exam 3 - ARE 201 Spring 2009 Exam #3 Topics: Chapters 7-9...

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1 ARE 201 Spring 2009 Exam #3 Topics: Chapters 7—9 Date: 04/07/2008 Time: 1:30pm—2:45pm Instructor: Prof. Zheng Format: Closed-book MULTIPLE CHOICE (3 points each) 1. With respect to welfare economics, the equilibrium price of a product is considered to be the best price because it a. maximizes total revenue to firms and total utility to buyers. b. maximizes the total welfare of buyers and sellers. c. minimizes costs and maximizes profits of sellers. d. minimizes the level of welfare payments to those who no longer live below the poverty line. 2. Suppose that Larry, Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin’s first movie. Each has in mind a maximum amount that he will bid. This maximum is called a. a resistance price. b. willingness to pay. c. consumer surplus. d. producer surplus. 3. Cost is a measure of the a. seller’s willingness to sell. b. seller’s producer surplus. c. producer shortage. d. seller’s willingness to buy. 4. According to the graph, which area represents producer surplus at a price of P2? a. BCE b. ACF c. ABED d. DEF e. AFEB 5. Which of the following is NOT correct? a. consumer surplus = value to buyers – amount paid by buyers b. producer surplus = amount received by sellers – cost of sellers c. total surplus = value to buyers – amount paid by buyers + amount received by sellers – costs of sellers d. total surplus = value to sellers – costs of sellers
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2 6. When a market is in equilibrium, which of the following would not be correct? a. The price determines which buyers and sellers participate in the market. b. Those buyers who value the good more than the price choose to buy the good. c. Those sellers whose costs are less than the price choose to produce and sell the good. d. Consumer surplus will be equal to producer surplus. 7. A tax placed on chocolate will a. reduce the equilibrium price of chocolate and increase the equilibrium quantity. b.
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This note was uploaded on 10/22/2009 for the course ARE 201 taught by Professor Eryuruk during the Fall '08 term at N.C. State.

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exam 3 - ARE 201 Spring 2009 Exam #3 Topics: Chapters 7-9...

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