Economics Practice Test 1
Refer to Figure 6-6. Which of the following price ceilings would be binding in this market?
$6
Refer to Figure 7-3. When the price is P1, consumer surplus is
A+B+C
Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?
ABC
Refer to Figure 7-10. Which area represents producer surplus when the price is P1?
BCG
A legal maximum on the price at which a good can be sold is called a price
Ceiling
Refer to Figure 7-20. Total surplus can be measured as the area
JNL
If a price ceiling is not binding then
The equilibrium is below the price ceiling
A price ceiling will be binding only if it is set
below the equilibrium price
Refer to Figure 6-2. The price ceiling
causes a shortage of 85 units
Refer to Figure 6-6. If the government imposes a price floor of $6 on this market,then there will be
no surplus
To say that a price ceiling is binding is to say that the price ceiling
results in a shortage, is set below the equilibrium price, and causes quantity demanded to exceed quantity supplied
Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be
$5
Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie
willingness to pay
Refer to Figure 7-4. Which area represents the increase in consumer surplus when the price falls from P1 to P2?
ABDG
Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?
DGH
Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposesa price floor of $3 per tube. As a result of the price floor,
Quantity demanded decreases, quantity supplied increases, and there is a surplus
Refer to Figure 6-1. A binding price ceiling is shown in
panel (b) only
If a nonbinding price ceiling is imposed on a market then the
quantity sold in the market will stay the same
Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $70, how much is the combined total cost of all participating sellers in the market?
$100
Refer to Table 7-1. If price of the product is $135, then the total consumer surplus is
$15
Refer to Figure 7-10. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?
ABGD
Refer to Figure 7-4. Which area represents consumer surplus at a price of P1?
BDF
Refer to Figure 7-3. When the price rises from P1 to P2, consumer surplus
decreases by an amount equal to B+C
To say that a price ceiling is nonbinding is to say that the price ceiling
is set above the equilibrium price
Refer to Figure 6-1. In which panel(s) of the figure would there be a shortage of the good at the price ceiling?
panel (b) only