Question 1

When a perfectly competitive, well-functioning market is in equilibrium:

Accepted Answer

A)  total surplus is maximized.
B)  the market is efficient.
C)  deadweight loss is zero.
D)  All of these are correct.E) B) and D)
F) All of the above

Question 2

Total surplus can be increased if:

Accepted Answer

A)  new markets are created.
B)  new technology is banned.
C)  deadweight loss is increased.
D)  All of these can increase total surplus.E) B) and D)
F) A) and B)

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 increased from $9 to $13, producer surplus would:

Accepted Answer

A)  increase for each producer.
B)  increase only for House Depot.
C)  remain unchanged for Bob's Hardware.
D)  increase by $4 for Lace Hardware.E) None of the above
F) B) and D)

Question 4

If the price of a good is less than a buyer's willingness to pay, the buyer will _____ the good because the opportunity cost of buying the good is _____ than the benefit received from consuming the good.

Accepted Answer

A)  purchase; less
B)  purchase; more
C)  not purchase; less
D)  not purchase; more.E) A) and B)
F) None of the above

Question 5

Assume there are three bakeries, each willing to sell one dozen cupcakes in a given time period. The Sweet Treat can offer a dozen cupcakes for a minimum of $6. The Cake Corner can offer a dozen cupcakes for a minimum of $9. Pastry Place can offer a dozen cupcakes for a minimum of $13.If the market price of one dozen cupcakes increased from $8 to $12:

Accepted Answer

A)  The Sweet Treat's producer surplus would increase by $6.
B)  Pastry Place's producer surplus would increase by $1.
C)  The Cake Corner's producer surplus would remain unchanged.
D)  All of these statements are true.E) A) and D)
F) A) and C)

Question 6

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

Question 7

1) . If the supply curve shifts to S2, and a new equilibrium is reached, which of the following is true? A) Total surplus decreases by $90. B) Total surplus decreases by $10. C) Total surplus increases by $250. D) Total surplus increases by $90." 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)  Total surplus decreases by $90.
B)  Total surplus decreases by $10.
C)  Total surplus increases by $250.
D)  Total surplus increases by $90.E) B) and C)
F) None of the above

Question 8

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 $11, total producer surplus would:

Accepted Answer

A)  increase to $5.
B)  decrease to $2.
C)  increase to $17.
D)  decrease to $7.E) B) and C)
F) C) and D)

Question 9

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) B) and C)
F) All of the above

Question 10

A seller's willingness to sell:

Accepted Answer

A)  must always be equal to a buyer's willingness to pay.
B)  is determined by the opportunity cost of producing and selling the good.
C)  is determined by a buyer's willingness to pay.
D)  can never be higher than the market price.E) A) and B)
F) A) and C)

Question 11

Suppose Sam's opportunity cost of producing a sweater is $37. Which of the following prices would he have to observe in the market in order to sell a sweater?

Accepted Answer

A)  $37
B)  $37.01
C)  $50
D)  Sam would sell a sweater at any of these prices.E) B) and D)
F) B) and C)

Question 12

1) . Total surplus is: A) greater than it is when the market is in equilibrium at D and S2. B) less than it is when the 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) . Total surplus is:

Accepted Answer

A)  greater than it is when the market is in equilibrium at D and S2.
B)  less than it is when the 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) A) and C)

Question 13

Assume a market price is set artificially low. In other words, the price is set below the equilibrium price. How will this affect the market?

Accepted Answer

A)  Every producer loses surplus, and it all gets transferred to consumers.
B)  Some producers drop out of the market, and those left lose some surplus.
C)  Every consumer gains surplus, due to the lower price now being charged.
D)  None of these are correct.E) B) and C)
F) All of the above

Question 14

If a market is missing:

Accepted Answer

A)  deadweight loss is zero.
B)  total surplus is maximized.
C)  the market is inefficient.
D)  trades are not mutually beneficial.E) A) and D)
F) A) and B)

Question 15

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

Accepted Answer

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

Question 16

The demand curve represents consumer's:

Accepted Answer

A)  willingness to pay.
B)  trade-offs.
C)  surplus.
D)  willingness to sell.E) B) and D)
F) B) and C)

Question 17

Assume a market has an equilibrium price of $7. If the market price is set at $3, 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 producers to consumers, 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) All of the above

Question 18

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 $9 to $13:

Accepted Answer

A)  House Depot's producer surplus would increase by $4.
B)  Lace Hardware Hardware's producer surplus would increase by $3.
C)  Bob's Hardware's producer surplus would remain unchanged.
D)  All of these statements are true.E) A) and C)
F) B) and C)

Question 19

1) . If the supply curve shifts to S2, total surplus falls by: A) $50. B) $75. C) $150. D) $200." class="answers-bank-image d-inline" rel="preload" > Assume the market shown in the graph is in equilibrium at demand (D) and supply (S1) . If the supply curve shifts to S2, total surplus falls by:

Accepted Answer

A)  $50.
B)  $75.
C)  $150.
D)  $200.E) None of the above
F) A) and B)

Question 20

Assume the market depicted in the graph is in equilibrium. Total surplus consists of area(s) :

Accepted Answer

A)  A + B + C.
B)  B.
C)  A.
D)  A + B.E) A) and B)
F) All of the above

Exam 5: Efficiency

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

Correct Answer
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Correct Answer
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Correct Answer
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Suppose Sam's opportunity cost of producing a sweater is $37. Which of the following prices would he have to observe in the market in order to sell a sweater?

Correct Answer
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Correct Answer
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A seller's willingness to sell:

Correct Answer
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Assume the market shown in the graph is in equilibrium at demand (D) and supply (S₁) . If the supply curve shifts to S₂, total surplus falls by:

Correct Answer
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Assume a market price is set artificially low. In other words, the price is set below the equilibrium price. How will this affect the market?

Correct Answer
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Total surplus can be increased if:

Correct Answer
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Correct Answer
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If the price of a good is less than a buyer's willingness to pay, the buyer will _ the good because the opportunity cost of buying the good is _ than the benefit received from consuming the good.

Correct Answer
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If a market is missing:

Correct Answer
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Assume a market has an equilibrium price of $7. If the market price is set at $3, which of the following statements is true?

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

Correct Answer
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Deadweight loss:

Correct Answer
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Assume the market depicted in the graph is in equilibrium. Total surplus consists of area(s) :

Correct Answer
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The demand curve represents consumer's:

Correct Answer
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When a perfectly competitive, well-functioning market is in equilibrium:

Correct Answer
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Correct Answer
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Exam 5: Efficiency

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

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose Sam's opportunity cost of producing a sweater is $37. Which of the following prices would he have to observe in the market in order to sell a sweater?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A seller's willingness to sell:

Correct AnswerverifiedShow Answer

Assume the market shown in the graph is in equilibrium at demand (D) and supply (S1) . If the supply curve shifts to S2, total surplus falls by:

Correct AnswerverifiedShow Answer

Assume a market price is set artificially low. In other words, the price is set below the equilibrium price. How will this affect the market?

Correct AnswerverifiedShow Answer

Total surplus can be increased if:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the price of a good is less than a buyer's willingness to pay, the buyer will _____ the good because the opportunity cost of buying the good is _____ than the benefit received from consuming the good.

Correct AnswerverifiedShow Answer

If a market is missing:

Correct AnswerverifiedShow Answer

Assume a market has an equilibrium price of $7. If the market price is set at $3, which of the following statements is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Deadweight loss:

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. Total surplus consists of area(s) :

Correct AnswerverifiedShow Answer

The demand curve represents consumer's:

Correct AnswerverifiedShow Answer

When a perfectly competitive, well-functioning market is in equilibrium:

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 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 shown in the graph is in equilibrium at demand (D) and supply (S₁) . If the supply curve shifts to S₂, total surplus falls by:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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If the price of a good is less than a buyer's willingness to pay, the buyer will _ the good because the opportunity cost of buying the good is _ than the benefit received from consuming the good.

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) . Total 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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