Question 1

In economics, the concept of surplus:

Accepted Answer

A)   measures the benefit that people receive when they buy something for less than they would have been willing to pay.
B)   measures the benefit that people receive when they sell something for more than they would have been willing to accept.
C)   is the best way to look at the benefits people receive from successful transactions.
D)   All of these are correct.E) A) and B)
F) A) and C)

Question 2

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) B) and C)

Question 3

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 $11:

Accepted Answer

A)   total producer surplus would fall by $4.
B)   producer surplus would fall by $4 for each producer.
C)   House Depot's producer surplus would fall by $4.
D)   total producer surplus would fall by $8.E) A) and B)
F) C) and D)

Question 4

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

Accepted Answer

A)   decrease by 7.
B)   decrease by 3.
C)   decrease by 10.
D)   not change-only price does.E) A) and B)
F) A) and C)

Question 5

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) C) and D)
F) B) and C)

Question 6

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) A) and B)
F) A) and C)

Question 7

Suppose Miguel wishes to buy a baseball glove. He observes that the market price of a glove is $43 and decides not to buy one. Which of the following prices could represent Miguel's willingness to pay for a baseball glove?

Accepted Answer

A)   $37
B)   $45
C)   $50
D)   None of these could represent Miguel's willingness to pay.E) B) and D)
F) A) and B)

Question 8

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

Accepted Answer

A)   $36
B)   $48
C)   $120
D)   None of these are correct.E) B) and D)
F) A) and C)

Question 9

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) B) and C)
F) A) and B)

Question 10

Total surplus can be increased by:

Accepted Answer

A)   policies that help people do business more efficiently.
B)   technologies that help people share more and better information.
C)   increasing the availability of accurate information.
D)   All of these can increase total surplus.E) A) and D)
F) None of the above

Question 11

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 $12, producer surplus would increase:

Accepted Answer

A)   from $8 to $12.
B)   by $4 for each producer.
C)   by $4 for House Depot.
D)   by $7 in total.E) A) and B)
F) A) and C)

Question 12

A consumer's willingness to pay:

Accepted Answer

A)   is the maximum price that the consumer would be willing to pay for a good or service.
B)   is the minimum price that the consumer would be willing to pay for a good or service.
C)   is known as the consumer's reserved minimum bid-price.
D)   must always equal a seller's willingness to sell.E) B) and D)
F) B) and C)

Question 13

Assume the market depicted in the graph is in equilibrium. If the market price is set to $12, which of the following statements is true?

Accepted Answer

A)   For those still interacting in the market, some surplus will be transferred from buyer to seller.
B)   For those still interacting in the market, some surplus will be transferred from seller to buyer.
C)   Producers will gain the surplus of those buyers who drop out of the market.
D)   Consumers will gain the surplus of those sellers who drop out of the market.E) None of the above
F) A) and B)

Question 14

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 C)
F) B) and D)

Question 15

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

Accepted Answer

A)   $160
B)   $180
C)   $320
D)   $360E) A) and D)
F) B) and D)

Question 16

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

Accepted Answer

A)   $180
B)   $80
C)   $120
D)   $200E) C) and D)
F) B) and D)

Question 17

1) . If supply shifts to S2, and a new equilibrium is reached, which of the following statements is true? A)  Consumer surplus increases by $45. B)  Producer surplus decreases by $45. C)  Consumer surplus increases by $90. D)  Total surplus increases by $45." class="answers-bank-image d-inline" rel="preload" > Assume the market in the graph is in equilibrium at demand (D)  and supply (S1) . If supply shifts to S2, and a new equilibrium is reached, which of the following statements is true?

Accepted Answer

A)   Consumer surplus increases by $45.
B)   Producer surplus decreases by $45.
C)   Consumer surplus increases by $90.
D)   Total surplus increases by $45.E) A) and B)
F) A) and D)

Question 18

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) B) and C)

Question 19

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

Accepted Answer

A)   A + B + G + C + G + H + I + J + L.
B)   A + B + G + L.
C)   A + B + C + G + H + L.
D)   A + B + C + G + H + I + J + L + M + N + O.E) A) and D)
F) A) and C)

Question 20

Assume a market has an equilibrium price of $5. If the market price is set at $9: I. Producer surplus rises for some producers because of the increased price.
II)  Producer surplus decreases for some producers because fewer transactions are taking place.
III)  Total surplus may rise or fall depending on the change in producer surplus.

Accepted Answer

A)   II only
B)   I and III only
C)   I and II only
D)   I, II, and IIIE) None of the above
F) A) and B)

Exam 5: Efficiency

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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We say a market is "missing" when:

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

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A consumer's willingness to pay:

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Assume the market depicted in the graph is in equilibrium. If the market price is set to $12, which of the following statements is true?

Correct Answer
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Deadweight loss:

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

Correct Answer
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Total surplus can be increased by:

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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In economics, the concept of surplus:

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

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

Correct Answer
verified

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

Correct Answer
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Suppose Miguel wishes to buy a baseball glove. He observes that the market price of a glove is $43 and decides not to buy one. Which of the following prices could represent Miguel's willingness to pay for a baseball glove?

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

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

Correct Answer
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Exam 5: Efficiency

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

We say a market is "missing" when:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A consumer's willingness to pay:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. If the market price is set to $12, which of the following statements is true?

Correct AnswerverifiedShow Answer

Deadweight loss:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Total surplus can be increased by:

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

In economics, the concept of surplus:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose Miguel wishes to buy a baseball glove. He observes that the market price of a glove is $43 and decides not to buy one. Which of the following prices could represent Miguel's willingness to pay for a baseball glove?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

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