Question 1

If a market is efficient,then it is possible that an increase in one person's consumption would not lower another person's consumption.

Accepted Answer

A) True 
 B)False

Question 2

A tax on a good results in a deadweight loss to society.

Accepted Answer

A) True 
 B)False

Question 3

The market system

Accepted Answer

A)  was born during the first Industrial Revolution in Great Britain.
B)  arises spontaneously when individuals wish to trade.
C)  is totally absent in state-run economies such as Cuba.
D)  was created by Adam Smith in 1776.
E)  is forced on a society by government and the capitalists who run it.F) B) and C)
G) C) and D)

Question 4

A shortage

Accepted Answer

A)  occurs when sellers are willing to sell more than consumers are willing to buy.
B)  can never occur in a market that is functioning properly and without interference.
C)  occurs when the market price is below the equilibrium price.
D)  is an example of market failure.
E)  causes a price decrease in a market.F) All of the above
G) A) and C)

Question 5

Without market coordination,

Accepted Answer

A)  violent force is necessary to motivate individuals.
B)  a society disintegrates.
C)  the problem of scarcity can be controlled.
D)  central direction is necessary.
E)  an orderly society can at last be a possibility.F) C) and D)
G) D) and E)

Question 6

Deadweight loss occurs in a price floor but not in a price ceiling.

Accepted Answer

A) True 
 B)False

Question 7

Suppose that the government imposes a sales tax that causes the equilibrium price to go up.Draw a graph showing the original supply curve,the new supply curve,and the demand curve.Use this graph to show:
(A)The deadweight loss resulting from the tax.
(B)The amount of revenue collected by the government.
(C)The effect the tax has on producer surplus and consumer surplus.

Accepted Answer

(A)
The deadweight loss is equal to the...

Question 8

Consider the following supply and demand schedule:  
(A)Draw the market supply and demand curves.Show the equilibrium quantity,price,producer surplus,and consumer surplus.
(B)Describe what would happen to the price of this product if a tax of $4.50 per unit sold is enacted by the government.Show your answer graphically.
(C)Show the deadweight loss due to the tax on your diagram.

Accepted Answer

(A) Prior to the tax,as shown in the gra...

Question 9

Pareto efficiency is achieved when deadweight loss is equal to zero.

Accepted Answer

A) True 
 B)False

Question 10

It is easier for buyers and sellers to exchange and process price information in market systems than in nonmarket systems.

Accepted Answer

A) True 
 B)False

Question 11

Efficiency is achieved when marginal benefit is equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 12

Other things being equal,a tax on producers results in deadweight loss.

Accepted Answer

A) True 
 B)False

Question 13

Deadweight loss is zero when quantity supplied equals quantity demanded.

Accepted Answer

A) True 
 B)False

Question 14

Market equilibrium is achieved when consumer surplus is equal to producer surplus.

Accepted Answer

A) True 
 B)False

Question 15

Can income equality and efficiency be achieved at the same time? Why or why not?

Accepted Answer

It seems that income equality and effici...

Question 16

Suppose a storm destroys 30 percent of the orange crop in the United States,which results in lower supply.
(A)Draw a supply and demand diagram to show what will happen to the equilibrium price and quantity of oranges in the United States.Assume the demand curve does not shift.
(B)Suppose the U.S.government observes that the price of oranges is increasing rapidly and imposes a price ceiling equal to the original equilibrium price.What effect does the price ceiling have on the quantity supplied and demanded of oranges?
(C)How is consumer surplus and producer surplus affected by the price ceiling?

Accepted Answer

(A) If the government does not intervene...

Question 17

All of the following contribute to the attainment of efficiency in a competitive market except

Accepted Answer

A)  marginal benefit equals marginal cost because of the establishment of market equilibrium
B)  every consumer maximizes his or her utility.
C)  every producer seeks to get the minimum price he or she is willing to accept.
D)  every consumer consumes to the point where price equals marginal benefit.
E)  every firm produces to the point where price equals marginal cost.F) A) and E)
G) A) and D)

Question 18

Exhibit 7-13 
-Refer to Exhibit 7-13.Calculate the deadweight loss that results from the government imposing a minimum price of $50 in the market.

Accepted Answer

$2,000
Consumers buy 300 unit...

Question 19

The primary problem with nonmarket economic coordination is

Accepted Answer

A)  that some people get wealthy.
B)  the possibility that efficiency will result.
C)  the difficulty of collecting and acting on economic information.
D)  that,without a market,exchange cannot take place.
E)  that no one is providing central direction for the economy.F) A) and B)
G) A) and C)

Question 20

Regarding price floors on milk prices,the result of a higher-than-equilibrium milk price is

Accepted Answer

A)  a loss in producer surplus and a gain in consumer surplus.
B)  a gain in producer surplus and a loss in consumer surplus.
C)  a loss in both producer surplus and consumer surplus.
D)  a gain in both producer surplus and consumer surplus.
E)  no change in both producer surplus and consumer surplus.F) A) and B)
G) C) and D)

Exam 7: The Interaction of People in Markets

Exhibit 7-13 -Refer to Exhibit 7-13.Calculate the deadweight loss that results from the government imposing a minimum price of $50 in the market.

Correct Answer
verified
$2,000
Consumers buy 300 unit...
View Answer

Deadweight loss occurs in a price floor but not in a price ceiling.

Correct Answer
verified

A tax on a good results in a deadweight loss to society.

Correct Answer
verified

Correct Answer
verified
(A) If the government does not intervene...
View Answer

It is easier for buyers and sellers to exchange and process price information in market systems than in nonmarket systems.

Correct Answer
verified

Correct Answer
verified
(A)
The deadweight loss is equal to the...
View Answer

All of the following contribute to the attainment of efficiency in a competitive market except

Correct Answer
verified

Correct Answer
verified
(A) Prior to the tax,as shown in the gra...
View Answer

A shortage

Correct Answer
verified

The market system

Correct Answer
verified

Other things being equal,a tax on producers results in deadweight loss.

Correct Answer
verified

Market equilibrium is achieved when consumer surplus is equal to producer surplus.

Correct Answer
verified

If a market is efficient,then it is possible that an increase in one person's consumption would not lower another person's consumption.

Correct Answer
verified

Efficiency is achieved when marginal benefit is equal to marginal cost.

Correct Answer
verified

Regarding price floors on milk prices,the result of a higher-than-equilibrium milk price is

Correct Answer
verified

Without market coordination,

Correct Answer
verified

Deadweight loss is zero when quantity supplied equals quantity demanded.

Correct Answer
verified

Can income equality and efficiency be achieved at the same time? Why or why not?

Correct Answer
verified
It seems that income equality and effici...
View Answer

The primary problem with nonmarket economic coordination is

Correct Answer
verified

Pareto efficiency is achieved when deadweight loss is equal to zero.

Correct Answer
verified

Exam 7: The Interaction of People in Markets

Exhibit 7-13 -Refer to Exhibit 7-13.Calculate the deadweight loss that results from the government imposing a minimum price of $50 in the market.

Correct Answerverified$2,000 Consumers buy 300 unit...View AnswerShow Answer

Deadweight loss occurs in a price floor but not in a price ceiling.

Correct AnswerverifiedShow Answer

A tax on a good results in a deadweight loss to society.

Correct AnswerverifiedShow Answer

Correct Answerverified(A) If the government does not intervene...View AnswerShow Answer

It is easier for buyers and sellers to exchange and process price information in market systems than in nonmarket systems.

Correct AnswerverifiedShow Answer

Correct Answerverified (A)The deadweight loss is equal to the...View AnswerShow Answer

All of the following contribute to the attainment of efficiency in a competitive market except

Correct AnswerverifiedShow Answer

Correct Answerverified(A) Prior to the tax,as shown in the gra...View AnswerShow Answer

A shortage

Correct AnswerverifiedShow Answer

The market system

Correct AnswerverifiedShow Answer

Other things being equal,a tax on producers results in deadweight loss.

Correct AnswerverifiedShow Answer

Market equilibrium is achieved when consumer surplus is equal to producer surplus.

Correct AnswerverifiedShow Answer

If a market is efficient,then it is possible that an increase in one person's consumption would not lower another person's consumption.

Correct AnswerverifiedShow Answer

Efficiency is achieved when marginal benefit is equal to marginal cost.

Correct AnswerverifiedShow Answer

Regarding price floors on milk prices,the result of a higher-than-equilibrium milk price is

Correct AnswerverifiedShow Answer

Without market coordination,

Correct AnswerverifiedShow Answer

Deadweight loss is zero when quantity supplied equals quantity demanded.

Correct AnswerverifiedShow Answer

Can income equality and efficiency be achieved at the same time? Why or why not?

Correct AnswerverifiedIt seems that income equality and effici...View AnswerShow Answer

The primary problem with nonmarket economic coordination is

Correct AnswerverifiedShow Answer

Pareto efficiency is achieved when deadweight loss is equal to zero.

Correct AnswerverifiedShow Answer

Correct Answer
verified
$2,000
Consumers buy 300 unit...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
(A) If the government does not intervene...
View Answer

Correct Answer
verified

Correct Answer
verified
(A)
The deadweight loss is equal to the...
View Answer

Correct Answer
verified

Correct Answer
verified
(A) Prior to the tax,as shown in the gra...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
It seems that income equality and effici...
View Answer

Correct Answer
verified

Correct Answer
verified