Not so economic CH4

31. In the economic sense, almost everything is scarce. ________ of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price.

A shortage

33. Which of the following is not a result of government price controls?

Price controls benefit poor consumers but harm producers and wealthy consumers.

32. Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia. What will be the likely effect on the market for sparkling wine in Vinyardia?

Quantity demanded will decrease, quantity supplied will increase, and a surplus will result.

23. Rent control is an example of

a price ceiling.

The area ________ the market supply curve and ________ the market price is equal to the total amount of producer surplus in a market.

above; below

6.Marginal benefit is equal to the ________ benefit to a consumer receives from consuming one more unit of a good or service

additional

1. The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

consumer surplus

4.Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

demand

21. If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximized, then

economic efficiency is achieved.

2. In a city with rent-controlled apartments, all of the following are true except

landlords have an incentive to rent more apartments than they would without rent control.

19. In a competitive market the demand curve shows the ________ received by consumers and the supply curve shows the ________.

marginal benefit; marginal cost

24. To affect the market outcome, a price ceiling

must be set below the equilibrium price.

In New York City, about 1 million apartments are subject to rent control by the local government. Rent control

puts a legal limit on the rent that landlords can charge for an apartment.

11.A ________ curve shows the marginal cost of producing one more unit of a good or service.

supply

Marginal cost is

the additional cost to a firm of producing one more unit of a good or service.

5. Willingness to pay measures

the maximum price that a buyer is willing to pay for a good.

18. If, in a competitive market, marginal benefit is less than marginal cost,

the quantity sold is greater than the equilibrium quantity.

22. When a competitive equilibrium is achieved in a market

the total net benefit to society is maximized.

20. If equilibrium is achieved in a competitive market

there is no deadweight loss.

34. Economists are reluctant to state that price controls are desirable or undesirable because

whether the gains from the winners exceed the losses from the losers is not strictly an economic question.