200810021149360

200810021149360 - Macroeconomics Testbank 1,...

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Macroeconomics – Testbank 1, (Hubbard/O’Brien) Chapter 4: Economic Efficiency, Government Price Setting, and Taxes MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following is a correct statement of why more output should be produced if the extra benefit to consumers is greater than the extra cost to producers? A) Sellers feel like they are taking advantage of buyers. B) Consumers would be willing to purchase the extra output and producers would be willing to supply the units making both consumers and producers better off. C) Buyers feel like they are taking advantage of sellers. D) None of these explain why. Answer: B Diff: 5 Topic: Economic efficiency 2) With a price ceiling what creates a deadweight loss? A) With a lower price, less is produced, causing less consumer and producer surplus. B) Producers have more incentive to produce. C) With a higher price, less is produced, causing less consumer and producer surplus. D) Consumers have less incentive to buy. Answer: A Diff: 6 Topic: Price ceiling 3) Market demand measures A) the average benefit of consumers for each level of consumption. B) the total benefit of consumers for each level of consumption. C) the marginal benefit of consumers for each level of consumption. D) none of these. Answer: C Diff: 5 Topic: Marginal benefit 4) The producer surplus for an individual unit of output sold can be found by A) subtracting selling price from the marginal cost. B) subtracting total cost from the selling price. C) subtracting marginal cost from the selling price. D) subtracting average cost from the selling price. Answer: C Diff: 4 Topic: Producer surplus 5) The total benefit consumers receive from consuming a good is equal to the A) height of the demand curve at the level of consumption. B) area under the demand curve up to the level of consumption. C) area under the demand curve up to the level of consumption divided by the number of units. D) none of these Answer: B Diff: 7 Topic: Marginal benefit 6) The FICA was written so A) only employers pay the tax.
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B) employees and employers split the payroll tax. C) only employees pay the tax. D) None of these accurately explain the intent of that act. Answer: B Diff: 5 Topic: Payroll tax 7) Which of the following occur under a city imposed rent control law? A) People who work in the city have less costs of getting to work. B) Landlords reduce the quantity of apartments offered for rent. C) All who want to rent an apartment in the city can do so. D) All of these occur. Answer: B Diff: 4 Topic: Price ceiling 8) Which of the following is found in a city with rent controls? A) Renters as a group benefit because consumer surplus becomes larger.
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This note was uploaded on 05/10/2010 for the course ECO 201 taught by Professor Mikeadkins during the Spring '08 term at KCTCS.

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200810021149360 - Macroeconomics Testbank 1,...

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