ECON Test #2
If the price of the product is $122, then the total consumer surplus is
$41
If the equilibrium price is $200, what is the producer surplus?
$7,500
If the market price is $1,000, the producer surplus in the market is
B. $300
Which of the following price ceilings would be binding in this market?
B. $6
If Ronnie charges all customers the same price for lawn mowing, that price is
B. $60
At equilibrium, consumer surplus is represented by the area
B. A + B + C
When the price of an eBook is $15 the quantity demanded is 400 eBooks per day. When the price falls to $10,000 the quantity demanded increases to 700. Using midpoint method- the demand for eBooks is
B. Elastic
On a graph, consumer surplus is represented by the area
B. below the demand curve and above price
Policymakers use taxes
B. both to raise revenue for public purposes and to influence market outcomes
A binding price ceiling
D (ii) and (iv) only
If the price of the good is $9.50, then producer surplus is
D. $8.50
In a competitive market, the price of a product
None of the above
Which of the following statements is not correct?
When the price is $6, there is a surplus of 8 units
A price ceiling will be binding only if it is set
below the equilibrium price
The movement from point A to point B on the graph shows an
increase in quantity demanded
Another term for equilibrium price
market-clearing price
A 10 percent increase in gasoline prices reduces gasoline consumption by about
2.5% after 1 year and 6% after 5 years
The following table contains a demand schedule for a good. If the law of demand applies to this good, then Q1 could be
A. 0
Which of the following is consistent with the elasticities given in the Table above?
A. A is a luxury and B is a necessity
Which of the following statements is correct?
A. Buyers always want to pay less and sellers always to be paid more
If the government imposes a price floor of $6 on this market, then there will be
A. No surplus
Which of the following observations would be consistent with the imposition of binding price ceiling on a market?
A. a smaller quantity of the good is bought and sold
When consumers face rising gasoline prices, they typically
A. reduce their quantity demanded more in the long run than in the short run
A key determinant of the price elasticity of supply is
A. the ability of sellers to change the price of the good they produce
A binding price ceiling is shown in
B. panel (b) only
Consumer surplus is
B. the amount a consumer is willing to pay minus the amount the consumer actually pays
Price controls are usually enacted
B. when policymakers believe that the market price of a good or service is unfair to buyers sellers
Price of frozen chicken nuggets decreases from $6.50 to $5.75 and quantity demanded increases from 600 to 800. Using the midpoint method, the price elasticity of demand for frozen chicken nuggets in the given price range is
C. 2.33
If the price of the product is $110, then who would be willing to purchase the product?
C. Calvin, Sam, and Andrew
Minimum-wage laws dictate
C. a minimum wage that firms may pay workers
A surplus results when a
C. binding price floor is imposed on a market
The shift from S to S' is called an
C. increase in supply
Demand is said to be inelastic if the
C. quantity demanded changes proportionately less than price
If the price elasticity of supply is .4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about
D. 12.5%
Elasticity is a measure of
D. How much buyers and sellers respond to changes in market conditions
The supply of a good will be more elastic, the
D. Longer the time period being considered
Which of the following is most likely explanation for the imposition of a price floor on the market for corn?
D. Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor
If the government imposes a price ceiling of $6 on this market, then there will be
D. a shortage of 30 units
When a buyer's willingness to pay for a good is equal to the price of the good, the
D. buyer is indifferent between buying the good and not buying it
The study of how the allocation of resources affects economic well-being is called
D. welfare economics
If the price were P3, consumer surplus would be represented by the area
E. A
Which of the following characteristics is required for a perfectly competitive market?
The goods offered for sale are exactly the same and there are so many buyers and sellers that no single buyer or seller has any influence over the market (D both A and B)
In a competitive market free of government regulation,
price adjusts until quantity demanded equals quantity supplied
Which of the following is likely to have the most price inelastic demand?
toothpaste