Question 1

When a market is efficient:

Accepted Answer

A)   there is no exchange that can make anyone better off without someone becoming worse off.
B)   a central planner must be involved.
C)   total surplus is zero.
D)   an increase in price will reduce the deadweight loss.E) B) and C)
F) None of the above

Question 2

Assume a market that has an equilibrium price of $4.If the market price is set at $8,which of the following is true?

Accepted Answer

A)   Some surplus is transferred from consumers to producers, but total surplus falls.
B)   All surplus is transferred from consumers to producers, and total surplus stays the same.
C)   Some surplus is transferred from producers to consumers, but total surplus falls.
D)   Some surplus is transferred from consumers to producers, causing total surplus to increase.E) A) and D)
F) None of the above

Question 3

A seller's willingness to sell:

Accepted Answer

A)   is the maximum price that a seller is willing to accept in exchange for a good or service.
B)   is the minimum price that a seller is willing to accept in exchange for a good or service.
C)   is his or her reserved minimum bid-price.
D)   must always equal the buyer's willingness to buy.E) A) and C)
F) B) and D)

Question 4

A market has four individuals,each considering buying a grill for his backyard.Assume that grills come in only one size and model.Abe considers himself a grill-master,and finds a grill a necessity,so he is willing to pay $400 for a grill.Butch is a meat-lover,honing his grilling skills,and is willing to pay $350 for a grill.Collin just met the girl of his dreams,and she loves a good grilled steak,so in his effort to impress her he is willing to pay $320 for a grill.Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp,so he is willing to pay $200 for a grill. If the market price of grills increases from $310 to $350,given the scenario described:

Accepted Answer

A)   total consumer surplus would fall by $120.
B)   total consumer surplus would fall by $90.
C)   Collin and Butch would experience a decrease in consumer surplus, but Abe's consumer surplus would rise.
D)   Collin would experience a decrease in consumer surplus, but Abe and Butch would experience a rise in consumer surplus.E) All of the above
F) B) and C)

Question 5

Total surplus:

Accepted Answer

A)   can never be negative.
B)   is always zero in an efficient market.
C)   can be negative when the market is not in equilibrium.
D)   is greater than the sum of consumer and producer surplus.E) All of the above
F) A) and C)

Question 6

Markets can be missing if:

Accepted Answer

A)   there is a lack of technology that would make the exchanges possible.
B)   there is a ban on the sale of a particular good.
C)   there is a lack of accurate information between potential buyers and sellers.
D)   All of these are true.E) B) and C)
F) A) and D)

Question 7

If Claire's reservation price on a sweater is $37,which of the following prices would she have to observe in the market in order to buy a sweater?

Accepted Answer

A)   $37.01
B)   $38.00
C)   $37.00
D)   Claire would not buy a sweater at any of these prices.E) A) and B)
F) None of the above

Question 8

Creating a market that was previously "missing":

Accepted Answer

A)   redistributes surplus from buyer to seller.
B)   creates more total surplus.
C)   redistributes surplus from seller to buyer.
D)   redistributes surplus from one market to the one that was previously missing.E) A) and B)
F) None of the above

Question 9

Assume the market is in equilibrium in the graph shown at demand D and supply S1 (and a quantity of 5) .If the supply curve shifts to S2,and a new equilibrium is reached (at a quantity of 7) ,which of the following is true?

Accepted Answer

A)   Consumer surplus increases by $5.
B)   Consumer surplus decreases by $5.
C)   Consumer surplus increases by $9.
D)   Consumer surplus decreases by $9.E) B) and D)
F) None of the above

Question 10

According to the graph shown,consumer surplus is area:

Accepted Answer

A)  A + B + C.
B)  B.
C)  A.
D)  A + BE) B) and C)
F) A) and D)

Question 11

Total surplus:

Accepted Answer

A)   is producer and consumer surplus combined.
B)   is producer surplus minus consumer surplus.
C)   is consumer surplus minus producer surplus.
D)   is the total amount spent on a good in a market.E) A) and C)
F) A) and D)

Question 12

What is the producer surplus earned by a seller whose willingness to sell is $10 below the market price of a good?

Accepted Answer

A)   $0
B)   $10
C)   (P* $10) 
D)   None of these is correct.E) None of the above
F) B) and C)

Question 13

Surplus is:

Accepted Answer

A)   a measure of the value that buyers and sellers get from participating in a market
B)   maximized for individuals whose reservation price equals the market price.
C)   negative for those who do not participate in a market.
D)   All of these are true.E) A) and C)
F) A) and B)

Question 14

2.If the supply curve shifts to S1,and a new equilibrium is reached,which of the following is true? A)  Producer surplus would increase, and total surplus would increase. B)  Producer surplus would decrease, and total surplus would increase. C)  Producer surplus would increase, and total surplus would decrease. D)  Producer surplus would decrease, and total surplus would decrease." class="answers-bank-image d-inline" rel="preload" > Assume the market is in equilibrium in the graph shown at demand D and supply S2.If the supply curve shifts to S1,and a new equilibrium is reached,which of the following is true?

Accepted Answer

A)   Producer surplus would increase, and total surplus would increase.
B)   Producer surplus would decrease, and total surplus would increase.
C)   Producer surplus would increase, and total surplus would decrease.
D)   Producer surplus would decrease, and total surplus would decrease.E) B) and D)
F) None of the above

Question 15

Assume a market that has an equilibrium price of $8.If the market price is set at $7,consumer surplus:

Accepted Answer

A)   rises for some because of the decreased price.
B)   decreases for some because of fewer transactions taking place.
C)   Both of these statements are true.
D)   Neither of these statements is true.E) A) and C)
F) All of the above

Question 16

Deadweight loss:

Accepted Answer

A)   occurs in markets that are efficient.
B)   occurs when markets are in equilibrium.
C)   is the loss in surplus from a market not in equilibrium.
D)   is additional surplus from an additional market transaction.E) A) and B)
F) A) and C)

Question 17

1.If the supply curve shifts to S2,and a new equilibrium is reached,which of the following is true? A)  Consumer surplus increases, and total surplus increases. B)  Consumer surplus decreases, and total surplus increases. C)  Consumer surplus increases, and total surplus decreases. D)  Consumer surplus decreases, and total surplus decreases." class="answers-bank-image d-inline" rel="preload" > Assume the market is in equilibrium in the graph shown at demand D and supply S1.If the supply curve shifts to S2,and a new equilibrium is reached,which of the following is true?

Accepted Answer

A)   Consumer surplus increases, and total surplus increases.
B)   Consumer surplus decreases, and total surplus increases.
C)   Consumer surplus increases, and total surplus decreases.
D)   Consumer surplus decreases, and total surplus decreases.E) C) and D)
F) A) and D)

Question 18

2 (at a quantity of 6) .If the supply curve shifts to S1,and a new equilibrium is reached (at a quantity of 4) ,which of the following is true? A)  Total surplus would increase by $7.50. B)  Total surplus would decrease by $16.50. C)  Total surplus would increase by $32. D)  Total surplus would decrease by $14.00." class="answers-bank-image d-inline" rel="preload" > Assume the market is in equilibrium in the graph shown at demand D and supply S2 (at a quantity of 6) .If the supply curve shifts to S1,and a new equilibrium is reached (at a quantity of 4) ,which of the following is true?

Accepted Answer

A)   Total surplus would increase by $7.50.
B)   Total surplus would decrease by $16.50.
C)   Total surplus would increase by $32.
D)   Total surplus would decrease by $14.00.E) B) and C)
F) A) and D)

Question 19

According to the graph shown,total surplus is:

Accepted Answer

A)   $25.
B)   $90.
C)   $50.
D)   $130.E) None of the above
F) A) and B)

Question 20

Deadweight loss:

Accepted Answer

A)   occurs when the market price is set above the equilibrium price.
B)   occurs when the market price is set below the equilibrium price.
C)   is the loss of total surplus that results when the quantity of a good that is bought and sold is below the market equilibrium quantity.
D)   All of these are true.E) B) and C)
F) A) and C)

Exam 5: Efficiency

Assume the market is in equilibrium in the graph shown at demand D and supply S₁.If the supply curve shifts to S₂,and a new equilibrium is reached,which of the following is true?

Correct Answer
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What is the producer surplus earned by a seller whose willingness to sell is $10 below the market price of a good?

Correct Answer
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Assume the market is in equilibrium in the graph shown at demand D and supply S₂.If the supply curve shifts to S₁,and a new equilibrium is reached,which of the following is true?

Correct Answer
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Assume a market that has an equilibrium price of $4.If the market price is set at $8,which of the following is true?

Correct Answer
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According to the graph shown,consumer surplus is area:

Correct Answer
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Deadweight loss:

Correct Answer
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Assume the market is in equilibrium in the graph shown at demand D and supply S₂ (at a quantity of 6) .If the supply curve shifts to S₁,and a new equilibrium is reached (at a quantity of 4) ,which of the following is true?

Correct Answer
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According to the graph shown,total surplus is:

Correct Answer
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Surplus is:

Correct Answer
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Deadweight loss:

Correct Answer
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Correct Answer
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Assume a market that has an equilibrium price of $8.If the market price is set at $7,consumer surplus:

Correct Answer
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Creating a market that was previously "missing":

Correct Answer
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Total surplus:

Correct Answer
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Assume the market is in equilibrium in the graph shown at demand D and supply S1 (and a quantity of 5) .If the supply curve shifts to S2,and a new equilibrium is reached (at a quantity of 7) ,which of the following is true?

Correct Answer
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Markets can be missing if:

Correct Answer
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If Claire's reservation price on a sweater is $37,which of the following prices would she have to observe in the market in order to buy a sweater?

Correct Answer
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A seller's willingness to sell:

Correct Answer
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Total surplus:

Correct Answer
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When a market is efficient:

Correct Answer
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Exam 5: Efficiency

Assume the market is in equilibrium in the graph shown at demand D and supply S1.If the supply curve shifts to S2,and a new equilibrium is reached,which of the following is true?

Correct AnswerverifiedShow Answer

What is the producer surplus earned by a seller whose willingness to sell is $10 below the market price of a good?

Correct AnswerverifiedShow Answer

Assume the market is in equilibrium in the graph shown at demand D and supply S2.If the supply curve shifts to S1,and a new equilibrium is reached,which of the following is true?

Correct AnswerverifiedShow Answer

Assume a market that has an equilibrium price of $4.If the market price is set at $8,which of the following is true?

Correct AnswerverifiedShow Answer

According to the graph shown,consumer surplus is area:

Correct AnswerverifiedShow Answer

Deadweight loss:

Correct AnswerverifiedShow Answer

Assume the market is in equilibrium in the graph shown at demand D and supply S2 (at a quantity of 6) .If the supply curve shifts to S1,and a new equilibrium is reached (at a quantity of 4) ,which of the following is true?

Correct AnswerverifiedShow Answer

According to the graph shown,total surplus is:

Correct AnswerverifiedShow Answer

Surplus is:

Correct AnswerverifiedShow Answer

Deadweight loss:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume a market that has an equilibrium price of $8.If the market price is set at $7,consumer surplus:

Correct AnswerverifiedShow Answer

Creating a market that was previously "missing":

Correct AnswerverifiedShow Answer

Total surplus:

Correct AnswerverifiedShow Answer

Assume the market is in equilibrium in the graph shown at demand D and supply S1 (and a quantity of 5) .If the supply curve shifts to S2,and a new equilibrium is reached (at a quantity of 7) ,which of the following is true?

Correct AnswerverifiedShow Answer

Markets can be missing if:

Correct AnswerverifiedShow Answer

If Claire's reservation price on a sweater is $37,which of the following prices would she have to observe in the market in order to buy a sweater?

Correct AnswerverifiedShow Answer

A seller's willingness to sell:

Correct AnswerverifiedShow Answer

Total surplus:

Correct AnswerverifiedShow Answer

When a market is efficient:

Correct AnswerverifiedShow Answer

Assume the market is in equilibrium in the graph shown at demand D and supply S₁.If the supply curve shifts to S₂,and a new equilibrium is reached,which of the following is true?

Correct Answer
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Correct Answer
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Assume the market is in equilibrium in the graph shown at demand D and supply S₂.If the supply curve shifts to S₁,and a new equilibrium is reached,which of the following is true?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Assume the market is in equilibrium in the graph shown at demand D and supply S₂ (at a quantity of 6) .If the supply curve shifts to S₁,and a new equilibrium is reached (at a quantity of 4) ,which of the following is true?

Correct Answer
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Correct Answer
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Correct Answer
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