intro to micro chapter 4 quiz
a
If the demand curve reflects consumers' full willingness to pay, and the supply curve reflects all costs of production, then which of the following is true? a) The benefit surpluses shared between consumers and producers will be maximized. b) The benefit surpluses received by consumers and producers will be equal c) There will be no consumer or producer surplus. d) Consumer surplus will be maximized, and producer surplus will be minimized.
c
Jennifer buys a piece of costume jewelry for $33, for which she was willing to pay $42. The minimum acceptable price to the seller, Nathan, was $30. Jennifer experiences a a) a consumer surplus of $12, and Nathan experiences a producer surplus of $3. b) a producer surplus of $9, and Nathan experiences a consumer surplus of $3. c) a consumer surplus of $9, and Nathan experiences a producer surplus of $3. d) a producer surplus of $9, and Nathan experiences a producer surplus of $12.
d
Professional buyers of antiques often have more information about the value of antique objects than do the sellers. This illustrates a) the principal-agent problem. b) the moral hazard problem c) the free-rider problem d) asymmetric information
a
Refer to the competitive market diagram for product Z. Assume that the current market demand and supply curves for Z are D1 and S1. If there are substantial external benefits associated with the production of Z, then a) government can improve the allocation of resources by subsidizing consumers of Z. b) government can improve the allocation of resources by imposing a per-unit tax on Z. c) a government subsidy for producers of Z would ensure that consumers are paying directly for all of the benefits they receive from Z. d) consumers are paying too much for the good.
c
Refer to the diagram. If actual production and consumption occur at Q1, a) efficiency is achieved. b) consumer surplus is maximized. c) an efficiency loss (or deadweight loss) of b + d occurs. d) an efficiency loss (or deadweight loss) of e + d occurs.
c
Suppose a firm offers its workers a cafeteria plan in which it allows workers to allocate a set amount of fringe benefit money toward specific insurance. Mary, who has five kids needing braces, selects the family dental coverage. This is an example of the a) free-rider problem b) principal-agent problem c) adverse selection problem d) moral hazard problem
c
The marginal benefit to society of reducing pollution declines with increases in pollution abatement because of the law of a) increasing costs b) diminishing returns c) diminishing marginal utility d) conservation of matter and energy