Question 1

Producer surplus is defined as the gap between the supply curve and the market price.

Accepted Answer

A) True 
 B)False

Question 2

Use the following to answer questions 
Figure: Determining Surplus 4 
-(Figure: Determining Surplus 4) In the graph,how much is consumer surplus?

Accepted Answer

A)   $40
B)   $80
C)   $130
D)   $160E) None of the above
F) B) and C)

Question 3

If a transaction imposes external costs,then:

Accepted Answer

A)   too much is being produced relative to the socially optimal amount.
B)   production should be increased to generate enough profits to cover those costs.
C)   all production of the good or service should cease.
D)   the market produces the socially optimal amount of goods.E) A) and B)
F) B) and C)

Question 4

If one person consumes a public good:

Accepted Answer

A)   others are excluded from enjoying it.
B)   the amounts available to others are diminished.
C)   he or she must pay for it.
D)   others cannot be excluded from enjoying it.E) None of the above
F) C) and D)

Question 5

Use the following to answer questions 
Figure: Understanding Price Ceilings and Floors 
-(Figure: Understanding Price Ceilings and Floors) In the graph,if the government sets a price of $75,there is a:

Accepted Answer

A)   shortage of 600.
B)   surplus of 600.
C)   shortage of 800.
D)   surplus of 800.E) A) and B)
F) All of the above

Question 6

A legal maximum price that can be charged for a product or service is known as a(n) :

Accepted Answer

A)   price ceiling.
B)   price floor.
C)   illegitimate price.
D)   non-agreed price.E) All of the above
F) C) and D)

Question 7

Markets tend to provide too little of products with external benefits.

Accepted Answer

A) True 
 B)False

Question 8

When a scarce good or resource is consumed by the person who does not value it most,economists refer to the situation as a misallocation of resources.

Accepted Answer

A) True 
 B)False

Question 9

Use the following to answer questions 
Figure: Determining Surplus 4 
-(Figure: Determining Surplus 4) In the graph,how much is producer surplus?

Accepted Answer

A)   $8
B)   $5
C)   $10
D)   $25E) A) and B)
F) All of the above

Question 10

Producer surplus is shown graphically as the area:

Accepted Answer

A)   under the demand curve and above the market price.
B)   under the demand curve and below the market price.
C)   above the supply curve and above the market price.
D)   above the supply curve and below the market price.E) None of the above
F) B) and C)

Question 11

Suppose that a customer's willingness to pay for a product is $79,and the seller's willingness to sell is $64.If the negotiated price is $68,how much is consumer surplus?

Accepted Answer

A)   $4
B)   $11
C)   $15
D)   $21E) A) and B)
F) A) and C)

Question 12

Suppose that a customer's willingness to pay for a product is $1,480,and the seller's willingness to sell is $1,210.If the negotiated price is $1,479,how much is producer surplus?

Accepted Answer

A)   $0
B)   $1
C)   $210
D)   $269E) A) and D)
F) A) and C)

Question 13

Use the following to answer questions 
Figure: Determining Surplus and Loss 
-(Figure: Determining Surplus and Loss) In the graph,if the government sets a price of $5,this is an example of an:

Accepted Answer

A)   effective price ceiling.
B)   effective price floor.
C)   efficient price ceiling.
D)   efficient price floor.E) All of the above
F) A) and B)

Question 14

Use the following to answer question 
Figure: Determining Surplus 5 
-(Figure: Determining Surplus 5) According to the graph,at equilibrium,consumer surplus is ______ and producer surplus is ______.

Accepted Answer

A)   $400;$200
B)   $800;$400
C)   $20;$10
D)   40 units;40 unitsE) All of the above
F) A) and B)

Question 15

Laissez-faire is a _____ term that means _____.

Accepted Answer

A)   French;"all else equal"
B)   French;"let it be"
C)   Spanish;"all else equal"
D)   Spanish;"let it be"E) A) and C)
F) None of the above

Question 16

Producer surplus is defined as the:

Accepted Answer

A)   gap between the demand curve and the market price.
B)   gap between the supply curve and the market price.
C)   difference between a price floor and the market price.
D)   difference between a price ceiling and the market price.E) A) and B)
F) B) and D)

Question 17

Use the following to answer questions 
Figure: Determining Surplus and Loss 
-(Figure: Determining Surplus and Loss) In the graph,how much is producer surplus at a price of $5?

Accepted Answer

A)   $30
B)   $90
C)   $170
D)   $300E) A) and C)
F) All of the above

Question 18

Suppose that a customer's willingness to pay for a product is $5,and the seller's willingness to sell is $2.If the negotiated price is $4,consumer surplus is $2.

Accepted Answer

A) True 
 B)False

Question 19

Use the following to answer question 
Figure: Determining Surplus 6 
-(Figure: Determining Surplus 6) We can calculate the total surplus as:

Accepted Answer

A)   $10,000.
B)   $20,000.
C)   $40,000.
D)   $80,000.E) All of the above
F) A) and D)

Question 20

Suppose that a customer's willingness to pay for a product is $79,and the seller's willingness to sell is $64.If the negotiated price is $68,producer surplus is $4.

Accepted Answer

A) True 
 B)False

Exam 4: Markets and Government

Use the following to answer questions Figure: Determining Surplus and Loss -(Figure: Determining Surplus and Loss) In the graph,how much is producer surplus at a price of $5?

Correct AnswerverifiedShow Answer

Producer surplus is defined as the:

Correct AnswerverifiedShow Answer

Suppose that a customer's willingness to pay for a product is $5,and the seller's willingness to sell is $2.If the negotiated price is $4,consumer surplus is $2.

Correct AnswerverifiedShow Answer

When a scarce good or resource is consumed by the person who does not value it most,economists refer to the situation as a misallocation of resources.

Correct AnswerverifiedShow Answer

Use the following to answer questions Figure: Understanding Price Ceilings and Floors -(Figure: Understanding Price Ceilings and Floors) In the graph,if the government sets a price of $75,there is a:

Correct AnswerverifiedShow Answer

Use the following to answer questions Figure: Determining Surplus and Loss -(Figure: Determining Surplus and Loss) In the graph,if the government sets a price of $5,this is an example of an:

Correct AnswerverifiedShow Answer

Suppose that a customer's willingness to pay for a product is $79,and the seller's willingness to sell is $64.If the negotiated price is $68,producer surplus is $4.

Correct AnswerverifiedShow Answer

Use the following to answer question Figure: Determining Surplus 6 -(Figure: Determining Surplus 6) We can calculate the total surplus as:

Correct AnswerverifiedShow Answer

Laissez-faire is a _____ term that means _____.

Correct AnswerverifiedShow Answer

Producer surplus is shown graphically as the area:

Correct AnswerverifiedShow Answer

If a transaction imposes external costs,then:

Correct AnswerverifiedShow Answer

A legal maximum price that can be charged for a product or service is known as a(n) :

Correct AnswerverifiedShow Answer

Use the following to answer questions Figure: Determining Surplus 4 -(Figure: Determining Surplus 4) In the graph,how much is producer surplus?

Correct AnswerverifiedShow Answer

Markets tend to provide too little of products with external benefits.

Correct AnswerverifiedShow Answer

Suppose that a customer's willingness to pay for a product is $79,and the seller's willingness to sell is $64.If the negotiated price is $68,how much is consumer surplus?

Correct AnswerverifiedShow Answer

Use the following to answer questions Figure: Determining Surplus 4 -(Figure: Determining Surplus 4) In the graph,how much is consumer surplus?

Correct AnswerverifiedShow Answer

Suppose that a customer's willingness to pay for a product is $1,480,and the seller's willingness to sell is $1,210.If the negotiated price is $1,479,how much is producer surplus?

Correct AnswerverifiedShow Answer

Producer surplus is defined as the gap between the supply curve and the market price.

Correct AnswerverifiedShow Answer

If one person consumes a public good:

Correct AnswerverifiedShow Answer

Use the following to answer question Figure: Determining Surplus 5 -(Figure: Determining Surplus 5) According to the graph,at equilibrium,consumer surplus is ______ and producer surplus is ______.

Correct AnswerverifiedShow Answer

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Laissez-faire is a _ term that means _.

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Use the following to answer question Figure: Determining Surplus 5 -(Figure: Determining Surplus 5) According to the graph,at equilibrium,consumer surplus is and producer surplus is .

Correct Answer
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