Microeconomics chapter 6,7,8,9 AIC

With trade, domestic production and domestic consumption, respectively, are a) 600 and 600. B)600 and 300. C)300 and 900. D)600 and 900.

C)300 and 900.

Which area represents producer surplus when the price is P1? A) BCG B) ACH C) ABGD D) DGH

A) BCG

Government revenue raised by the tariff is represented by the area A) E. B) B + E. C) D + E + F. D) B + D + E + F.

A) E.

A price ceiling is binding when it is set A) above the equilibrium price, causing a shortage. B) above the equilibrium price, causing a surplus. C)below the equilibrium price, causing a shortage. D)below the equilibrium price, causing a surplus.

A) above the equilibrium price, causing a shortage.

Suppose the nation of Canada forbids international trade. In Canada, you can obtain a hockey stick by trading 5 baseball bats. In other countries, you can obtain a hockey stick by trading 8 baseball bats. These facts indicate that A) if Canada were to allow trade, it would export hockey sticks. B) Canada has an absolute advantage, relative to other countries, in producing hockey sticks. C) Canada has a comparative advantage, relative to other countries, in producing baseball bats. D) All of the above are correct.

A) if Canada were to allow trade, it would export hockey sticks.

If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price, A) the country will be an exporter of the good. B) the country will be an importer of the good. C) the country will be neither an exporter nor an importer of the good. D) Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

A) the country will be an exporter of the good.

If a price floor is not binding, then A)the equilibrium price is above the price floor. B)the equilibrium price is below the price floor. C) there will be a surplus in the market. D)there will be a shortage in the market.

A) the equilibrium price is above the price floor.

A government-imposed price of $12 in this market is an example of a A)binding price ceiling that creates a shortage. B)non-binding price ceiling that creates a shortage. C)binding price floor that creates a surplus. D)non-binding price floor that creates a surplus.

A)binding price ceiling that creates a shortage.

When the country for which the figure is drawn allows international trade in crude oil, A)consumer surplus for domestic crude-oil consumers decreases. B)the demand for crude oil by domestic crude-oil consumers decreases. C)the losses of the domestic losers outweigh the gains of the domestic winners. D)domestic crude-oil producers sell less crude oil.

A)consumer surplus for domestic crude-oil consumers decreases.

Buyer Willingness To Pay Calvin $150.00 Sam $135.00 Andrew $120.00 Lori $100.00 If the price of the product is $130, then who would be willing to purchase the product? A) Calvin B) Calvin and Sam C) Calvin, Sam, and Andrew D) Calvin, Sam, Andrew, and Lori

B) Calvin and Sam

On a graph, the area below a demand curve and above the price measures A) producer surplus. B) consumer surplus. C) deadweight loss. D) willingness to pay.

B) consumer surplus.

If a nonbinding price ceiling is imposed on a market, then the the A) quantity sold in the market will decrease. B) quantity sold in the market will stay the same. C) price in the market will increase. D) price in the market will decrease.

B) quantity sold in the market will stay the same.

With trade and without a tariff, the price and domestic quantity demanded are A)P1 and Q1. B)P1 and Q4. C)P2 and Q2. D)P2 and Q3.

B)P1 and Q4.

A legal minimum on the price at which a good can be sold is called a A) price subsidy. B)price floor. C)tax. D)price ceiling.

B)price floor.

Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called A)a resistance price. B)willingness to pay. C)consumer surplus. D)producer surplus.

B)willingness to pay

The price of a good that prevails in a world market is called the A) absolute price. B) relative price. C) comparative price. D) world price.

D) world price.

When a binding price ceiling is imposed on a market, A) price no longer serves as a rationing device. B) the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling. C) all buyers benefit. D) All of the above are correct.

D) All of the above are correct.

A demand curve reflects each of the following except the A) willingness to pay of all buyers in the market. B) value each buyer in the market places on the good. C) highest price buyers are willing to pay for each quantity. D) ability of buyers to obtain the quantity they desire.

D) ability of buyers to obtain the quantity they desire.

The principle of comparative advantage asserts that A)not all countries can benefit from trade with other countries. B) the world price of a good will prevail in all countries, regardless of whether those countries allow international trade in that good. C) countries can become better off by exporting goods, but they cannot become better off by importing goods. D) countries can become better off by specializing in what they do best.

D) countries can become better off by specializing in what they do best.

The price ceiling A)is binding. B)causes a shortage. C)causes the quantity demanded to exceed the quantity supplied. D)All of the above are correct

D)All of the above are correct

To say that a price ceiling is binding is to say that the price ceiling A)results in a shortage. B)is set below the equilibrium price. C)causes quantity demanded to exceed quantity supplied. D)All of the above are correct.

D)All of the above are correct.

To say that a price ceiling is nonbinding is to say that the price ceiling A) results in a surplus. B)is set above the equilibrium price. C) causes quantity demanded to exceed quantity supplied. D)All of the above are correct.

D)All of the above are correct.

The market for soybeans in Canada consists solely of domestic buyers of soybeans and domestic sellers of soybeans if A) consumer surplus equals producer surplus in the Canadian soybean market. B)total surplus exceeds consumer surplus in the Canadian soybean market. C)Canada permits international trade in soybeans. D)Canada forbids international trade in soybeans.

D)Canada forbids international trade in soybeans.

What is the fundamental basis for trade among nations? A) shortages or surpluses in nations that do not trade B)misguided economic policies C) absolute advantage D)comparative advantage

D)comparative advantage

If the government removes a binding price ceiling from a market, then the price paid by buyers will A) increase, and the quantity sold in the market will increase. B)increase, and the quantity sold in the market will decrease. C)decrease, and the quantity sold in the market will increase. D)decrease, and the quantity sold in the market will decrease

D)decrease, and the quantity sold in the market will decrease

The study of how the allocation of resources affects economic well-being is called A)consumer economics. B)macroeconomics. C)willingness-to-pay economics. D)welfare economics

D)welfare economics

If the price of the good is $150, then consumer surplus amounts to a. $150. b. $200. c. $250. d. $300.

c. $250

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price, A) the country will be an exporter of the good. B) the country will be an importer of the good. C) the country will be neither an exporter nor an importer of the good. D) Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

B) the country will be an importer of the good.

Which of the Ten Principles of Economics does welfare economics explain more fully? A)The cost of something is what you give up to get it. B)Markets are usually a good way to organize economic activity. C)Trade can make everyone better off. D) A country's standard of living depends on its ability to produce goods and services.

B)Markets are usually a good way to organize economic activity.

A price floor will be binding only if it is set A)equal to the equilibrium price. B)above the equilibrium price. C)below the equilibrium price. D)either above or below the equilibrium price.

B)above the equilibrium price.

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it A) maximizes both the total revenue for firms and the quantity supplied of the product. B)maximizes the combined welfare of buyers and sellers. C)minimizes costs and maximizes output. D)minimizes the level of welfare payments.

B)maximizes the combined welfare of buyers and sellers.

When the country for which the figure is drawn allows international trade in crude oil, A) consumer surplus changes from the area A + B + D to the area A. B)producer surplus changes from the area C to the area B + C + D. C)total surplus decreases by the area D. D)All of the above are correct.

B)producer surplus changes from the area C to the area B + C + D.

The price ceiling causes A)supplied to exceed quantity demanded by 45 units. B)supplied to exceed quantity demanded by 85 units. C)demanded to exceed quantity supplied by 45 units. D)demanded to exceed quantity supplied by 85 units.

B)supplied to exceed quantity demanded by 85 units.

When the price is P1, consumer surplus is A) A. B) A+B. C) A+B+C. D) A+B+D.

C) A+B+C

Seller Cost Abby $1,600 Bobby $1,300 Dianne $1,100 Evaline $900 Carlos $800 If the price is $1,l50, who would be willing to supply the product? A)Abby and Bobby B)Abby, Bobby, and Dianne C)Carlos, Dianne, and Evaline D)Dianne and Evaline only

C)Carlos, Dianne, and Evaline

Spain is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Spain imposes a $5 tariff on chips. As a result, A) Spanish consumers of chips and Spanish producers of chips both gain. B) Spanish consumers of chips gain and Spanish producers of chips lose. C)Spanish consumers of chips lose and Spanish producers of chips gain. D) Spanish consumers of chips and Spanish producers of chips both lose.

C)Spanish consumers of chips lose and Spanish producers of chips gain.

Welfare economics explains which of the following in the market for televisions? A) The government sets the price of televisions; firms respond to the price by producing a specific level of output. B)The government sets the quantity of televisions; firms respond to the quantity by charging a specific price. C)The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers. D)The market equilibrium price for televisions maximizes consumer welfare and minimizes producer profit.

C)The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers.

A shortage results when a A)nonbinding price ceiling is imposed on a market. B)nonbinding price ceiling is removed from a market. C)binding price ceiling is imposed on a market. D)binding price ceiling is removed from a market.

C)binding price ceiling is imposed on a market.

A government-imposed price of $24 in this market is an example of a A)binding price ceiling that creates a shortage. B)non-binding price ceiling that creates a shortage. X C)binding price floor that creates a surplus. D)non-binding price floor that creates a surplus.

C)binding price floor that creates a surplus.

Assume, for Vietnam, that the domestic price of textiles without international trade is higher than the world price of textiles. This suggests that, in the production of textiles, A) Vietnam has a comparative advantage over other countries and Vietnam will import textiles. B) Vietnam has a comparative advantage over other countries and Vietnam will export textiles. C)other countries have a comparative advantage over Vietnam and Vietnam will import textiles. D) other countries have a comparative advantage over Vietnam and Vietnam will export textiles.

C)other countries have a comparative advantage over Vietnam and Vietnam will import textiles.

An example of normative analysis is studying A)how market forces produce equilibrium. B)surpluses and shortages. C)whether equilibrium outcomes are socially desirable D)income distributions

C)whether equilibrium outcomes are socially desirable

If a price ceiling is not binding, then... A) here will be a surplus in the market. B) there will be a shortage in the market. C) the market will be less efficient than it would be without the price ceiling. D) there will be no effect on the market price or quantity sold

D) there will be no effect on the market price or quantity sold

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should A) export copper, since that country has a comparative advantage in copper. B) import copper, since that country has a comparative advantage in copper. C) neither export nor import copper, since that country cannot gain from trade. D)neither export nor import copper, since that country already produces copper at a low cost compared to other countries.

D)neither export nor import copper, since that country already produces copper at a low cost compared to other countries.

Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is a. $150. b. $350. c. $500. d. $850.

a. $150.