108: ECO Introduction to Economics Problem Set 8 Chapters 7 Professor: Eva Carceles-Poveda
1. Market equilibrium is considered efficient because A. prices are low. B. the price consumers pay equals the profit producers receive. C. no more trades remain that benefit some without harming others. D. it assures that both the buyer and seller earn equal surplus. Daily Supply and Demand: Oranges in Hurricane Alley
2. At the price of $4.00, sellers offer _____ and buyers want to purchase ____ pounds of oranges a day. A. 10; 30 B. 10; 20 C. 20; 20 D. 30; 10
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3. The price of $4.00 per pound will lead to a(n) _____ of _____ pounds of oranges per day. A. excess supply; 20 B. excess demand; 30 C. equilibrium quantity; 20 D. excess demand; 20
Supply and Demand Curve for Jeans in Gallania Mall. 4. At the price of $60 each, sellers offer _____ and buyers wish to purchase _____ pairs of jeans a day. A. 60; 20 B. 8; 24 C. 16; 16 D. 24; 8
5. The price of $60 each will lead to an _____ of _____ pairs of jeans per day. A. excess supply; 8 B. excess supply; 16 C. equilibrium quantity; 16 D. excess demand; 16
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6. At the quantity of 24 pairs of jeans a day, what is the cost of producing an extra pair of jeans? A. $20 B. $40 C. $60 D. $80 7. If an individual producer is willing to produce one unit of a good for $2.50 but finds he can sell it for $7.50, he has a producer surplus of A. $10.00. B. $7.50. C. $5.00. D. $6.25. 8. The cumulative difference between the price producers actually receive and the price for which they are willing to produce is A. producer surplus. B. deadweight loss. C. total economics surplus. D. consumer surplus. 9. Suppose a market is in equilibrium. The area between the demand curve and the market price is A. the total economic surplus. B. producer surplus. C. consumer surplus. D. the deadweight loss. 10. Suppose a market is in equilibrium. The area between the market price and the supply curve is A. the deadweight loss. B. producer surplus. C. consumer surplus. D. total economic surplus. 11. Total economic surplus is A. the area between the demand curve and market price. B. the difference between consumer surplus and producer surplus. C. the difference between tax revenues and government expenditures. D. the sum of consumer and producer surpluses.
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12. Refer to the figure above. Based on demand curve D and supply curve S, the dollar value of the consumer surplus is A. $240. B. $200. C. $180. D. $160. 13. Refer to the figure above. Based on demand curve D and supply curve S, the dollar value of the producer surplus is A. $180. B. $75. C. $150. D. $130.
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14. Refer to the figure above. Based on demand curve D and supply curve S, the dollar value of the total economic surplus is A. $75. B. $255. C. $180. D. $225. 15. Refer to the figure above. Based on demand curve D1 and supply curve S, the dollar value of the consumer surplus is A. $550. B. $525. C. $500. D. $472.50. 16. Refer to the figure above. Based on demand curve D1 and supply curve S, the dollar value of the producer surplus is A. $135. B. $150. C. $200. D. $212.50. 17. Refer to the figure above. Based on demand curve D1 and supply curve S, the dollar value of the total economic surplus is A. $600. B. $675. C. $630. D. $643.50.
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18. Refer to the figure above. After the price ceiling is imposed, producer surplus _________ and is represented by the area _______. A. increases; DBC B. decreases; DGF C. increases; 0GFQ2 D. decreases; 0DFQ2 19. Refer to the figure above. After the price ceiling is imposed, consumer surplus _________ and is represented by the area _______. A. decreases; BJEH B. increases; BAEH C. decreases; JAE D. increases; Refer GAEF
20. to the figure above. The deadweight loss due to the price ceiling is represented by the area A. FEC. B. DAC. C. GJEF. D. JAE + DGF.
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21. Refer to the figure above. If the market is unregulated, the value of consumer surplus is A. $4. B. $8. C. $16. D. $24.
22. Refer to the figure above. If the market is unregulated, the value of producer surplus is A. $16. B. $24. C. $32. D. $48.
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23. Refer to the figure above. If the market is unregulated, the value of the total economic surplus is A. $20. B. $32. C. $48. D. $84.
24. Refer to the figure above. Suppose a price ceiling is imposed at $4. The value of the consumer surplus is A. $36. B. $20. C. $24. D. $28.
25. Refer to the figure above. Suppose a price ceiling is imposed at $4. The value of the producers surplus is A. $24. B. $16. C. $2. D. $4.
26. Refer to the figure above. The total economic surplus after the $4 price ceiling is imposed is A. $48. B. $20. C. $24. D. $32.
27. Refer to the figure above. The deadweight loss due to the $4 price ceiling is A. $4. B. $8. C. $12. D. $16.
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28. Refer to the figure above. The change in total economic surplus due to the imposition of the $4 price ceiling is A. $2. B. $4. C. $8. D. $12.
29. In general, a tax placed on each unit a producer sells results in A. economic efficiency. B. a deadweight loss. C. increased demand for the taxed good. D. a decrease in demand for the taxed good.
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30. Refer to the figure above. Suppose S and D are the initial supply and demand curves and a tax represented by S' is imposed on sellers. The distance that represents the per unit amount of the tax is A. EG. B. 0A. C. HJ. D. IH.
31. Refer to the figure above. If S and D are the initial supply and demand curves, after the tax represented by S' is imposed, the equilibrium price is the distance A. 0M. B. 0E. C. 0A. D. 0G.
32. Refer to the figure above. If S and D are the initial supply and demand curves, after the tax represented by S' is imposed, the equilibrium quantity is the distance A. FB. B. 0B. C. 0F. D. 0F + 0B. 33. Refer to the figure above. If S and D are the initial supply and demand curves, the amount of tax revenue raised by this tax, represented by S', is equal to the area represented by the area A. EGJI. B. AGJH. C. EAHI. D. IJC.
34. Refer to the figure above. If S and D are the initial supply and demand curves and S' represents a tax, consumer surplus after the tax is imposed is represented by the area A. MAC. B. MEI. C. MAHI. D. EAHI.
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35. Refer to the figure above. If S and D are the initial supply and demand curves and S' represents a tax, producer surplus after the tax is imposed is represented by the area A. HJC. B. AKC. C. GJK. D. EGJCI.
36. Refer to the figure above. If S and D are the initial supply and demand curves and S' represents a tax, the burden of the tax to consumers is measured by the distance A. EA. B. AG. C. HJ. D. 0E.
37. Refer to the figure above. If S and D are the initial supply and demand curves and S' represents a tax, the burden of the tax to producers is measured by the distance A. GL. B. GK. C. EG. D. AG.
38. Refer to the figure above. If S and D are the initial supply and demand curves and S' represents a tax, the deadweight loss due to the tax is measured by the area A. LKCI. B. HJC. C. IHC. D. IJC.
39. Refer to the figure above. The loss in efficiency due to the tax, represented by S', is measured by the area ______ and stems from ______. A. IJC; the trades that do not occur because of the tax B. IHC; consumer unrest about higher prices C. HJC; producer dissatisfaction with lower revenues D. EGJI; wasteful use of the tax revenue by government
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