Question 1

Markets can be missing:

Accepted Answer

A)  because public policy taxes a market.
B)  when the sale of a particular service is banned.
C)  when miscommunication of information between buyers and sellers leads to the wrong equilibrium price.
D)  All of these are true.E) None of the above
F) A) and C)

Question 2

When the market price is set below the equilibrium price:

Accepted Answer

A)  efficiency does not occur.
B)  total surplus is not maximized.
C)  producer surplus is decreased.
D)  All of these are true.E) B) and D)
F) B) and C)

Question 3

Assume there are three hardware stores in the market for hammers and that all three markets produce a single,standard model hammer.House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7.Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10.Bob's Hardware store is a family owned and operated,independent hardware store and can offer hammers 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 be:

Accepted Answer

A)  $3.
B)  $6.
C)  $7.
D)  $17.E) All of the above
F) C) and D)

Question 4

Assume there are three hardware stores in the market for hammers and that all three markets produce a single,standard model hammer.House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7.Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10.Bob's Hardware store is a family owned and operated,independent hardware store and can offer hammers at a minimum price of $13.
Given the scenario described,if the market price of hammers increased from $8 to $11:

Accepted Answer

A)  total producer surplus would increase to $5.
B)  total producer surplus would decrease to $1.
C)  total producer surplus would increase to $17.
D)  total producer surplus would decrease to $7.E) B) and C)
F) None of the above

Question 5

Assume a market that has an equilibrium price of $5.If the market price is set at $9,producer surplus:

Accepted Answer

A)  rises for some because of the increased price.
B)  decreases for some because of fewer transactions taking place.
C)  Both of these statements are true.
D)  Neither of these statements is true.E) B) and C)
F) C) and D)

Question 6

Deadweight loss:

Accepted Answer

A)  occurs in markets that are inefficient.
B)  occurs when markets are not in equilibrium.
C)  is lost surplus due to less market transactions.
D)  All of these are true.E) C) and D)
F) B) and C)

Question 7

A seller always wants to:

Accepted Answer

A)  sell for a price that is as high as possible,but never lower than his minimum.
B)  sell for a price that is as low as possible,but never higher than his maximum.
C)  sell for a price that is as high as possible,but never higher than his maximum.
D)  sell for a price that is as low as possible,but never lower than his minimum.E) All of the above
F) A) and D)

Question 8

Well being can be increased by:

Accepted Answer

A)  policies that help people do business more effectively.
B)  technologies that help people share more and better information.
C)  increasing the availability of accurate information.
D)  All of these are true.E) A) and B)
F) A) and D)

Question 9

Surplus is:

Accepted Answer

A)  a way of measuring who benefits from transactions and by how much.
B)  the difference between the price the buyer would have paid and the actual price paid.
C)  the difference between the price the seller would have accepted and the actual sell price.
D)  All of these statements are true.E) A) and B)
F) A) and C)

Question 10

The concept of surplus can:

Accepted Answer

A)  show who loses from international trade.
B)  show who benefits from a tax.
C)  show who loses from minimum wage.
D)  show any of these.E) All of the above
F) A) and B)

Question 11

Assume there are three hardware stores in the market for hammers and that all three markets produce a single,standard model hammer.House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7.Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10.Bob's Hardware store is a family owned and operated,independent hardware store and can offer hammers at a minimum price of $13.
Given the scenario described,if the market price of hammers increased from $8 to $14,total producer surplus would:

Accepted Answer

A)  increase from $8 to $14.
B)  increase from $1 to $12.
C)  decrease from $14 to $8.
D)  increase from $7 to $30.E) None of the above
F) C) and D)

Question 12

Assume a market price gets set artificially high-that is,it gets set above the equilibrium price.This change means:

Accepted Answer

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

Question 13

Which of the following prices could represent Eli's willingness to pay for a baseball glove if he observed the market price of $43 and decided not buy one?

Accepted Answer

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

Question 14

Each seller's opportunity costs are:

Accepted Answer

A)  determined monetarily,which is why they can never be zero.
B)  determined by a number of factors,none of which is monetary.
C)  determined by a number of factors,including monetary considerations.
D)  None of these is true.E) C) and D)
F) A) and B)

Question 15

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)  None of these terms is used.E) A) and D)
F) A) and C)

Question 16

Willingness to pay represents:

Accepted Answer

A)  the point at which the benefit that a person will get from a good is equal to the benefit of spending the money on another alternative.
B)  the opportunity cost of a good.
C)  the buyer's reservation price.
D)  All of these represent willingness to pay.E) B) and D)
F) C) and D)

Question 17

Assume a market price gets set artificially low-that is,it gets set below the equilibrium price.This change means:

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 is true.E) A) and B)
F) B) and D)

Question 18

A market has four individuals considering buying a grill for his backyard.Further 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 $320,given the scenario described:

Accepted Answer

A)  Collin would drop out of the market.
B)  Collin's surplus would decrease the least.
C)  Collin is the only consumer who would be affected in terms of surplus.
D)  None of these is true.E) A) and B)
F) A) and D)

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 heroin.
D)  All of these markets are missing.E) C) and D)
F) None of the above

Question 20

The loss of total surplus that results when the quantity of a good that is bought and sold is below the market equilibrium quantity is called:

Accepted Answer

A)  deadweight loss.
B)  producer surplus.
C)  consumer surplus.
D)  total surplus.E) A) and C)
F) All of the above

Exam 5: Efficiency

Assume a market price gets set artificially high-that is,it gets set above the equilibrium price.This change means:

Correct Answer
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Assume a market that has an equilibrium price of $5.If the market price is set at $9,producer surplus:

Correct Answer
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Assume a market price gets set artificially low-that is,it gets set below the equilibrium price.This change means:

Correct Answer
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The loss of total surplus that results when the quantity of a good that is bought and sold is below the market equilibrium quantity is called:

Correct Answer
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Markets can be missing:

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

Correct Answer
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Well being can be increased by:

Correct Answer
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Each seller's opportunity costs are:

Correct Answer
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Deadweight loss:

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Which of the following prices could represent Eli's willingness to pay for a baseball glove if he observed the market price of $43 and decided not buy one?

Correct Answer
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A seller always wants to:

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Willingness to pay represents:

Correct Answer
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Surplus is:

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An example of a "missing" market would be:

Correct Answer
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The concept of surplus can:

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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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Exam 5: Efficiency

Assume a market price gets set artificially high-that is,it gets set above the equilibrium price.This change means:

Correct AnswerverifiedShow Answer

Assume a market that has an equilibrium price of $5.If the market price is set at $9,producer surplus:

Correct AnswerverifiedShow Answer

Assume a market price gets set artificially low-that is,it gets set below the equilibrium price.This change means:

Correct AnswerverifiedShow Answer

The loss of total surplus that results when the quantity of a good that is bought and sold is below the market equilibrium quantity is called:

Correct AnswerverifiedShow Answer

Markets can be missing:

Correct AnswerverifiedShow Answer

When the market price is set below the equilibrium price:

Correct AnswerverifiedShow Answer

Well being can be increased by:

Correct AnswerverifiedShow Answer

Each seller's opportunity costs are:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Deadweight loss:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following prices could represent Eli's willingness to pay for a baseball glove if he observed the market price of $43 and decided not buy one?

Correct AnswerverifiedShow Answer

A seller always wants to:

Correct AnswerverifiedShow Answer

Willingness to pay represents:

Correct AnswerverifiedShow Answer

Surplus is:

Correct AnswerverifiedShow Answer

An example of a "missing" market would be:

Correct AnswerverifiedShow Answer

The concept of surplus can:

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

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