is economically inefficient.

Question 5

Figure 5-2  
-Refer to Figure 5-2.What area represents the increase in producer surplus when the market price rises from P1 to P2?

Accepted Answer

A) B + D 
B) A + C + E 
C) C + E 
D) A + B 
A) B + D 
B) A + C + E 
C) C + E 
D) A + B

Question 6

One result of a tax is an increase in economic efficiency.

Accepted Answer

A) True 
 B)False

Question 7

Figure 5-1   Figure 5-1 shows Arnold's demand curve for burritos.
-Refer to Figure 5-1.If the market price is $1.00,what is the consumer surplus on the fourth burrito?

Accepted Answer

A) $0 
B) $0.50 
C) $1.50 
D) $2.25 
A) $0 
B) $0.50 
C) $1.50 
D) $2.25

Question 8

Figure 5-5   Figure 5-5 shows the market for apartments in Springfield.Recently,the government imposed a rent ceiling of $1000 per month.
-Refer to Figure 5-5.Suppose that instead of a rent ceiling,the government imposed a price floor of $2000 per month for apartments.What is the value of the deadweight loss after the imposition of the price floor?

Accepted Answer

A) $50 000 
B) $125 000 
C) $175 000 
D) $260 000 
A) $50 000 
B) $125 000 
C) $175 000 
D) $260 000

Question 9

Figure 5-3   Figure 5-3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40S1U1B1 S1U1B0in order to raise the price to $18.
-Refer to Figure 5-3.What is the value of the deadweight loss at a price of $18?

Accepted Answer

A) $100 
B) $180 
C) $660 
D) $1040 
A) $100 
B) $180 
C) $660 
D) $1040

Question 10

Table 5-4
   Table 5-4 shows the demand and supply schedules for labour market in the city of Pixley.
-Refer to Table 5-4.If a minimum wage of $11.50 an hour is mandated,what is the quantity of labour supplied?

Accepted Answer

A) 40 000 
B) 570 000 
C) 610 000 
D) 1 180 000 
A) 40 000 
B) 570 000 
C) 610 000 
D) 1 180 000

Question 11

Figure 5-1   Figure 5-1 shows Arnold's demand curve for burritos.
-Refer to Figure 5-1.What is the total amount that Arnold is willing to pay for 3 burritos?

Accepted Answer

A) $1.50 
B) $6.00 
C) $7.00 
D) $10.00 
A) $1.50 
B) $6.00 
C) $7.00 
D) $10.00

Question 12

Suppose the demand curve for a product is vertical and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

Accepted Answer

A) sellers bear the entire burden of the tax. 
B) buyers bear the entire burden of the tax. 
C) the tax burden will be shared equally between buyers and sellers. 
D) buyers share the burden of the tax with the government. 
A) sellers bear the entire burden of the tax. 
B) buyers bear the entire burden of the tax. 
C) the tax burden will be shared equally between buyers and sellers. 
D) buyers share the burden of the tax with the government.

Question 13

The payroll tax is a tax imposed on ________ that is used to fund Social Security and Medicare.

Accepted Answer

A) employers only 
B) workers only 
C) employers and workers 
D) the unemployed 
A) employers only 
B) workers only 
C) employers and workers 
D) the unemployed

Question 14

Table 5-4
   Table 5-4 shows the demand and supply schedules for labour market in the city of Pixley.
-Refer to Table 5-4.Suppose that the quantity of labour demanded increases by 40 000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

Accepted Answer

A) W = $8.50;Q = 550 000 
B) W = $12.50;Q = 630 000 
C) W = $9.50;Q = 570 000 
D) W = $11.50;Q = 610 000 
A) W = $8.50;Q = 550 000 
B) W = $12.50;Q = 630 000 
C) W = $9.50;Q = 570 000 
D) W = $11.50;Q = 610 000

Question 15

A tax is efficient if it imposes a large excess burden relative to the tax revenue it raises.

Accepted Answer

A) True 
 B)False

Question 16

Table 5-6
  
-Refer to Table 5-6.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of consumer surplus?

Accepted Answer

A) $100 thousand 
B) $200 thousand 
C) $600 thousand 
D) $800 thousand 
A) $100 thousand 
B) $200 thousand 
C) $600 thousand 
D) $800 thousand

Question 17

A price ceiling is a legally determined maximum price that sellers may charge.

Accepted Answer

A) True 
 B)False

Question 18

Assume the market price for lemon grass is $4.00 per pound,but most buyers are willing to pay more than the market price.At the market price of $4.00,the quantity of lemon grass demanded is 1500 pounds per month,and quantity demanded does not reach zero until the price reaches $30.00 per pound.Construct a graph showing this data,calculate the total consumer surplus in the market for lemon grass,and show the consumer surplus on the graph.

Accepted Answer

@#IMG-DLM& The total consumer

Question 19

Figure 5-3   Figure 5-3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40S1U1B1 S1U1B0in order to raise the price to $18.
-Refer to Figure 5-3.At the equilibrium price of $15,consumers are willing to buy 80 pounds of tiger shrimp.Is this an economically efficient quantity?

Accepted Answer

A) No,the marginal benefit of the 80th unit exceeds the marginal cost of the 80th unit. 
B) Yes,because marginal cost is zero at the 80th unit. 
C) Yes,because $15 is the price where the marginal benefit is equal to the marginal cost. 
D) No,the marginal cost of the 80th unit exceeds the marginal benefit of the 80th unit. 
A) No,the marginal benefit of the 80th unit exceeds the marginal cost of the 80th unit. 
B) Yes,because marginal cost is zero at the 80th unit. 
C) Yes,because $15 is the price where the marginal benefit is equal to the marginal cost. 
D) No,the marginal cost of the 80th unit exceeds the marginal benefit of the 80th unit.

Question 20

Figure 5-3   Figure 5-3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40S1U1B1 S1U1B0in order to raise the price to $18.
-Refer to Figure 5-3.What is the value of consumer surplus at the equilibrium price of $15?

Accepted Answer

A) $60 
B) $120 
C) $180 
D) $240 
A) $60 
B) $120 
C) $180 
D) $240

If,in a competitive market,marginal benefit is less than marginal cost,

A minimum wage law dictates

Suppose the demand curve for a product is horizontal and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

Figure 5-4 -Refer to Figure 5-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9,

Figure 5-2 -Refer to Figure 5-2.What area represents the increase in producer surplus when the market price rises from P₁ to P₂?

One result of a tax is an increase in economic efficiency.

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.If the market price is $1.00,what is the consumer surplus on the fourth burrito?

Figure 5-3 Figure 5-3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40in order to raise the price to $18. -Refer to Figure 5-3.What is the value of the deadweight loss at a price of $18?

Table 5-4 Table 5-4 shows the demand and supply schedules for labour market in the city of Pixley. -Refer to Table 5-4.If a minimum wage of $11.50 an hour is mandated,what is the quantity of labour supplied?

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.What is the total amount that Arnold is willing to pay for 3 burritos?

Suppose the demand curve for a product is vertical and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

The payroll tax is a tax imposed on ________ that is used to fund Social Security and Medicare.

Table 5-4 Table 5-4 shows the demand and supply schedules for labour market in the city of Pixley. -Refer to Table 5-4.Suppose that the quantity of labour demanded increases by 40 000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

A tax is efficient if it imposes a large excess burden relative to the tax revenue it raises.

Table 5-6 -Refer to Table 5-6.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of consumer surplus?

A price ceiling is a legally determined maximum price that sellers may charge.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 5: Economic Efficiency, Government Price Setting and Taxes

If,in a competitive market,marginal benefit is less than marginal cost,

A minimum wage law dictates

Suppose the demand curve for a product is horizontal and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

Figure 5-4 -Refer to Figure 5-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9,

Figure 5-2 -Refer to Figure 5-2.What area represents the increase in producer surplus when the market price rises from P1 to P2?

One result of a tax is an increase in economic efficiency.

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.If the market price is $1.00,what is the consumer surplus on the fourth burrito?

Figure 5-3 Figure 5-3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40 in order to raise the price to $18. -Refer to Figure 5-3.What is the value of the deadweight loss at a price of $18?

Table 5-4 Table 5-4 shows the demand and supply schedules for labour market in the city of Pixley. -Refer to Table 5-4.If a minimum wage of $11.50 an hour is mandated,what is the quantity of labour supplied?

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.What is the total amount that Arnold is willing to pay for 3 burritos?

Suppose the demand curve for a product is vertical and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

The payroll tax is a tax imposed on ________ that is used to fund Social Security and Medicare.

Table 5-4 Table 5-4 shows the demand and supply schedules for labour market in the city of Pixley. -Refer to Table 5-4.Suppose that the quantity of labour demanded increases by 40 000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

A tax is efficient if it imposes a large excess burden relative to the tax revenue it raises.

Table 5-6 -Refer to Table 5-6.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of consumer surplus?

A price ceiling is a legally determined maximum price that sellers may charge.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Figure 5-2 -Refer to Figure 5-2.What area represents the increase in producer surplus when the market price rises from P₁ to P₂?

Figure 5-3 Figure 5-3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40in order to raise the price to $18. -Refer to Figure 5-3.What is the value of the deadweight loss at a price of $18?