Question 1

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

Question 2

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 $300,given the scenario described,the total consumer surplus would be:

Accepted Answer

A)   $1,070.
B)   $170.
C)   $200.
D)   None of these is true.E) A) and C)
F) C) and D)

Question 3

The market to buy and sell organs:

Accepted Answer

A)   would increase the well-being of those who interacted in it.
B)   would not be considered "missing," since surplus could be gained from it.
C)   would create negative surplus in those who could not afford an organ, but needed one.
D)   would never exist because it is unfair.E) B) and D)
F) B) and C)

Question 4

Assume there are three hardware stores,each willing to sell one standard model hammer in a given time period.House Depot can offer this 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 was $13,then total producer surplus would be:

Accepted Answer

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

Question 5

According to the graph shown,consumer surplus is:

Accepted Answer

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

Question 6

Assume the market is in equilibrium in the graph shown at demand D and supply S1.If the supply curve shifts to S2,and a new equilibrium is reached,equilibrium quantity will increase from 4 to 4.5 units.Which of the following is true?

Accepted Answer

A)   Producer surplus increases by $3.00.
B)   Producer surplus decreases by $8.50.
C)   Producer surplus increases by $7.50.
D)   Producer surplus decreases by $16.E) All of the above
F) B) and C)

Question 7

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 increased from $6 to $7:

Accepted Answer

A)   total producer surplus would increase.
B)   total producer surplus would remain unchanged.
C)   total producer surplus would decrease.
D)   total producer surplus cannot be determined with the information given.E) B) and C)
F) All of the above

Question 8

When the market price is set below the equilibrium price:

Accepted Answer

A)   the market is not efficient.
B)   total surplus is not maximized.
C)   producer surplus is decreased.
D)   All of these are true.E) A) and B)
F) None of the above

Question 9

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

Accepted Answer

A)  A.
B)  A + B + C.
C)  A + B + C + D + E.
D)  D + E.E) A) and D)
F) A) and B)

Question 10

The maximum price that a buyer would be willing to pay for a good or service is also called:

Accepted Answer

A)   the reservation price.
B)   the buyer-max price.
C)   the reserved max price.
D)   the opportunity cost.E) A) and B)
F) B) and D)

Question 11

Markets can be missing:

Accepted Answer

A)   because public policy prevents the market from existing.
B)   when the production of a particular good is banned.
C)   because of a lack of accurate information between potential buyers and sellers.
D)   All of these are true.E) A) and B)
F) None of the above

Question 12

Assume the market was in equilibrium in the graph shown.If the market price gets set to $7,which of the following is true?

Accepted Answer

A)   Some producers gain surplus, but total surplus falls.
B)   Some producers lose surplus, but total surplus rises.
C)   Some consumers gain surplus, but total surplus falls.
D)   Some consumers lose surplus, but total surplus rises.E) A) and B)
F) None of the above

Question 13

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 $11:

Accepted Answer

A)   total producer surplus would fall by $4.
B)   producer surplus for each producer falls by $4.
C)   House Depot's producer surplus falls by $4.
D)   total producer surplus falls by $8.E) None of the above
F) All of the above

Question 14

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 increased from $9 to $12,total producer surplus would increase by:

Accepted Answer

A)   $1.
B)   $3.
C)   $5.
D)   $7.E) B) and C)
F) A) and C)

Exam 5: Efficiency

Assume the market was in equilibrium in the graph shown.If the market price gets set to $7,which of the following is true?

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

Correct Answer
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The maximum price that a buyer would be willing to pay for a good or service is also called:

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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According to the graph shown,consumer surplus is:

Correct Answer
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Assume the market is in equilibrium in the graph shown at demand D and supply S1.If the supply curve shifts to S2,and a new equilibrium is reached,equilibrium quantity will increase from 4 to 4.5 units.Which of the following is true?

Correct Answer
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When the market price is set below the equilibrium price:

Correct Answer
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Correct Answer
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Markets can be missing:

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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Correct Answer
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Exam 5: Efficiency

Assume the market was in equilibrium in the graph shown.If the market price gets set to $7,which of the following is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The maximum price that a buyer would be willing to pay for a good or service is also called:

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

According to the graph shown,consumer surplus is:

Correct AnswerverifiedShow Answer

Assume the market is in equilibrium in the graph shown at demand D and supply S1.If the supply curve shifts to S2,and a new equilibrium is reached,equilibrium quantity will increase from 4 to 4.5 units.Which of the following is true?

Correct AnswerverifiedShow Answer

When the market price is set below the equilibrium price:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Markets can be missing:

Correct AnswerverifiedShow Answer

The market to buy and sell organs:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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