Quiz 3
The figure to the right shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. What is the value of producer surplus at the equilibrium price of $15? A. $80 B. $160 C. $240 D. $400
B. $160
The graph to the right shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. What is the value of producer surplus at a price of $18? A. $300 B. $240 C. $340 D. $720
B. $240
The figure shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. What is the value of consumer surplus after the imposition of the ceiling? A. $200,000 B. $250,000 C. $300,000 D. $400,000
B. $250,000
The graph at the right shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. What is the value of consumer surplus at a price of $18? A. $180 B. $60 C. $120 D. $240
B. $60
In New York City, government limits on the supply of taxis resulted in a price ________ the competitive market level, which would typically ________ economic efficiency. A. below; reduce B. above; reduce C. below; increase D. above; increase
B. above; reduce
Frieda is at her local florist to buy a dozen roses. She is willing to pay $75 for the roses, and buys them for $75. Frieda's consumer surplus from the purchase is A. $150. B. $75. C. $37.50. D. $0.
D. $0.
The figure to the right shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. What is the value of consumer surplus at the equilibrium price of $15? A. $60 B. $120 C. $180 D. $240
D. $240
The graph at the right shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. At a price of $18 consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity? A. No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th unit. B. Yes, otherwise consumers would not buy 40 units. C. Yes, because $18 shows what consumers are willing to pay for the product. D. No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit.
D. No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit.
The figure to the right shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. What is the value of the deadweight loss at the equilibrium price of $15? A. $0 B. $40 C. $60 D. $100
A. $0
The figure shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. What is the value of producer surplus after the imposition of the ceiling? A. $50,000 B. $200,000 C. $250,000 D. $300,000
A. $50,000
The area ________ the market supply curve and ________ the market price is equal to the total amount of producer surplus in a market. A. above; below B. below; below C. below; above D. above; above
A. above; below
Refer to the diagram to the right. What area represents producer surplus at a price of P2? A. A + B + C + D + E B. A + B + C C. A + B D. B + D
B. A + B + C
Marginal benefit is equal to the ________ benefit a consumer receives from consuming one more unit of a good or service. A. total B. additional C. surplus D. unintended
B. additional
Consumer surplus in a market for a product would be equal to ________ if the market price was zero. A. the area between the supply curve and the demand curve B. the area under the demand curve C. zero D. the area above the supply curve
B. the area under the demand curve
The graph to the right shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. What is the value of the deadweight loss at a price of $18? A. $660 B. $100 C. $180 D. $1,040
B. $100
Refer to the diagram to the right. What area represents the increase in producer surplus when the market price rises from P1 to P2? A. C + E B. B + D C. A + B D. A + C + E
C. A + B
Which of the following statements is true? A. Producer surplus measures the total benefit received by producers from participating in a market. B. Consumer surplus measures the total benefit from participating in a market. C. Consumer surplus measures the net benefit from participating in a market. D. When a market is in equilibrium consumer surplus equals producer surplus.
C. Consumer surplus measures the net benefit from participating in a market.
Consumer Willingness to Pay Tom $40 Dick $30 Harriet $25 The table above lists the highest prices three consumers, Tom, Dick, and Harriet, are willing to pay for a short−sleeved polo shirt. If the price of one of the shirts is $28 dollars, A. Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts. B. Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts. C. Tom will receive $12 of consumer surplus from buying one shirt. D. Harriet will receive $25 of consumer surplus since she will buy no shirts.
C. Tom will receive $12 of consumer surplus from buying one shirt.
The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called A. the income effect. B. the substitution effect. C. consumer surplus. D. producer surplus.
C. consumer surplus.
Consumers are willing to purchase a product up to the point where A. the consumer surplus is equal to the producer surplus. B. the marginal benefit of consuming the product equals the area below the supply curve and above the market price. C. the marginal benefit of consuming the product is equal to the marginal cost of consuming it. D. the marginal benefit of consuming a product is equal to zero.
C. the marginal benefit of consuming the product is equal to the marginal cost of consuming it.
Suppliers will be willing to supply a product only if A. the price received is less than the additional cost of producing the product. B. the price received is at least double the additional cost of producing the product. C. the price received is at least equal to the additional cost of producing the product. D. the price is higher than the average cost of producing the product.
C. the price received is at least equal to the additional cost of producing the product.
Economic surplus A. does not exist when a competitive market is in equilibrium. B. is the difference between quantity demanded and quantity supplied when the market price for a product is greater than the equilibrium price. C. is equal to the difference between consumer surplus and producer surplus. D. is equal to the sum of consumer surplus and producer surplus.
D. is equal to the sum of consumer surplus and producer surplus.
The figure to the right represents the market for pecans. Assume that this is a competitive market. If 4,000 pounds of pecans are sold A. the marginal benefit of each of the 4,000 pounds of pecans equals $3. B. consumer surplus equals zero. C. marginal benefit is equal to marginal cost. D. the deadweight loss is equal to $12,000.
D. the deadweight loss is equal to $12,000.
Economic efficiency in a competitive market is achieved when A. consumers and producers are satisfied. B. economic surplus is equal to consumer surplus. C. producer surplus equals the total amount firms receive from consumers minus the cost of production. D. the marginal benefit equals the marginal cost from the last unit sold.
D. the marginal benefit equals the marginal cost from the last unit sold.
The figure to the right represents the market for pecans. Assume that this is a competitive market. At a quantity of 4,000 pounds, A. the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently high. B. producers should lower the price to $3 in order to sell the quantity demanded of 4,000. C. the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high. D. the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low.
D. the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low.
