Question 1

Deadweight loss:

Accepted Answer

A)   occurs when the market price is set above the equilibrium price.
B)   occurs when the market price is set below the equilibrium price.
C)   is the loss of total surplus that results when the quantity of a good that is bought and sold is below the market equilibrium quantity.
D)   All of these are true.E) None of the above
F) A) and D)

Question 2

If Claire's reservation price on a sweater is $37, which of the following prices would she have to observe in the market in order to buy a sweater?

Accepted Answer

A)   $37.01
B)   $38.00
C)   $37.00
D)   Claire would not buy a sweater at any of these prices.E) B) and C)
F) B) and D)

Question 3

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

Accepted Answer

A)   $12 gets transferred from consumer surplus to producer surplus.
B)   area C is lost consumer surplus due to fewer transactions taking place.
C)   area E is lost producer surplus due to fewer transactions taking place.
D)   All of these are true.E) B) and C)
F) A) and B)

Question 4

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills is $320, given the scenario described, Abe's consumer surplus would be:

Accepted Answer

A)   $400.
B)   $350.
C)   $320.
D)   $80.E) A) and B)
F) All of the above

Question 5

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills increases from $300 to $325, given the scenario described:

Accepted Answer

A)   Collin would drop out of the market.
B)   Collin's surplus would decrease the most.
C)   Collin is the only consumer who would be affected in terms of surplus.
D)   Daniel's surplus would decrease.E) B) and D)
F) C) and D)

Question 6

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills falls from $375 to $330, given the scenario described, which of the following can be said?

Accepted Answer

A)   Butch will join the market, but receive no consumer surplus.
B)   Butch and Collin will join the market, and together will receive $30 in consumer surplus.
C)   Abe will experience a decrease in consumer surplus of $45.
D)   Abe will experience an increase in consumer surplus of $45.E) B) and C)
F) B) and D)

Question 7

According to the graph shown, producer surplus is:

Accepted Answer

A)   the area under the demand curve and above the market price.
B)   the area under the supply curve and above the price.
C)   the area above the supply curve and below the price.
D)   the area above the demand curve and below the price.E) B) and C)
F) A) and B)

Question 8

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

Accepted Answer

A)   market transactions will decrease by 7.
B)   market transactions will decrease by 3.
C)   market transactions will decrease by 10.
D)   market transactions will not change, only price has changed.E) B) and D)
F) B) and C)

Question 9

2 at a quantity of 8, producer surplus is: A)  28 B)  less than the consumer surplus. C)  16 D)  $32." class="answers-bank-image d-inline" rel="preload" > Assuming the market is in equilibrium in the graph shown with demand D and supply S2 at a quantity of 8, producer surplus is:

Accepted Answer

A)   28
B)   less than the consumer surplus.
C)   16
D)   $32.E) All of the above
F) B) and D)

Question 10

When Bob's willingness to pay for a cup of coffee is $1, and the price of a cup of coffee is $1:

Accepted Answer

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

Question 11

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

Accepted Answer

A)   the market ceases to be efficient.
B)   total surplus will decline.
C)   deadweight loss will occur.
D)   All of these are true.E) B) and D)
F) B) and C)

Question 12

Deadweight loss:

Accepted Answer

A)   occurs in markets that are efficient.
B)   occurs when markets are in equilibrium.
C)   is the loss in surplus from a market not in equilibrium.
D)   is additional surplus from an additional market transaction.E) A) and B)
F) All of the above

Question 13

According to the graph shown, if the market is in equilibrium, total surplus is:

Accepted Answer

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

Question 14

The market to buy and sell organs:

Accepted Answer

A)   is missing.
B)   has been banned by public policy.
C)   would create surplus for those who would interact in it.
D)   All of these are true.E) None of the above
F) A) and D)

Question 15

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills is $350, given the scenario described, total consumer surplus would be:

Accepted Answer

A)   $750.
B)   $400.
C)   $50.
D)   $870.E) A) and B)
F) C) and D)

Question 16

1 is in equilibrium at a quantity of 5 units. Consumer surplus is: A)  $5. B)  $10. C)  $45. D)  $9." class="answers-bank-image d-inline" rel="preload" > Assume the market in the graph shown with demand D and supply S1 is in equilibrium at a quantity of 5 units. Consumer surplus is:

Accepted Answer

A)   $5.
B)   $10.
C)   $45.
D)   $9.E) B) and D)
F) A) and D)

Question 17

At prices below a consumer's willingness to pay:

Accepted Answer

A)   the buyer will participate in the market because the opportunity cost is less than the benefit from consuming the good.
B)   the buyer will participate in the market because the opportunity cost is more than the benefit from consuming the good.
C)   the buyer will not participate in the market because the opportunity cost is less than the benefit from consuming the good.
D)   the buyer will not participate in the market because the opportunity cost is more than the benefit from consuming the good.E) C) and D)
F) B) and D)

Question 18

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers decreased from $15 to $10:

Accepted Answer

A)   total producer surplus falls by $5.
B)   producer surplus for each producer falls by $5.
C)   Bob's Hardware no longer sells hammers.
D)   total producer surplus falls by $15.E) None of the above
F) A) and C)

Question 19

An example of a "missing" market would be:

Accepted Answer

A)   the market to buy and sell children for adoption.
B)   the market to buy and sell a kidney.
C)   the market to buy and sell dates for a Friday night.
D)   All of these markets are missing.E) None of the above
F) A) and B)

Question 20

A buyer always wants to:

Accepted Answer

A)   buy for a price that is as high as possible, but never higher than his willingness to pay.
B)   buy for a price that is as low as possible, but never lower than his willingness to pay.
C)   buy for a price that is as low as possible, but never higher than his willingness to pay.
D)   buy for a price that is as high as possible, but never lower than his willingness to pay.E) A) and B)
F) A) and C)

Exam 5: Efficiency

Deadweight loss:

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

Correct Answer
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Correct Answer
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Assuming the market is in equilibrium in the graph shown with demand D and supply S₂at a quantity of 8, producer surplus is:

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 then:

Correct Answer
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When Bob's willingness to pay for a cup of coffee is $1, and the price of a cup of coffee is $1:

Correct Answer
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A buyer always wants to:

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
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At prices below a consumer's willingness to pay:

Correct Answer
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Correct Answer
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An example of a "missing" market would be:

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

Correct Answer
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Assume the market in the graph shown with demand D and supply S₁ is in equilibrium at a quantity of 5 units. Consumer surplus is:

Correct Answer
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If Claire's reservation price on a sweater is $37, which of the following prices would she have to observe in the market in order to buy a sweater?

Correct Answer
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Correct Answer
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Deadweight loss:

Correct Answer
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According to the graph shown, producer surplus is:

Correct Answer
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According to the graph shown, if the market is in equilibrium, total surplus is:

Correct Answer
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Exam 5: Efficiency

Deadweight loss:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The market to buy and sell organs:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assuming the market is in equilibrium in the graph shown with demand D and supply S2 at a quantity of 8, producer surplus is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When Bob's willingness to pay for a cup of coffee is $1, and the price of a cup of coffee is $1:

Correct AnswerverifiedShow Answer

A buyer always wants to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

At prices below a consumer's willingness to pay:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An example of a "missing" market would be:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume the market in the graph shown with demand D and supply S1 is in equilibrium at a quantity of 5 units. Consumer surplus is:

Correct AnswerverifiedShow Answer

If Claire's reservation price on a sweater is $37, which of the following prices would she have to observe in the market in order to buy a sweater?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Deadweight loss:

Correct AnswerverifiedShow Answer

According to the graph shown, producer surplus is:

Correct AnswerverifiedShow Answer

According to the graph shown, if the market is in equilibrium, total surplus is:

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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Assuming the market is in equilibrium in the graph shown with demand D and supply S₂at a quantity of 8, producer 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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Assume the market in the graph shown with demand D and supply S₁ is in equilibrium at a quantity of 5 units. 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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