CH4

t/f Markets tend to provide too little of products with external benefits.

true

In the graph, how much is deadweight loss at a price of $12? a. $80 b. $70 c. $60 d. $0

b.

In the graph, which price would NOT allow for an effective price floor? a. $12 b. $8 c. $14 d. $10

b.

When a scarce good or resource is consumed by the person who does not value it most, economists refer to the situation as: a. the allocation of resources. b. a misallocation of resources. c. equity. d. efficiency.

b.

A good example of a government-imposed price floor is: a. rent controls. b. supply and demand. c. minimum wage. d. equilibrium.

c.

Flu vaccination shots provide external benefits. Thus: a.the private market provides the socially desirable output of shots. b. the private market collapses. c. too few flu vaccination shots are given. d. too many flu vaccination shots are given.

c.

Suppose a price floor is set on cane sugar that is approximately three times the equilibrium price. One of the effects is a(n): a. shortage of sugar. b. increase in the efficiency of the market. c. drop in the quantity of sugar consumed. d. shift by food manufacturers from the use of corn syrup to cane sugar.

c.

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 producer surplus? a. $21 b. $11 c. $4 d. $15

c.

The measure of society's benefits due to a market transaction is called: a. producer surplus. b. deadweight loss. c. total surplus. d. consumer surplus.

c.

"Price gouging" laws are types of _____ and often result in _____. a. price ceilings; a sufficient supply of a scarce good b. price floors; a sufficient supply of a scarce good c. price floors; surpluses of a scarce good d. price ceilings; shortages of a scarce good

d.

Consumer surplus is defined as the: a. difference between a price ceiling and the market price. b. gap between the supply curve and the market price. c. difference between a price floor and the market price. d. gap between the demand curve and the market price.

d.

Consider the graph. If the price is raised from $8 to $12, consumer surplus: a. decreases by $120 and deadweight loss increases by $70. b. increases by $20 and deadweight loss increases by $70. c. increases by $120 and deadweight loss increases by $60. d. decreases by $20 and deadweight loss increases by $70.

a.

In the graph above, efficiency in this market is achieved at a price of: a. $10. b. $0. c. $4. d. $14.

a.

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. $11 b. $21 c. $4 d. $15

a.

A good example of a government imposed-price ceiling is: a. equilibrium. b. supply and demand. c. rent controls. d. minimum wage.

c.

In the graph, which price would NOT allow for an effective price floor? a. $10 b. $18 c. $14 d. $6

d.

Jonathan purchased coffee for $5 at Jennifer's coffee shop; however, he was willing to pay $9. Jennifer was willing to accept $3 for the coffee. The results of this transaction are a consumer surplus of: a. $2 and a producer surplus of $4. b. $10 and a producer surplus of $12. c. $12 and a producer surplus of $10. d. $4 and a producer surplus of $2.

d.

Producer surplus is defined as the: a. difference between a price floor and the market price. b. difference between a price ceiling and the market price. c. gap between the demand curve and the market price. d. gap between the supply curve and the market price.

d.