Question 1

-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.

Question 2

-The above figure shows supply and demand curves for milk.If the government passes a $2 per gallon specific tax,the loss in consumer surplus will equal

Accepted Answer

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

Question 3

-The above figure shows the demand and supply curves in the market for milk.Currently the market is in equilibrium.If the government establishes a $4 per gallon price support,estimate the change in p,Q,and social welfare.

Accepted Answer

The answer of 
-The above figure shows the demand and...

Question 4

-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 Consumption distortion loss is equal to

Accepted Answer

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

Question 5

Consumer surplus from a given purchase is the difference between what one was willing to pay for that purchase and what was actually paid.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)  the loss in consumer surplus if a rent ceiling of $350 is imposed. 
B)  a transfer from producers to consumers if a rent ceiling of $350 is imposed. 
C)  a transfer from consumers to producers if a rent ceiling of $350 is imposed. 
D)  the total revenue received by supplying Q1 units.

Question 7

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.

Question 8

Changes in a firm's profit induce ________ in the producer surplus (PS).

Accepted Answer

A)  identical changes 
B)  smaller changes 
C)  larger changes 
D)  no changes

Question 9

-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.As a result,consumer surplus falls by

Accepted Answer

A)  a. 
B)  b + f. 
C)  f + g. 
D)  b + f - c.

Question 10

The change in total welfare from a 10% increase in price will depend only on the elasticity of demand.

Accepted Answer

A) True 
 B)False

Question 11

Explain why a government would impose an import tariff when domestic consumers suffer more than producers gain.

Accepted Answer

The answer of Explain why a government would impose an...

Question 12

As the price of a good increases,the loss in consumer surplus is larger,

Accepted Answer

A)  the more elastic demand is. 
B)  the more money previously spent on the good. 
C)  the less money previously spent on the good. 
D)  the smaller the price increase.

Question 13

Mary purchased a stuffed animal toy for $5.After a few weeks,someone offered her $100 for the toy.Mary refused.One can conclude that Mary's consumer surplus from the toy is

Accepted Answer

A)  less than $5. 
B)  at least $95. 
C)  at least $100. 
D)  $105.

Question 14

Firms are ________ with an economic profit of zero,they will ________ in the industry since they ________ be better off in another industry.

Accepted Answer

A)  satisfied; stay; won't 
B)  unsatisfied; leave; will 
C)  satisfied; leave; will 
D)  unsatisfied; stay; won't

Question 15

As the quantity produced of a good increases,the social welfare generated by that good increases.

Accepted Answer

A) True 
 B)False

Question 16

Suppose when a market has four firms,average economic profit is $1,000 per month.When the market has five firms,the average economic profit is -$50 per month.This suggests that

Accepted Answer

A)  the long-run equilibrium number of firms is between four and five. 
B)  the long-run equilibrium number of firms is four. 
C)  the long-run equilibrium number of firms is five. 
D)  there is no long-run equilibrium in this market as profits can never be zero.

Exam 9: Applying the Competitive Model

-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 milk.If the government passes a $2 per gallon specific tax,the loss in consumer surplus will equal

-The above figure shows the demand and supply curves in the market for milk.Currently the market is in equilibrium.If the government establishes a $4 per gallon price support,estimate the change in p,Q,and social welfare.

-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 Consumption distortion loss is equal to

Consumer surplus from a given purchase is the difference between what one was willing to pay for that purchase and what was actually paid.

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

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

Changes in a firm's profit induce ________ in the producer surplus (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.As a result,consumer surplus falls by

The change in total welfare from a 10% increase in price will depend only on the elasticity of demand.

Explain why a government would impose an import tariff when domestic consumers suffer more than producers gain.

As the price of a good increases,the loss in consumer surplus is larger,

Mary purchased a stuffed animal toy for $5.After a few weeks,someone offered her $100 for the toy.Mary refused.One can conclude that Mary's consumer surplus from the toy is

Firms are with an economic profit of zero,they will in the industry since they be better off in another industry.

As the quantity produced of a good increases,the social welfare generated by that good increases.

Suppose when a market has four firms,average economic profit is $1,000 per month.When the market has five firms,the average economic profit is -$50 per month.This suggests that