Question 1

1) . If the supply curve shifts to S2, and a new equilibrium is reached, which of the following is true? A) Producer surplus increases and total surplus increases. B) Producer surplus decreases and total surplus increases. C) Producer surplus increases and total surplus decreases. D) Producer 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)  Producer surplus increases and total surplus increases.
B)  Producer surplus decreases and total surplus increases.
C)  Producer surplus increases and total surplus decreases.
D)  Producer surplus decreases and total surplus decreases.E) B) and D)
F) B) and C)

Question 2

When someone's willingness to pay is the same as the actual price paid for an item:

Accepted Answer

A)  the individual will not purchase the item.
B)  the individual's surplus is zero.
C)  surplus cannot be maximized.
D)  All of these are correct.E) A) and D)
F) C) and D)

Question 3

Suppose Takumi's willingness to pay for one snowboard is $250 and his willingness to pay for a second snowboard is $400. How many snowboards would Takumi buy if the market price of snowboards is $500?

Accepted Answer

A)  0
B)  1
C)  2
D)  The amount of snowboards purchased would depend on Takumi's income.E) A) and C)
F) A) and D)

Question 4

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

Accepted Answer

A)  $150
B)  $175
C)  $200
D)  $400E) A) and C)
F) None of the above

Question 5

Suppose the market for kidneys is depicted in the graph shown.  If the government allows the buying and selling of kidneys, _____ kidneys will be sold at a price of _____ per kidneys.

Accepted Answer

A)  900; $0
B)  2,000; $1,200
C)  900; $1,500
D)  0; $0E) All of the above
F) B) and D)

Question 6

1) . Consumer surplus is: A) greater than it is when market is in equilibrium at D and S2. B) less than it is when market is in equilibrium at D and S2. C) the same as it is when market is in equilibrium at D and S2. D) zero." class="answers-bank-image d-inline" rel="preload" > Assume the market depicted in the graph is in equilibrium at demand (D) and supply (S1) . Consumer surplus is:

Accepted Answer

A)  greater than it is when market is in equilibrium at D and S2.
B)  less than it is when market is in equilibrium at D and S2.
C)  the same as it is when market is in equilibrium at D and S2.
D)  zero.E) A) and D)
F) None of the above

Question 7

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 falls from $395 to $340, which of the following statements is true?

Accepted Answer

A)  Martina's consumer surplus increases from $5 to $60, and total consumer surplus increases from $5 to $70.
B)  Martina's consumer surplus decreases from $60 to $5, and total consumer surplus decreases from $70 to $5.
C)  Kamal's consumer surplus increases from $0 to $20, and total consumer surplus increases from $5 to $70.
D)  Javier's consumer surplus decreases from $10 to $0, and total consumer surplus increases from $10 to $80.E) A) and B)
F) None of the above

Question 8

We say a market is "missing" when:

Accepted Answer

A)  there is no place for potential buyers and sellers to exchange a particular good or service.
B)  the quantity being exchanged is at or close to zero.
C)  there is an absence of a well-functioning market, and total surplus is lower than it could be.
D)  All of these are correct.E) A) and D)
F) A) and C)

Question 9

If price is set at $11 in the market shown in the graph, consumer surplus will consist of areas:

Accepted Answer

A)  A + B + G.
B)  B + G + L
C)  A + B + C + G + H + L
D)  A + B + C + G + H + I + JE) B) and C)
F) A) and C)

Question 10

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

Accepted Answer

A)  total surplus is not maximized.
B)  the market is not efficient.
C)  exchanges exist that make some better off without making someone else worse off.
D)  All of these are correct.E) All of the above
F) B) and D)

Question 11

Suppose Advik's willingness to pay for a cup of coffee is $1, which is equal to its price. Which of the following statements is true?

Accepted Answer

A)  Advik is indifferent about purchasing a cup of coffee.
B)  Advik will get no surplus by purchasing a cup of coffee.
C)  Advik will get the same surplus whether he purchases a cup of coffee or not.
D)  All of these are correct.E) B) and C)
F) A) and B)

Question 12

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 is $13, what would total producer surplus be?

Accepted Answer

A)  $9
B)  $30
C)  $17
D)  $7E) A) and B)
F) A) and C)

Question 13

Deadweight loss:

Accepted Answer

A)  creates efficiency in markets when producers and consumers both agree to it.
B)  is the difference between the total surplus occurring in a market and the maximum total surplus achievable.
C)  is the loss in producer surplus from a price increase.
D)  is the difference between the efficient quantity and the market quantity.E) C) and D)
F) A) and C)

Question 14

The willingness to pay of buyers in a market:

Accepted Answer

A)  is represented by the demand curve.
B)  is represented by the supply curve.
C)  explains why the demand curve is bowed-out.
D)  explains why the demand curve is bowed-in.E) A) and B)
F) None of the above

Question 15

When the quantity of a good bought and sold is below the equilibrium quantity, the loss of total surplus that results is called:

Accepted Answer

A)  deadweight loss.
B)  producer surplus.
C)  consumer surplus.
D)  total surplus.E) A) and B)
F) None of the above

Question 16

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

Accepted Answer

A)  $72
B)  $90
C)  $50
D)  $130E) B) and C)
F) A) and B)

Question 17

Suppose the market for kidneys is depicted in the graph shown.  Kidneys can only be donated and cannot be sold (meaning price is zero) . How many kidneys are donated in this hypothetical situation?

Accepted Answer

A)  0
B)  900
C)  2,000
D)  1,200E) B) and C)
F) B) and D)

Question 18

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

Accepted Answer

A)  $27.00
B)  $54.00
C)  $40.50
D)  $67.50E) B) and C)
F) A) and D)

Question 19

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

Accepted Answer

A)      from (F + G + H)  to (B + C + D + E + F + G + H) .	
B)      from (F + G + H)  to (B + C + F + G + H) .
C)      from (F + G + H)  to (B + F + H) .
D)      from (C + G)  to (B + C + F + G + H) . E) A) and C)
F) B) and C)

Question 20

Assume a market has an equilibrium price of $4. If the market price is set at $8, which of the following statements is true?

Accepted Answer

A)  Some surplus is transferred from consumers to producers, but total surplus falls.
B)  All surplus is transferred from consumers to producers, and total surplus stays the same.
C)  Some surplus is transferred from producers to consumers, but total surplus falls.
D)  Some surplus is transferred from consumers to producers, causing total surplus to increase.E) A) and B)
F) A) and C)

Exam 5: Efficiency

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

Correct Answer
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We say a market is "missing" when:

Correct Answer
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The willingness to pay of buyers in a market:

Correct Answer
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Assume a market has an equilibrium price of $4. If the market price is set at $8, which of the following statements is true?

Correct Answer
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Suppose the market for kidneys is depicted in the graph shown. If the government allows the buying and selling of kidneys, _ kidneys will be sold at a price of _ per kidneys.

Correct Answer
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When the quantity of a good bought and sold is below the equilibrium quantity, the loss of total surplus that results is called:

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

Correct Answer
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Assume the market depicted in the graph is in equilibrium at demand (D) and supply (S₁) . Consumer surplus is:

Correct Answer
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Suppose Takumi's willingness to pay for one snowboard is $250 and his willingness to pay for a second snowboard is $400. How many snowboards would Takumi buy if the market price of snowboards is $500?

Correct Answer
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When someone's willingness to pay is the same as the actual price paid for an item:

Correct Answer
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Deadweight loss:

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

Correct Answer
verified

Suppose the market for kidneys is depicted in the graph shown. Kidneys can only be donated and cannot be sold (meaning price is zero) . How many kidneys are donated in this hypothetical situation?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

If price is set at $11 in the market shown in the graph, consumer surplus will consist of areas:

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
verified

Suppose Advik's willingness to pay for a cup of coffee is $1, which is equal to its price. Which of the following statements is true?

Correct Answer
verified

Exam 5: Efficiency

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

Correct AnswerverifiedShow Answer

We say a market is "missing" when:

Correct AnswerverifiedShow Answer

The willingness to pay of buyers in a market:

Correct AnswerverifiedShow Answer

Assume a market has an equilibrium price of $4. If the market price is set at $8, which of the following statements is true?

Correct AnswerverifiedShow Answer

Suppose the market for kidneys is depicted in the graph shown. If the government allows the buying and selling of kidneys, _____ kidneys will be sold at a price of _____ per kidneys.

Correct AnswerverifiedShow Answer

When the quantity of a good bought and sold is below the equilibrium quantity, the loss of total surplus that results is called:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium at demand (D) and supply (S1) . Consumer surplus is:

Correct AnswerverifiedShow Answer

Suppose Takumi's willingness to pay for one snowboard is $250 and his willingness to pay for a second snowboard is $400. How many snowboards would Takumi buy if the market price of snowboards is $500?

Correct AnswerverifiedShow Answer

When someone's willingness to pay is the same as the actual price paid for an item:

Correct AnswerverifiedShow Answer

Deadweight loss:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the market for kidneys is depicted in the graph shown. Kidneys can only be donated and cannot be sold (meaning price is zero) . How many kidneys are donated in this hypothetical situation?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If price is set at $11 in the market shown in the graph, consumer surplus will consist of areas:

Correct AnswerverifiedShow Answer

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

Suppose Advik's willingness to pay for a cup of coffee is $1, which is equal to its price. Which of the following statements is true?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Suppose the market for kidneys is depicted in the graph shown. If the government allows the buying and selling of kidneys, _ kidneys will be sold at a price of _ per kidneys.

Correct Answer
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Correct Answer
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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) . Consumer surplus is:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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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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