Question 1

Use the following to answer questions 
Figure: Determining Surplus 4 
-(Figure: Determining Surplus 4) In the graph,how much is producer surplus?

Accepted Answer

A)   $25
B)   $40
C)   $50
D)   $80

Question 2

Which of the following is an example of external cost?

Accepted Answer

A)   higher level of incidence of cancer of people living next to a toxic dump
B)   market price of oranges
C)   learning to shop more efficiently as a result of taking an economics course
D)   paying a higher price for oranges at a farmer's market

Question 3

A price floor is _____ if it is set _____ the market price.

Accepted Answer

A)   effective;above
B)   effective;below
C)   efficient;above
D)   efficient;below

Question 4

Use the following to answer questions 
Figure: Determining Surplus 2 
-(Figure: Determining Surplus 2) In the graph,how much is producer surplus?

Accepted Answer

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

Question 5

Suppose that a customer's willingness to pay for a product is $1,480,and the seller's willingness to sell is $1,210.If the negotiated price is $1,479,how much is consumer surplus?

Accepted Answer

A)   $0
B)   $1
C)   $210
D)   $269

Question 6

If a price floor is set below the equilibrium price in the market,consumer surplus will be:

Accepted Answer

A)   higher than it would be without the price floor.
B)   lower than it would be without the price floor.
C)   the same as it would be without the price floor.
D)   impossible to calculate.

Question 7

A $30 maximum on an automobile inspection is an example of:

Accepted Answer

A)   a price ceiling.
B)   a price floor.
C)   rent control.
D)   laissez-faire.

Question 8

Use the following to answer questions 
Figure: Determining Surplus and Loss 
-(Figure: Determining Surplus and Loss) In the graph,consumer surplus is _____ in equilibrium and _____ at a price of $12.

Accepted Answer

A)   $40;$160
B)   $80;$80
C)   $160;$40
D)   $320;$210

Question 9

A $30 maximum on an automobile inspection is an example of a price ceiling.

Accepted Answer

A) True 
 B)False

Question 10

Suppose that a customer's willingness to pay for a product is $1,480,and the seller's willingness to sell is $1,210.If the negotiated price is $1,300,how much is producer surplus?

Accepted Answer

A)   $90
B)   $210
C)   $220
D)   $270

Question 11

Use the following to answer question 
Figure: Interpreting Surplus 
-(Figure: Interpreting Surplus) In the supply/demand graph:

Accepted Answer

A)   consumer surplus is $50,000 and producer surplus is $100,000.
B)   total market surplus is $200,000.
C)   total market surplus is $50,000.
D)   consumer surplus exceeds producer surplus.

Question 12

Which of the following would create an external benefit?

Accepted Answer

A)   livestock in your neighbor's backyard
B)   cigar smoke
C)   restoration of a run-down home
D)   a slow car on a busy thoroughfare

Question 13

It would be difficult for a private firm to make a profit if it produced and sold:

Accepted Answer

A)   health food.
B)   river levees.
C)   package delivery.
D)   banking services.

Question 14

Use the following to answer questions 
Figure: Determining Surplus and Loss 
-(Figure: Determining Surplus and Loss)In the graph,a price of $8 would allow for an effective price floor.

Accepted Answer

A) True 
 B)False

Question 15

An effective price ceiling results in:

Accepted Answer

A)   a surplus.
B)   equilibrium in the market.
C)   quantity supplied exceeding quantity demanded.
D)   a shortage.

Question 16

If a price ceiling is set below the market price,it is effective.

Accepted Answer

A) True 
 B)False

Question 17

Suppose that a customer's willingness to pay for a product is $5,and the seller's willingness to sell is $2.If the negotiated price is $3:

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.

Question 18

Which of the following situations involves an external cost?

Accepted Answer

A)   Winston doesn't understand his economics text-which was not written by Professor Chiang-and he feels he has wasted his money.
B)   Alma lives next to a freeway and the noise wakes her up every morning,against her wishes,at six o'clock.
C)   Pablo can't decide whether to go to Hong Kong for lunch or Paris for brunch,and he doesn't think it is fair that he can't do both.
D)   Johnston thinks that the price of gasoline is too high.

Question 19

An example of an external benefit is a homeowner planting a beautiful flower garden by the street.

Accepted Answer

A) True 
 B)False

Question 20

Use the following to answer questions 
Figure: Determining Surplus and Loss 
-(Figure: Determining Surplus and Loss)In the graph,a price of $12 would allow for an effective price floor.

Accepted Answer

A) True 
 B)False

Exam 4: Markets and Government

A $30 maximum on an automobile inspection is an example of:

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Suppose that a customer's willingness to pay for a product is $5,and the seller's willingness to sell is $2.If the negotiated price is $3:

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Use the following to answer questions Figure: Determining Surplus and Loss -(Figure: Determining Surplus and Loss)In the graph,a price of $8 would allow for an effective price floor.

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It would be difficult for a private firm to make a profit if it produced and sold:

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An effective price ceiling results in:

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Which of the following would create an external benefit?

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Use the following to answer questions Figure: Determining Surplus and Loss -(Figure: Determining Surplus and Loss)In the graph,a price of $12 would allow for an effective price floor.

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If a price ceiling is set below the market price,it is effective.

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Use the following to answer questions Figure: Determining Surplus 2 -(Figure: Determining Surplus 2) In the graph,how much is producer surplus?

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Suppose that a customer's willingness to pay for a product is $1,480,and the seller's willingness to sell is $1,210.If the negotiated price is $1,300,how much is producer surplus?

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Use the following to answer question Figure: Interpreting Surplus -(Figure: Interpreting Surplus) In the supply/demand graph:

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A $30 maximum on an automobile inspection is an example of a price ceiling.

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Suppose that a customer's willingness to pay for a product is $1,480,and the seller's willingness to sell is $1,210.If the negotiated price is $1,479,how much is consumer surplus?

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An example of an external benefit is a homeowner planting a beautiful flower garden by the street.

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Which of the following situations involves an external cost?

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If a price floor is set below the equilibrium price in the market,consumer surplus will be:

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Use the following to answer questions Figure: Determining Surplus 4 -(Figure: Determining Surplus 4) In the graph,how much is producer surplus?

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Which of the following is an example of external cost?

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A price floor is _____ if it is set _____ the market price.

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Use the following to answer questions Figure: Determining Surplus and Loss -(Figure: Determining Surplus and Loss) In the graph,consumer surplus is _____ in equilibrium and _____ at a price of $12.

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A price floor is _ if it is set _ the market price.

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Use the following to answer questions Figure: Determining Surplus and Loss -(Figure: Determining Surplus and Loss) In the graph,consumer surplus is _ in equilibrium and _ at a price of $12.

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