Macroeconomics Chapter 4

In the graph, how much is deadweight loss at a price of $12? A. $0 B. $60 C. $80 D. $70

D. $70

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? A. $4 B. $11 C. $15 D. $21

B. $11

In graph, calculate the value of producer surplus in this market. A. $140 B. $70 C. $60 D. $60

C. $60

In the graph, what is the efficient level of output? A. 0 B. 5 C. 10 D. 14

C. 10

Which is one of the four major reasons why markets fail? A. too much competition B. no externalities C. a mismatch of information D. private ownership of resources

C. a mismatch of information

In the graph, if a ceiling is set at $4, which of the following would result? A. surplus of 20 units B. a surplus of 40 units C. a shortage of 20 units D. a shortage of 40 units

C. a shortage of 20 units

Producer surplus us the difference between the: A. minimum price the buyer is willing to accept and the market price B. maximum price the buyer is willing to accept and the market price C. market price and the minimum price the seller is willing to accept D. maximum price the seller price is willing to accept and the market price

C. market price and the minimum price the seller is willing to accept

Which of these would be considered a public good? A. a football stadium B. a toll bridge C. national defense D. a private office building

C. national defense

If the price of a good falls below the equilibrium price: A. consumer surplus is decreased and deadweight loss is increased B. consumer surplus is increased and deadweight loss is decreased C. producer surplus is decreased and deadweight loss is increased D. producer surplus is decreased and deadweight loss is decreased

C. producer surplus is decreased and deadweight loss is increased

In the graph, what is the consumer surplus when the market price is $10? A. $30 B. $40 C. $60 D. $20

D. $20

Producer surplus is shown graphically as the area: A. under the demand curve and above the market price B. under the demand curved below the market price C. above the supply curve and above the market price D. above the supply curve and below the market price

D. above the supply curve and below the market price

Jessica lists her faulty treadmill for sale on craigslist but does not disclose the problems with it. If Blake buys the treadmill believing that it's problem-free, this is an example of market failure due to: A. the existence of external costs B. the existence of public goods C. the lack of competition D. asymmetric information

D. asymmetric information

In the graph, if the government sets a price of $12, this is an example of an: A. effective price ceiling B. effective price floor C. efficient price ceiling D. efficient price floor

B. effective price floor

In a market-based economy, producers will tend to prefer less competition because it: A. enables lower prices B. enables higher prices C. supports quality improvements D. increases product variety

B. enables higher prices

In the graph, consumer surplus is ______ in equilibrium and _____ at a price of $12 A. $40;$160 B. $80;$80 C. $160;$40 D. $320;$210

C. $160;$40

In the graph, the producer surplus is equal to_____ A. $12 B. $15 C. $25 D. $30

A. $12

In the graph, what is the producer surplus when the market price is $10? A. $30 B. $40 C. $60 D. $20

A. $30

Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If negotiated price is $68, how much is producer surplus? A. $4 B. $11 C. $15 D. $21

A. $4

In the graph, if a price floor on soybeans is set at $2 per bushel, the amount of surplus in this market would be_____ A. 0 bushels B. 10 bushels C. 40 bushels D. 50 bushels

A. 0 bushels

Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If negotiated price is $68: A. consumer surplus is negative B. consumer surplus is greater than producer surplus C. producer surplus is negative D. producer surplus is greater than consumer surplus

B. consumer surplus is greater than producer surplus

At the end of the term, Vicky wants to sell her economics textbook for at least $25, otherwise she would keep it. George is looking to buy a textbook because he's taking the class next term, and he is willing to pay at most $60. If Vicky agrees to sell the textbook to George for $45. A. George's consumer surplus is $15 and Vicky's producer surplus is $20 B. George's consumer surplus is $45 and Vicky's producer surplus is $45 C. George's consumer surplus is $60 and Vicky's producer surplus is $25 D. George's consumer surplus is $20 and Vicky's producer surplus is $15

A. George's consumer surplus is $15 and Vicky's producer surplus is $20

Implementing a price ceiling can cause: A. a shortage B. poverty C. a surplus D. scarcity

A. a shortage

Getting the flu shot reduces the chances of spreading the illness to one's classmates and friends. Why, then, is this considered a market failure due to external benefits? A. because the number of people who obtain flu shots is less than the socially optimal quantity B. because too many people actually get the flu shot C. because flu shots are not 100% effective D. because flu shots are priced too high relative to the cost of producing them

A. because the number of people who obtain flu shots is less than the socially optimal quantity

An effective price ceiling occurs at a price ________ the equilibrium price and causes a ______ A. below; shortage B. below; surplus C. above; shortage D. above; surplus

A. below; shortage

Supposed that the price of a good is $6 and equilibrium price is $3. Compared to market equilibrium: A. consumer surplus is decreased and deadweight loss is increased B. consumer surplus is increased and deadweight loss is decreased C. producer surplus is decreased and deadweight loss is increased D. producer surplus is decreased and deadweight loss is decreased

A. consumer surplus is decreased and deadweight loss is increased

Minimum wage laws: A. create a price floor below which workers cannot legally paid B. create a shortage of workers because no one would be willing to work for the minimum wage C. have no impact on wages because the equilibrium wage is higher than the minimum wage. D. are prime examples of price ceilings

A. create a price floor below which workers cannot legally paid

A price ceiling usually results in a: A. shortage and a misallocation of resources B. surplus and a misallocation of resources C. shortage and no misallocation of resources D. surplus and no misallocation of resources

A. shortage and a misallocation of resources

Markets tend to produce: A. too much of a good exhibiting external costs B. too much of a good exhibiting external benefits C. the right amount of a good exhibiting external costs D. the right amount of a good exhibiting external benefits

A. too much of a good exhibiting external costs

Consumer surplus is shown graphically as the area: A. under the demand curve and above the market price B. under the demand curved below the market price C. above the supply curve and above the market price D. above the supply curve and below the market price

A. under the demand curve and above the market price

Suppose the equilibrium price of carrots is $1. The price floor instituted by the government is $1.50. Based on this information, which of the following would you expect to take place in the market? A. we would expect to see a surplus of carrots B. there would be a shortage of carrots C. farmers would switch from growing carrots to growing potatoes D. the price floor would have no impact on the market because it is higher than equilibrium price.

A. we would expect to see a surplus of carrots

In the graph above, efficiency in this market is achieved at a price of: A. $14 B. $10 C. $4 D. $0

B. $10

While Steve is cleaning out his garage, he finds an old surfboard, that he no longer needs. As he walks to the dumpster to throw it out, his neighbor John asks if he could have it. John offers Steve a 6-pack of beer (worth $10) in exchange, which Steve happily accepts. Steve has achieved a producer surplus of: A. $0 since he was just going to throw out the board B. $10, the value of the beer he received C. $5, because Steve and John benefited equally from the $10 transaction. D. $50, because that's what the surfboard was likely worth.

B. $10, the value of the beer he received

In the graph, the consumer surplus is equal to ______ A. $12 B. $15 C. $25 D. $30

B. $15

Jason purchased a new printer for $150 although he was willing to pay $175. The minimum price acceptable to the seller, Jasmine, was $145. The results of this transaction are a consumer surplus of: A. $325 and a producer surplus of $295 B. $25 and a producer surplus of $5 C. $175 abd a producer surplus of $145 D. $150 and a producer surplus of $150

B. $25 and a producer surplus of $5

In graph, calculate the value of consumer surplus in market. A. $5 B.$50 C. $100 D. $240

B. $50

Suppose the market price is $5. The producer who sells the first unit of output has a willingness to sell equal to $2; and the producer who sells the third unit of output has a willingness-to-sell equal to $4. Total producer surplus across these three producers is: A.$7 B. $8 C. $4 D.$5

B. $8

Consumer surplus is the difference between the: A. minimum price the buyer is willing to pay and the market price B. maximum price the buyer is willing to pay and the market price C. minimum price the seller is willing to pay and the market price D. maximum price the seller is willing to pay and the market price

B. maximum price the buyer is willing to pay and the market price

If a price ceiling is set above the equilibrium price: A. a surplus results in the market B. no impact is felt in the market C. a shortage occurs in the market D. quantity supplied exceeds quantity demanded

B. no impact is felt in the market

If a price ceiling is set below the equilibrium price in the market, producer surplus will be: A. larger than it would be without the price ceiling B. smaller than it would be without the price ceiling C. the same as it would be without the price ceiling D. impossible to calculate

B. smaller than it would be without the price ceiling

When markets are efficient: A. the sum of consumer and producer surplus is minimized B. the sum of consumer and producer surplus is maximized C. consumer surplus is maximized, but producer surplus is minimized D. consumer surplus is minimized, but producer surplus is maximized

B. the sum of consumer and producer surplus is maximized

In the graph, producer surplus is____ in equilibrium and ____ at a price of $12 A. $0;$210 B. $160;$40 C. $120; $170 D$120;$120

C. $120; $170

Jackie finds a pair of jeans that she likes but the price tag is missing. She willing to buy it as long as it's not more than $100. The cashier informs Jackie that the price is $72. Jackie buys the jeans, and therefore achieved a consumer surplus of: A. $100 because that is what she was willing to pay B. $72 the price that she actually paid C. $28 the difference between what she was willing to pay and the price D. $0 because the jeans were not actually discount

C. $28 the difference between what she was willing to pay and the price

Which of the following price floors milk would not cause a surplus in the market if the equilibrium price for milk is $3.60 A. $3.90 B. $3.80 C. $3.50 D. All price floors cause a surplus

C. $3.50

In the graph, what is the sum of consumer and producer surplus? A. $30 B. $140 C. $50 D. $0

C. $50

An effective price ceiling leads to: A. quantity supplied exceeding quantity demanded B. quantity supplied equal to quantity demanded C. quantity demanded exceeding quantity supplied D. no effect on the market

C. quantity demanded exceeding quantity supplied

When the price of running shoes is higher than the market equilibrium price, which of these occurs? A. Consumer surplus rises and deadweight loss falls B. Consumer surplus rises and deadweight loss rises C. Consumer surplus falls and deadweight loss falls D. Consumer surplus falls and deadweight loss rises

D. consumer surplus falls and deadweight loss rises

If one person consumes a public good: A. others are excluded from enjoying it B. the amount of the public good available to others is diminished C. he or she much pay for it D. others cannot be excluded from enjoying it

D. others cannot be excluded from enjoying it

In the graph, if the government sets a price of $12, there is a: A. shortage of 20 units B. surplus of 20 units C. shortage of 40 units D. surplus of 40 units

D. surplus of 40 units

Market failure means that: A. the market has crashed B. the market has more buyers than sellers C. some firms that were industry have gone bankrupt D. the market has not provided a socially optimal amount of goods and services

D. the market has not provided a socially optimal amount of goods and services

Flu vaccination shots provide external benefits. Thus: A. too many flu vaccination shots are given B. the private market provides the socially desirable output shots C. the private markets collapse D. too few flu vaccination shots are given

D. too few flu vaccination shots are given