Question 1

(Figure: Determining Surplus 3)  In the graph, producer surplus equals __________.

Accepted Answer

A)   $60
B)   $140
C)   $160
D)   $320

Question 2

(Figure: Determining Surplus 3)  In the graph, consumer surplus equals _______.

Accepted Answer

A)   $30
B)   $60
C)   $140
D)   $280

Question 3

Suppose that the price of a good is $22 and equilibrium price is $18. Compared to market equilibrium:

Accepted Answer

A)   consumer surplus is decreased and deadweight loss is increased.
B)   consumer surplus is increased and deadweight loss is decreased.
C)   producer surplus is decreased and deadweight loss is increased.
D)   producer surplus is decreased and deadweight loss is decreased.

Question 4

(Figure: Determining Surplus 2)  In the graph, consumer surplus is equal to ________.

Accepted Answer

A)   $15
B)   $30
C)   $54
D)   $60

Question 5

(Figure: Determining Total Surplus)  In the graph, total producer surplus is shown by area:

Accepted Answer

A)   acdf.
B)   ace.
C)   bce.
D)   abe.

Question 6

Yulhee buys and wears a certain perfume because she likes its fragrance. Which statement describes externalities in the perfume market that come from individuals wearing perfume?

Accepted Answer

A)   There may be positive externalities because others enjoy the scent, but there are no negative externalities.
B)   There may be negative externalities because some may be allergic to the scent, but there are no positive externalities.
C)   There may be both positive and negative externalities, since some enjoy the scent and some others have an allergic reaction to it.
D)   There are no externalities associated with wearing perfume.

Question 7

If a city government were to impose a price ceiling to bring down rental prices of apartments in the downtown area:

Accepted Answer

A)   quantity supplied would increase.
B)   supply would increase.
C)   an illegal rental market would likely emerge.
D)   quantity demanded would decrease.

Question 8

Price floors and price ceilings, although often inefficient, are an attempt by government to create equity or fairness in the market.

Accepted Answer

A) True 
 B)False

Question 9

The government often provides funding for the arts when markets do not do so sufficiently. This funding is to overcome which market failure?

Accepted Answer

A)   asymmetric information
B)   negative externality (external costs) 
C)   positive externality (external benefits) 
D)   public goods

Question 10

(Figure: Determining Surplus and Loss) In the graph, $8 would allow for an effective price ceiling.

Accepted Answer

A) True 
 B)False

Question 11

(Figure: Determining Surplus) In the graph, the formula for producer surplus is 0.5 × (i - j) × (k - i).

Accepted Answer

A) True 
 B)False

Question 12

When markets are efficient:

Accepted Answer

A)   the sum of consumer and producer surplus is minimized.
B)   the sum of consumer and producer surplus is maximized.
C)   consumer surplus is maximized, but producer surplus is minimized.
D)   consumer surplus is minimized, but producer surplus is maximized.

Question 13

At times, there are conflicts between market outcomes that are efficient and outcomes that society deems fair.

Accepted Answer

A) True 
 B)False

Question 14

(Figure: Determining Surplus and Loss)  In the graph, if the government sets a price of $5, this is an example of an:

Accepted Answer

A)   effective price ceiling.
B)   effective price floor.
C)   efficient price ceiling.
D)   efficient price floor.

Question 15

In the graph, if a price ceiling is set at $4, which of the following would result?

Accepted Answer

A)   a surplus of 20 units
B)   a surplus of 40 units
C)   a shortage of 20 units
D)   a shortage of 40 units

Question 16

In theory, markets left alone should be competitive; however, when they are not, governments can promote competition in the marketplace.

Accepted Answer

A) True 
 B)False

Question 17

(Figure: Determining Surplus 2)  In the graph, the producer surplus is equal to _______.

Accepted Answer

A)   $12
B)   $15
C)   $25
D)   $30

Question 18

The gap between the supply curve and the market price is called:

Accepted Answer

A)   consumer surplus.
B)   deadweight loss.
C)   markup.
D)   producer surplus.

Question 19

(Figure: Determining Surplus) In the graph, the triangle hik represents consumer surplus.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that a customer's willingness to pay for a product is $120, and the seller's willingness to sell is $110. If the negotiated price is $119:

Accepted Answer

A)   consumer surplus is negative.
B)   consumer surplus is greater than producer surplus.
C)   producer surplus is negative.
D)   producer surplus is greater than consumer surplus.

Exam 4: Markets and Government

(Figure: Determining Surplus and Loss) In the graph, if the government sets a price of $5, this is an example of an:

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Yulhee buys and wears a certain perfume because she likes its fragrance. Which statement describes externalities in the perfume market that come from individuals wearing perfume?

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(Figure: Determining Surplus) In the graph, the formula for producer surplus is 0.5 × (i - j) × (k - i).

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In theory, markets left alone should be competitive; however, when they are not, governments can promote competition in the marketplace.

Correct AnswerverifiedShow Answer

(Figure: Determining Surplus 2) In the graph, the producer surplus is equal to _______.

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(Figure: Determining Surplus 3) In the graph, consumer surplus equals _______.

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The gap between the supply curve and the market price is called:

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Price floors and price ceilings, although often inefficient, are an attempt by government to create equity or fairness in the market.

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When markets are efficient:

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The government often provides funding for the arts when markets do not do so sufficiently. This funding is to overcome which market failure?

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If a city government were to impose a price ceiling to bring down rental prices of apartments in the downtown area:

Correct AnswerverifiedShow Answer

(Figure: Determining Surplus 2) In the graph, consumer surplus is equal to ________.

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Suppose that the price of a good is $22 and equilibrium price is $18. Compared to market equilibrium:

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(Figure: Determining Surplus 3) In the graph, producer surplus equals __________.

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(Figure: Determining Total Surplus) In the graph, total producer surplus is shown by area:

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At times, there are conflicts between market outcomes that are efficient and outcomes that society deems fair.

Correct AnswerverifiedShow Answer

(Figure: Determining Surplus) In the graph, the triangle hik represents consumer surplus.

Correct AnswerverifiedShow Answer

Suppose that a customer's willingness to pay for a product is $120, and the seller's willingness to sell is $110. If the negotiated price is $119:

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(Figure: Determining Surplus and Loss) In the graph, $8 would allow for an effective price ceiling.

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In the graph, if a price ceiling is set at $4, which of the following would result?

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