Question 1 of 20 5.0 Points
At the market equilibrium, resources are allocated efficiently because __________ .
A. the marginal cost of producing another unit is equal to zero
B. the price buyers pay accurately reflects the marginal cost of the resources used to produce the good
C. the price buyers pay is greater than sellers’ willingness to sell
D. all of the above
Question 2 of 20 5.0 Points
If the government sets a minimum price above the equilibrium price for soybeans, which of the following statements will be correct?
A. There will be an efficient level of output produced.
B. There will be excess supply.
C. There will be excess demand.
D. all of the above
Question 3 of 20 5.0 Points
A ban on imported avocados would result in __________ .
A. an increase in total surplus because domestic production will increase
B. no change in total surplus because the reduction in consumer surplus will offset the increase in producer surplus
C. a reduction in total surplus because a deadweight loss is created
D. It is impossible to say what will happen to total surplus.
Question 4 of 20 5.0 Points
If the government sets a maximum price for insulin below the equilibrium price, __________ .
A. there will be an efficient level of insulin produced
B. there will be excess supply of insulin
C. total surplus will be lower than it would be at the market equilibrium price
D. total surplus will be greater than it would be at the market equilibrium price
Question 5 of 20 5.0 Points
Jody’s bakery makes cakes and would be willing to sell each cake for $12.50. If Jody’s bakery sells 10 cakes for $13 each, the total producer surplus for Jody’s bakery would be equal to __________ .
Question 6 of 20 5.0 Points
In the market equilibrium, with a price of $500 there are 2000 apartments. If the government decides to enact a rent control policy, with a maximum price of $400, it reduces the quantity to 1500 apartments. Due to the rent control decreasing the total surplus of the market, the policy generates a(n) __________ .
A. excess supply
C. higher price
D. deadweight loss
Question 7 of 20 5.0 Points
If the government imposes a maximum price for milk that is above the equilibrium price __________ .
A. this maximum price for milk will have no economic impact
B. quantity demanded of milk will be less than quantity supplied
C. demand for milk will be greater than supply
D. the available milk supply will have to be rationed
Question 8 of 20 5.0 Points
If the market price of salmon is $8.99 per pound but the government will not allow salmon farmers to charge more than $4.99 per pound, which of the following will happen?
A. The supply curve for salmon will shift to the left.
B. There will be an excess demand for salmon.
C. There will be an excess supply of salmon.
D. The market will be in equilibrium at a price of $4.99.
Question 9 of 20 5.0 Points
The conclusion that the level of output is efficient at the market equilibrium rests on all of the following assumptions EXCEPT that __________ .
A. buyers and sellers are well-informed
B. there are no external costs or benefits
C. the government regulates price and output
D. the market is perfectly competitive
Question 10 of 20 5.0 Points
The difference between the maximum amount a person is willing to pay for a good and its current market price is known as __________ .
A. the paradox of value
C. revealed preferences
D. consumer surplus
Question 11 of 20 5.0 Points
Mary has an old house built in 1950 that she would be willing to sell for $100,000. If someone offers to buy her house for $110,000, Mary’s producer surplus would be equal to __________ .
Question 12 of 20 5.0 Points
Assume that production costs rise and demand remains constant. The equilibrium price will __________ and the producer surplus will __________ .
A. increase; increase
B. increase; decrease
C. decrease; decrease
D. decrease; increase
Question 13 of 20 5.0 Points
Laura makes hand-made jewelry and she would be willing to sell pairs of earrings for $50. If Laura sells each pair of earrings for $65, her producer surplus per pair of earrings sold would be equal to __________ .
Question 14 of 20 5.0 Points
Tom would be willing to pay a maximum of $2,500 to attend the Super Bowl this year, and he can buy a ticket for $2,050. His consumer surplus is __________ .
Question 15 of 20 5.0 Points
Assume that Crystal’s demand for handbags remains constant, but the price of handbags increases. Crystal’s consumer surplus __________ .
C. remains constant
D. may increase or decrease depending on the amount of the price decrease
Taxes may cause deadweight losses because __________ .
A. they transfer purchasing power from buyers to the government
B. they lower the surplus in the market
C. they increase consumer surplus at the expense of producer surplus
D. they transfer purchasing power from sellers to the government
Question 17 of 20 5.0 Points
You would be willing to pay a maximum of $1,000 for an airplane ticket to London during the summer, and you can buy an airplane ticket for $890. Your consumer surplus is __________ .
Question 18 of 20 5.0 Points
Suppose that you are willing to pay $25 for a new shirt and the market price is $35. In this case __________ .
A. you will not buy the good
B. you will buy the good and receive a consumer surplus of $5
C. you will buy the good and receive a consumer surplus of –$10
D. you will buy the good and receive a consumer surplus of –$35
Question 19 of 20 5.0 Points
Recall the application on rent control and mismatches. Under rent control, the government sets a maximum price for housing, decreasing the quantity supplied and the total value of the market. Rent control and other maximum prices cause __________ and possibly __________ .
A. inefficiency; mismatches
B. efficiency: mismatches
C. mismatches: equilibrium
D. none of the above
Question 20 of 20 5.0 Points
If the equilibrium price of gasoline is $2.75 per gallon and the government will not allow oil companies to charge more than $2.00 per gallon, which of the following will happen?
A. Demand must eventually decrease so that the market will come into equilibrium at a price of $2.00.
B. Supply must eventually increase so that the market will come into equilibrium at a price of $2.00.
C. Total surplus in the market will be lower than it would be if the price was $2.75 per gallon.
D. The market will be in equilibrium at a price of $2.00.