Question 1

Rent control is an example of

Accepted Answer

A) a subsidy for low-skilled workers. 
B) a price floor. 
C) a price ceiling. 
D) a black market. 
A) a subsidy for low-skilled workers. 
B) a price floor. 
C) a price ceiling. 
D) a black market.

Question 2

Which of the following is not a result of imposing a rent ceiling?

Accepted Answer

A) Some consumer surplus is converted to producer surplus. 
B) There is a reduction in the quantity supplied of apartments. 
C) There is an increase in the quantity demanded of apartments. 
D) The marginal benefit of the last apartment rented is greater than the marginal cost of supplying it. 
A) Some consumer surplus is converted to producer surplus. 
B) There is a reduction in the quantity supplied of apartments. 
C) There is an increase in the quantity demanded of apartments. 
D) The marginal benefit of the last apartment rented is greater than the marginal cost of supplying it.

Question 3

The total amount of consumer surplus in a market is equal to the area below the demand curve.

Accepted Answer

A) True 
 B)False

Question 4

What is economic surplus? When is economic surplus at a maximum?

Accepted Answer

Economic surplus is sum of con

Question 5

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 $12.50 is mandated,there will be a

Accepted Answer

A) shortage of 40 000 units of labour. 
B) surplus of 40 000 units of labour. 
C) shortage of 80 000 units of labour. 
D) surplus of 80 000 units of labour. 
A) shortage of 40 000 units of labour. 
B) surplus of 40 000 units of labour. 
C) shortage of 80 000 units of labour. 
D) surplus of 80 000 units of labour.

Question 6

The total amount of producer surplus in a market is equal to the area below the supply curve.

Accepted Answer

A) True 
 B)False

Question 7

Table 5-1
  
-Refer to Table 5-1.The table above lists the highest prices three consumers,Tom,Dick and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of the shirts falls from $28 to $20,

Accepted Answer

A) consumer surplus increases from $14 to $35. 
B) Tom will buy two shirts;Dick and Harriet will each buy one shirt. 
C) consumer surplus will increase from $70 to $95. 
D) Harriet will receive more consumer surplus than Tom or Dick. 
A) consumer surplus increases from $14 to $35. 
B) Tom will buy two shirts;Dick and Harriet will each buy one shirt. 
C) consumer surplus will increase from $70 to $95. 
D) Harriet will receive more consumer surplus than Tom or Dick.

Question 8

Figure 5-7   Figure 5-7 shows the market for beer.The government plans to impose a unit tax in this market.
-Refer to Figure 5-7.For each unit sold,the price sellers receive after the tax (net of tax)is

Accepted Answer

A) $20. 
B) $22. 
C) $27. 
D) $32. 
A) $20. 
B) $22. 
C) $27. 
D) $32.

Question 9

Figure 5-4  
-Refer to Figure 5-4.The figure above represents the market for pecans.Assume that this is a competitive market.If 8000 pounds of pecans are sold,

Accepted Answer

A) the deadweight loss is equal to economic surplus. 
B) producer surplus equals consumer surplus. 
C) the marginal benefit of each of the 8000 pounds of pecans equals $9. 
D) marginal benefit is equal to marginal cost. 
A) the deadweight loss is equal to economic surplus. 
B) producer surplus equals consumer surplus. 
C) the marginal benefit of each of the 8000 pounds of pecans equals $9. 
D) marginal benefit is equal to marginal cost.

Question 10

In a competitive market equilibrium

Accepted Answer

A) total consumer surplus equals total producer surplus. 
B) marginal benefit and marginal cost are maximised. 
C) consumers and producers benefit equally. 
D) the marginal benefit equals the marginal cost of the last unit sold. 
A) total consumer surplus equals total producer surplus. 
B) marginal benefit and marginal cost are maximised. 
C) consumers and producers benefit equally. 
D) the marginal benefit equals the marginal cost of the last unit sold.

Question 11

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

Accepted Answer

A) the sum of consumer surplus and producer surplus is at a maximum. 
B) economic surplus is minimised. 
C) the sum of the benefits to firms is equal to the sum of the benefits to consumers. 
D) the sum of consumer surplus and producer surplus is minimised. 
A) the sum of consumer surplus and producer surplus is at a maximum. 
B) economic surplus is minimised. 
C) the sum of the benefits to firms is equal to the sum of the benefits to consumers. 
D) the sum of consumer surplus and producer surplus is minimised.

Question 12

When the government taxes a good or service,it

Accepted Answer

A) affects the market equilibrium for that good or service. 
B) eliminates the deadweight loss associated with the good or service. 
C) increases consumer surplus for the good or service. 
D) increases producer surplus for the good or service. 
A) affects the market equilibrium for that good or service. 
B) eliminates the deadweight loss associated with the good or service. 
C) increases consumer surplus for the good or service. 
D) increases producer surplus for the good or service.

Question 13

Figure 5-7   Figure 5-7 shows the market for beer.The government plans to impose a unit tax in this market.
-Refer to Figure 5-7.The price buyers pay after the tax is

Accepted Answer

A) $7. 
B) $20. 
C) $22. 
D) $27. 
A) $7. 
B) $20. 
C) $22. 
D) $27.

Question 14

Which of the following is not a result of government price controls?

Accepted Answer

A) Some people win and some people lose. 
B) Price controls benefit poor consumers but harm producers and wealthy consumers. 
C) Price controls decrease economic efficiency. 
D) A deadweight loss will occur. 
A) Some people win and some people lose. 
B) Price controls benefit poor consumers but harm producers and wealthy consumers. 
C) Price controls decrease economic efficiency. 
D) A deadweight loss will occur.

Question 15

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 producer surplus at a price of $18?

Accepted Answer

A) $240 
B) $300 
C) $340 
D) $720 
A) $240 
B) $300 
C) $340 
D) $720

Question 16

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 Arnold's consumer surplus?

Accepted Answer

A) $1.00 
B) $2.00 
C) $6.00 
D) $7.00 
A) $1.00 
B) $2.00 
C) $6.00 
D) $7.00

Question 17

In order to be binding,a price ceiling

Accepted Answer

A) must lie above the free market equilibrium price. 
B) must lie below the free market equilibrium price. 
C) must coincide with the free market equilibrium price. 
D) must be high enough for firms to earn a profit. 
A) must lie above the free market equilibrium price. 
B) must lie below the free market equilibrium price. 
C) must coincide with the free market equilibrium price. 
D) must be high enough for firms to earn a profit.

Question 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 $12.50 an hour is mandated,what is the quantity of labour demanded?

Accepted Answer

A) 80 000 
B) 550 000 
C) 630 000 
D) 1 180 000 
A) 80 000 
B) 550 000 
C) 630 000 
D) 1 180 000

Question 19

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 decreases by 80 000 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 = $9.50;Q = 590 000 
A) W = $8.50;Q = 550 000 
B) W = $12.50;Q = 630 000 
C) W = $9.50;Q = 570 000 
D) W = $9.50;Q = 590 000

Question 20

Consumers are willing to purchase a product up to the point where

Accepted Answer

A) the marginal benefit of consuming the product is equal to the marginal cost of consuming it. 
B) the consumer surplus is equal to the producer surplus. 
C) the marginal benefit of consuming the product equals the area below the supply curve and above the market price. 
D) the marginal benefit of consuming a product is equal to its price. 
A) the marginal benefit of consuming the product is equal to the marginal cost of consuming it. 
B) the consumer surplus is equal to the producer surplus. 
C) the marginal benefit of consuming the product equals the area below the supply curve and above the market price. 
D) the marginal benefit of consuming a product is equal to its price.

Rent control is an example of

Which of the following is not a result of imposing a rent ceiling?

The total amount of consumer surplus in a market is equal to the area below the demand curve.

What is economic surplus? When is economic surplus at a maximum?

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 $12.50 is mandated,there will be a

The total amount of producer surplus in a market is equal to the area below the supply curve.

Table 5-1 -Refer to Table 5-1.The table above lists the highest prices three consumers,Tom,Dick and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of the shirts falls from $28 to $20,

Figure 5-7 Figure 5-7 shows the market for beer.The government plans to impose a unit tax in this market. -Refer to Figure 5-7.For each unit sold,the price sellers receive after the tax (net of tax)is

Figure 5-4 -Refer to Figure 5-4.The figure above represents the market for pecans.Assume that this is a competitive market.If 8000 pounds of pecans are sold,

In a competitive market equilibrium

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

When the government taxes a good or service,it

Figure 5-7 Figure 5-7 shows the market for beer.The government plans to impose a unit tax in this market. -Refer to Figure 5-7.The price buyers pay after the tax is

Which of the following is not a result of government price controls?

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 producer surplus at a price of $18?

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 Arnold's consumer surplus?

In order to be binding,a price ceiling

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 $12.50 an hour is mandated,what is the quantity of labour demanded?

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 decreases by 80 000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

Consumers are willing to purchase a product up to the point where

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

Rent control is an example of

Which of the following is not a result of imposing a rent ceiling?

The total amount of consumer surplus in a market is equal to the area below the demand curve.

What is economic surplus? When is economic surplus at a maximum?

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 $12.50 is mandated,there will be a

The total amount of producer surplus in a market is equal to the area below the supply curve.

Table 5-1 -Refer to Table 5-1.The table above lists the highest prices three consumers,Tom,Dick and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of the shirts falls from $28 to $20,

Figure 5-7 Figure 5-7 shows the market for beer.The government plans to impose a unit tax in this market. -Refer to Figure 5-7.For each unit sold,the price sellers receive after the tax (net of tax)is

Figure 5-4 -Refer to Figure 5-4.The figure above represents the market for pecans.Assume that this is a competitive market.If 8000 pounds of pecans are sold,

In a competitive market equilibrium

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

When the government taxes a good or service,it

Figure 5-7 Figure 5-7 shows the market for beer.The government plans to impose a unit tax in this market. -Refer to Figure 5-7.The price buyers pay after the tax is

Which of the following is not a result of government price controls?

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 producer surplus at a price of $18?

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 Arnold's consumer surplus?

In order to be binding,a price ceiling

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 $12.50 an hour is mandated,what is the quantity of labour demanded?

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 decreases by 80 000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

Consumers are willing to purchase a product up to the point where

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 5-3 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 producer surplus at a price of $18?