Question 1

The concept of surplus can show:

Accepted Answer

A)  the benefits of introducing new markets.
B)  who benefits from a tax.
C)  who loses from minimum wage.
D)  All of these are correct.E) A) and B)
F) A) and C)

Question 2

According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Accepted Answer

A)  total surplus will fall by $30.
B)  producer surplus will rise by $45.
C)  total surplus will change by $15.
D)  consumer surplus will fall by $30.E) A) and C)
F) None of the above

Question 3

When a perfectly competitive, well-functioning market is in equilibrium:

Accepted Answer

A)  consumer surplus is minimized.
B)  producer surplus is minimized.
C)  total surplus is maximized.
D)  total surplus is zero.E) C) and D)
F) B) and C)

Question 4

Assume the market depicted in the graph is in equilibrium. If its price is subsequently set at $12, producer surplus will be areas:

Accepted Answer

A)  B + C + D + F + G + H
B)  B + C + D + E + F + G + H
C)  A + B + F + H
D)  B + F + HE) A) and D)
F) B) and C)

Question 5

According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Accepted Answer

A)  deadweight loss will occur.
B)  seven fewer units will be exchanged.
C)  consumer surplus will decrease.
D)  All of these are correct.E) A) and D)
F) C) and D)

Question 6

The creation of markets that were previously missing:

Accepted Answer

A)  can create winners and losers.
B)  increases total surplus.
C)  benefits those who interact in the new markets.
D)  All of these are correct.E) A) and D)
F) A) and B)

Question 7

The market to buy and sell organs would:

Accepted Answer

A)  increase the well-being of those who interacted in it.
B)  not be considered missing, since surplus could be gained from it.
C)  create negative surplus for those who cannot afford an organ, but need one.
D)  never exist because it is unfair.E) B) and D)
F) None of the above

Question 8

When a perfectly competitive, well-functioning market is not in equilibrium:

Accepted Answer

A)  total surplus is not maximized.
B)  any additional changes to make someone better off will make someone else worse off.
C)  the market is efficient.
D)  All of these are correct.E) B) and D)
F) All of the above

Question 9

Assume a market has an equilibrium price of $8. If the market price is set at $7:
I. Total surplus rises if the change in quantity is large enough.
II. Consumer surplus rises for some because of the decreased price.
III. Consumer surplus decreases for some because fewer transactions are taking place.

Accepted Answer

A)  I and II only
B)  II and III only
C)  III only
D)  I and III onlyE) A) and C)
F) C) and D)

Question 10

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers increased from $7 to $11:

Accepted Answer

A)  more producers would participate in the market.
B)  only Bob's Hardware would lose surplus.
C)  both Bob's Hardware and Lace Hardware would lose surplus.
D)  House Depot is the only producer that would gain surplus.E) B) and D)
F) C) and D)

Question 11

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Accepted Answer

A)  $20
B)  $30
C)  $50
D)  $60E) B) and D)
F) None of the above

Question 12

Assume the market depicted in the graph is in equilibrium. What is producer surplus?

Accepted Answer

A)  $10
B)  $6
C)  $2
D)  $20E) All of the above
F) A) and B)

Question 13

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers increased from $8 to $14, total producer surplus would increase from:

Accepted Answer

A)  $8 to $14.
B)  $1 to $12.
C)  $14 to $8.
D)  $7 to $30.E) A) and D)
F) A) and C)

Question 14

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers decreased from $15 to $13, which of the following can be said with certainty?

Accepted Answer

A)  Bob's Hardware would no longer participate in the market.
B)  Total producer surplus would decrease.
C)  Only Bob's Hardware would experience a drop in producer surplus.
D)  Bob's Hardware would continue to participate in the market.E) B) and D)
F) C) and D)

Question 15

A market has four individuals, each considering buying a grill. Assume that grills come in only one size and model. Martina considers herself a grill-master, and finds a grill a necessity, so she is willing to pay $400 for a grill. Javier is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Kamal wants to impress his friends with his vegetable grilling skills and is willing to pay $320 for a grill. Lina loves grilled shrimp and thinks it might be cheaper in the long run if she grills her own shrimp instead of eating out at a restaurant, so she is willing to pay $200 for a grill.If the market price of grills is $320, what is Martina's consumer surplus?

Accepted Answer

A)  $400
B)  $350
C)  $320
D)  $80E) C) and D)
F) None of the above

Question 16

1) . If the supply curve shifts to S2, and a new equilibrium is reached, which of the following is true? A) Consumer surplus increases and total surplus increases. B) Consumer surplus decreases and total surplus increases. C) Consumer surplus increases and total surplus decreases. D) Consumer surplus decreases and total surplus decreases." class="answers-bank-image d-inline" rel="preload" > Assume the market depicted in the graph is in equilibrium at demand (D) and supply (S1) . If the supply curve shifts to S2, and a new equilibrium is reached, which of the following is true?

Accepted Answer

A)  Consumer surplus increases and total surplus increases.
B)  Consumer surplus decreases and total surplus increases.
C)  Consumer surplus increases and total surplus decreases.
D)  Consumer surplus decreases and total surplus decreases.E) B) and C)
F) C) and D)

Question 17

Suppose the market for kidneys is depicted in the graph shown.  Initially, kidneys exchanges are regulated to allow donations only. This means kidneys can only be exchanged at a price of zero. What is the deadweight loss from this restriction?

Accepted Answer

A)  $0
B)  $825,000
C)  $1,350,000
D)  $1,500,000E) B) and D)
F) B) and C)

Question 18

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Accepted Answer

A)  $54,000
B)  $72,000
C)  $126,000
D)  $108,000E) B) and C)
F) A) and D)

Question 19

Assume a market price is set artificially high. In other words, the price is set above the equilibrium price. How will this affect the market?

Accepted Answer

A)  Every consumer loses surplus, and it all gets transferred to producers.
B)  Every producer gains surplus, due to the higher price now being charged.
C)  Some consumers drop out of the market, and those left lose some surplus.
D)  None of these are correct.E) None of the above
F) A) and D)

Question 20

1) . If the supply curve shifts to S2, and a new equilibrium is reached, producer surplus will: A) increase by $90. B) increase by $120. C) decrease by $20. D) decrease by $30." class="answers-bank-image d-inline" rel="preload" > Assume the market in the graph is in equilibrium at demand (D) and supply (S1) . If the supply curve shifts to S2, and a new equilibrium is reached, producer surplus will:

Accepted Answer

A)  increase by $90.
B)  increase by $120.
C)  decrease by $20.
D)  decrease by $30.E) B) and C)
F) All of the above

Exam 5: Efficiency

Assume a market price is set artificially high. In other words, the price is set above the equilibrium price. How will this affect the market?

Correct Answer
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The creation of markets that were previously missing:

Correct Answer
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Assume the market depicted in the graph is in equilibrium at demand (D) and supply (S₁) . If the supply curve shifts to S₂, and a new equilibrium is reached, which of the following is true?

Correct Answer
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Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Correct Answer
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Correct Answer
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Assume the market depicted in the graph is in equilibrium. If its price is subsequently set at $12, producer surplus will be areas:

Correct Answer
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Correct Answer
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Suppose the market for kidneys is depicted in the graph shown. Initially, kidneys exchanges are regulated to allow donations only. This means kidneys can only be exchanged at a price of zero. What is the deadweight loss from this restriction?

Correct Answer
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Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Correct Answer
verified

When a perfectly competitive, well-functioning market is in equilibrium:

Correct Answer
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Correct Answer
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Correct Answer
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Assume the market in the graph is in equilibrium at demand (D) and supply (S₁) . If the supply curve shifts to S₂, and a new equilibrium is reached, producer surplus will:

Correct Answer
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Correct Answer
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The market to buy and sell organs would:

Correct Answer
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According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Correct Answer
verified

According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Correct Answer
verified

The concept of surplus can show:

Correct Answer
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When a perfectly competitive, well-functioning market is not in equilibrium:

Correct Answer
verified

Assume the market depicted in the graph is in equilibrium. What is producer surplus?

Correct Answer
verified

Exam 5: Efficiency

Assume a market price is set artificially high. In other words, the price is set above the equilibrium price. How will this affect the market?

Correct AnswerverifiedShow Answer

The creation of markets that were previously missing:

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium at demand (D) and supply (S1) . If the supply curve shifts to S2, and a new equilibrium is reached, which of the following is true?

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. If its price is subsequently set at $12, producer surplus will be areas:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the market for kidneys is depicted in the graph shown. Initially, kidneys exchanges are regulated to allow donations only. This means kidneys can only be exchanged at a price of zero. What is the deadweight loss from this restriction?

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Correct AnswerverifiedShow Answer

When a perfectly competitive, well-functioning market is in equilibrium:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume the market in the graph is in equilibrium at demand (D) and supply (S1) . If the supply curve shifts to S2, and a new equilibrium is reached, producer surplus will:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The market to buy and sell organs would:

Correct AnswerverifiedShow Answer

According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Correct AnswerverifiedShow Answer

According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Correct AnswerverifiedShow Answer

The concept of surplus can show:

Correct AnswerverifiedShow Answer

When a perfectly competitive, well-functioning market is not in equilibrium:

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. What is producer surplus?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Assume the market depicted in the graph is in equilibrium at demand (D) and supply (S₁) . If the supply curve shifts to S₂, and a new equilibrium is reached, which of the following is true?

Correct Answer
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Correct Answer
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Assume the market in the graph is in equilibrium at demand (D) and supply (S₁) . If the supply curve shifts to S₂, and a new equilibrium is reached, producer surplus will:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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