Question 1

Figure 4-1  Figure 4-1 shows Kendra's demand for ice-cream cones curve.
-Refer to Figure 4-1.Kendra's marginal benefit from consuming the second ice cream cone is

Accepted Answer

A)  $6.50
B)  $6.00
C)  $3.00
D)  $2.25E) A) and B)
F) A) and C)

Question 2

Table 4-2
 
-Refer to Table 4-2.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the price of polo shirts increases from $15 to $20

Accepted Answer

A)  consumers will buy no polo shirts.
B)  the marginal cost of producing the third polo shirt will increase to $20.
C)  producer surplus will rise from $13 to $28.
D)  there will be a surplus of polo shirts.E) A) and D)
F) B) and C)

Question 3

Figure 4-11 1 and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax? A) The consumer will bear a greater share of the tax burden if the demand curve is D1. B) The consumer's share of the tax burden is the same whether the demand curve is D1 or D2. C) The consumer will bear a greater share of the tax burden if the demand curve is D2. D) The consumer will bear the entire burden of the tax if the demand curve is D1 and the producer will bear the entire burden of the tax if the demand curve is D2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 4-11.Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

Accepted Answer

A)  The consumer will bear a greater share of the tax burden if the demand curve is D1.
B)  The consumer's share of the tax burden is the same whether the demand curve is D1 or D2.
C)  The consumer will bear a greater share of the tax burden if the demand curve is D2.
D)  The consumer will bear the entire burden of the tax if the demand curve is D1 and the producer will bear the entire burden of the tax if the demand curve is D2.E) A) and C)
F) B) and C)

Question 4

The area above the market supply curve and below the market price

Accepted Answer

A)  is equal to the total amount of producer surplus in a market.
B)  is equal to the marginal cost of the last unit produced.
C)  is equal to the total amount of economic surplus in a market.
D)  is equal to the total cost of production.E) All of the above
F) B) and D)

Question 5

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.If the price of iced tea is $1

Accepted Answer

A)  the quantity supplied is less than the economically efficient quantity.
B)  the quantity supplied is economically efficient but the quantity demanded is economically inefficient.
C)  economic surplus is maximized.
D)  not enough consumers want to buy iced tea.E) None of the above
F) A) and B)

Question 6

Figure 4-6  Figure 4-6 shows the demand and supply curves for the coffee market.The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at $7.00.
-Refer to Figure 4-6.What is the value of consumer surplus after the imposition of the price floor?

Accepted Answer

A)  $1,500
B)  $2,700
C)  4,500
D)  $5,700E) A) and B)
F) None of the above

Question 7

________ 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 the sum of consumer surplus and producer surplus is at a maximum.

Accepted Answer

A)  Economic efficiency
B)  Consumer efficiency
C)  Producer efficiency
D)  Deadweight efficiencyE) A) and B)
F) C) and D)

Question 8

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.Which of the following is true?

Accepted Answer

A)  If the price of iced tea is $3 the output will be economically efficient but there will be a deadweight loss.
B)  If the price of iced tea is $3 consumers will purchase more than the economically efficient output.
C)  Both 10,000 and 30,000 are economically inefficient rates of output.
D)  If the price of iced tea is $3 producers will sell 30,000 units of iced tea but this output will be economically inefficient.E) All of the above
F) A) and B)

Question 9

You are given the following market data for Venus automobiles in Saturnia.
Demand: P = 35,000 - 0.5Q
Supply: P = 8,000 + 0.25Q
where P = Price and Q = Quantity.
a.Calculate the equilibrium price and quantity.
b.Calculate the consumer surplus in this market.
c.Calculate the producer surplus in this market.

Accepted Answer

a.Quantity = 36,000: {35,000 - 0.5Q = 8,...

Question 10

An efficient tax is

Accepted Answer

A)  a tax that imposes an equal tax burden on buyers and sellers.
B)  a tax that raises a maximum amount of revenue.
C)  a tax that imposes a small excess burden relative to the tax revenue that it raises.
D)  a tax that is used to fund research and development of new technology.E) C) and D)
F) All of the above

Question 11

Figure 4-1  Figure 4-1 shows Kendra's demand for ice-cream cones curve.
-Refer to Figure 4-1.If the market price is $2.50,what is Kendra's consumer surplus?

Accepted Answer

A)  $9.00
B)  $7.50
C)  $1.50
D)  $0E) None of the above
F) A) and B)

Question 12

What is deadweight loss? When is deadweight loss equal to zero?

Accepted Answer

Deadweight loss is the reduction in econ...

Question 13

Table 4-3
  Table 4-3 shows the demand and supply schedules for the low-skilled labor market in the city of Westover.
-Refer to Table 4-3.If a minimum wage of $9.50 an hour is mandated,what is the quantity of labor demanded?

Accepted Answer

A)  380,000
B)  370,000
C)  360,000
D)  10,000E) None of the above
F) A) and B)

Question 14

New York City has about two million apartments.Of this number

Accepted Answer

A)  all are subject to rent control.
B)  about one-half are subject to rent control.
C)  all are subject to price floors.
D)  about 10 percent are subject to rent control.E) C) and D)
F) A) and B)

Question 15

Figure 4-5 0. -Refer to Figure 4-5.What area represents the deadweight loss after the imposition of the ceiling? A) G + H B) J + H C) C + E + J + H D) C + E" class="answers-bank-image d-inline" rel="preload" > Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R0.
-Refer to Figure 4-5.What area represents the deadweight loss after the imposition of the ceiling?

Accepted Answer

A)  G + H
B)  J + H
C)  C + E + J + H
D)  C + EE) A) and D)
F) A) and C)

Question 16

________ dictates the lowest wage that firms may pay for labor.

Accepted Answer

A)  A maximum wage requirement
B)  A minimum wage law
C)  The black market wage
D)  A price ceiling wageE) B) and C)
F) All of the above

Question 17

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.If the price of iced tea is $3,what changes in the market would result in an economically efficient output?

Accepted Answer

A)  The price would decrease,the quantity supplied would increase,and the quantity demanded would decrease.
B)  The quantity supplied would decrease,the quantity demanded would increase and the equilibrium price would decrease.
C)  The price would decrease,the demand would increase and the supply would decrease.
D)  The price would decrease,quantity demanded would increase and quantity supplied would decrease.E) A) and D)
F) A) and B)

Question 18

Equilibrium in a competitive market results in the greatest amount of economic surplus from the production of a good or service.

Accepted Answer

A) True 
 B)False

Question 19

Economic surplus is maximized in a competitive market when

Accepted Answer

A)  demand is equal to supply.
B)  the deadweight loss equals the sum of consumer surplus and producer surplus.
C)  marginal benefit equals marginal cost.
D)  producers sell the quantity that consumers are willing to buy.E) A) and D)
F) B) and C)

Question 20

The additional cost to a firm of producing one more unit of a good or service is the

Accepted Answer

A)  minimum cost.
B)  total cost.
C)  opportunity cost.
D)  marginal cost.E) B) and D)
F) All of the above

Exam 4: Economic Efficiency, government Price Setting, and Taxes

Economic surplus is maximized in a competitive market when

Correct Answer
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The area above the market supply curve and below the market price

Correct Answer
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Equilibrium in a competitive market results in the greatest amount of economic surplus from the production of a good or service.

Correct Answer
verified

Correct Answer
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a.Quantity = 36,000: {35,000 - 0.5Q = 8,...
View Answer

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.If the price of iced tea is $3,what changes in the market would result in an economically efficient output?

Correct Answer
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Table 4-3 Table 4-3 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-3.If a minimum wage of $9.50 an hour is mandated,what is the quantity of labor demanded?

Correct Answer
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Figure 4-5 Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R₀. -Refer to Figure 4-5.What area represents the deadweight loss after the imposition of the ceiling?

Correct Answer
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Figure 4-1 Figure 4-1 shows Kendra's demand for ice-cream cones curve. -Refer to Figure 4-1.Kendra's marginal benefit from consuming the second ice cream cone is

Correct Answer
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The additional cost to a firm of producing one more unit of a good or service is the

Correct Answer
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________ 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 the sum of consumer surplus and producer surplus is at a maximum.

Correct Answer
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Figure 4-1 Figure 4-1 shows Kendra's demand for ice-cream cones curve. -Refer to Figure 4-1.If the market price is $2.50,what is Kendra's consumer surplus?

Correct Answer
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Correct Answer
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Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.If the price of iced tea is $1

Correct Answer
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What is deadweight loss? When is deadweight loss equal to zero?

Correct Answer
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Deadweight loss is the reduction in econ...
View Answer

New York City has about two million apartments.Of this number

Correct Answer
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________ dictates the lowest wage that firms may pay for labor.

Correct Answer
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Figure 4-11 -Refer to Figure 4-11.Suppose the market is initially in equilibrium at price P₁ and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

Correct Answer
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Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.Which of the following is true?

Correct Answer
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An efficient tax is

Correct Answer
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Table 4-2 -Refer to Table 4-2.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the price of polo shirts increases from $15 to $20

Correct Answer
verified

Exam 4: Economic Efficiency, government Price Setting, and Taxes

Economic surplus is maximized in a competitive market when

Correct AnswerverifiedShow Answer

The area above the market supply curve and below the market price

Correct AnswerverifiedShow Answer

Equilibrium in a competitive market results in the greatest amount of economic surplus from the production of a good or service.

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Quantity = 36,000: {35,000 - 0.5Q = 8,...View AnswerShow Answer

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.If the price of iced tea is $3,what changes in the market would result in an economically efficient output?

Correct AnswerverifiedShow Answer

Table 4-3 Table 4-3 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-3.If a minimum wage of $9.50 an hour is mandated,what is the quantity of labor demanded?

Correct AnswerverifiedShow Answer

Figure 4-5 Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R0. -Refer to Figure 4-5.What area represents the deadweight loss after the imposition of the ceiling?

Correct AnswerverifiedShow Answer

Figure 4-1 Figure 4-1 shows Kendra's demand for ice-cream cones curve. -Refer to Figure 4-1.Kendra's marginal benefit from consuming the second ice cream cone is

Correct AnswerverifiedShow Answer

The additional cost to a firm of producing one more unit of a good or service is the

Correct AnswerverifiedShow Answer

________ 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 the sum of consumer surplus and producer surplus is at a maximum.

Correct AnswerverifiedShow Answer

Figure 4-1 Figure 4-1 shows Kendra's demand for ice-cream cones curve. -Refer to Figure 4-1.If the market price is $2.50,what is Kendra's consumer surplus?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.If the price of iced tea is $1

Correct AnswerverifiedShow Answer

What is deadweight loss? When is deadweight loss equal to zero?

Correct AnswerverifiedDeadweight loss is the reduction in econ...View AnswerShow Answer

New York City has about two million apartments.Of this number

Correct AnswerverifiedShow Answer

________ dictates the lowest wage that firms may pay for labor.

Correct AnswerverifiedShow Answer

Figure 4-11 -Refer to Figure 4-11.Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

Correct AnswerverifiedShow Answer

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.Which of the following is true?

Correct AnswerverifiedShow Answer

An efficient tax is

Correct AnswerverifiedShow Answer

Table 4-2 -Refer to Table 4-2.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the price of polo shirts increases from $15 to $20

Correct AnswerverifiedShow Answer

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a.Quantity = 36,000: {35,000 - 0.5Q = 8,...
View Answer

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Figure 4-5 Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R₀. -Refer to Figure 4-5.What area represents the deadweight loss after the imposition of the ceiling?

Correct Answer
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Deadweight loss is the reduction in econ...
View Answer

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Correct Answer
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Figure 4-11 -Refer to Figure 4-11.Suppose the market is initially in equilibrium at price P₁ and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

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