SCAN0806_000 - Chapter Four. Name: Date: 1. Consider the...

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Unformatted text preview: Chapter Four. Name: Date: 1. Consider the market for milkshakes. An increase in the consumer surplus may result from: A) an increase in the price of milkshakes. B) an increase in the supply of milkshakes. C) a decrease in the demand for milkshakes. D) a decrease in the supply of milkshakes. 2. Suppose the United States removes the current sugar quotas and the market price of sugar drops. In the candy bar market, we would expect: A) the consumer surplus to increase. B) the consumer surplus to decrease. C) the consumer surplus to he unchanged. D) the deadweight loss to increase. 3. Along a given demand curve, a decrease in the price of a good: A) will increase consumer surplus. B) will decrease consumer surplus. C) will have no effect on consumer surplus. D) It's impossible to tell what will happen to consumer surplus. 4. Consumer surplus for an individual buyer is equal to: A) the consumer's willingness to pay for the good, minus the marginal cost of producing the good. B) the price of the good, minus the marginal cost of producing the good. C) the consumer's willingness to pay for the good, minus the price of the good. D) the marginal cost of the good, minus the consumer's willingness to pay for the good. 5. Consumer surplus can he found by computing the area: A) above the supply curve and below the price. B) under the supply curve and above the price. C) under the demand curve and above the price. D) under the demand curve and below the price. 6. Ashley bought a new pair of jeans. When she walked out of the store, she thought, “I got such a great deal; I would have paid $40 more for these jeans!” This best represents the concept of: A) consumer surplus. B) producer surplus. C) total surplus. D) equilibrium. Chapter Four Page 1 10. 11. 12. 13. . Consumer surplus is represented by the area Mark and Rasheed are at the bookstore buying new calculators for the semester. Mark is willing to pay $75 and Rasheed is willing to pay $100 for a graphing calculator. The ‘ price for a calculator at the bookstore is $65. How much is total. consumer surplus? A) $10 B) $35 C) $45 D) $60 the demand curve and the price. A) above; beiow B) above; above C) below; above D) below; below . If the price of a good rises, then producer sulplus: will increase. will decrease. wili remain the same. may change but we can't tell how. A) B) C) D) Producer surplus for an individual seller is equal to: A) the price of the good, minus the marginal cost of producing the good. B) the marginal cost of the good, minus the willingness to pay for the good. C) the willingness to pay for the good, minus the price of the good. D) the marginal cost of the good, minus the price of the good. If the cost to download a song from the Internet falls from $0.99 to $0.50, then we would predict that producer surplus would in the market for NLP3 players. A) increase B) decrease C) not change D) We cannot determine what producer surplus will do without information about consumer surplus Producer surplus is represented by the area the price. A) above; above B) above; below C) beiow; above D) below; below The number of seats in a football stadium is fixed at 70,000. The team raises the price of a ticket from $30 to $40, and it still sells 70,000 tickets. The price change caused a change in the consumer surplus of and a change in the producer surplus of the supply curve and A) —$10; $10 B) —$700,000;$700,000 C) $0g$0 D) $40;4o Chapter Four Page 2 14. 15. 16. 17. 18. 19. 20. The total surplus generated in a market is: A) B) C) D) the excess supply due to the imposition of a price floor. the surplus that exists when a good is not scarce, defined as the total amount (if any) by which quantity supplied exceeds quantity demanded at a zero price. the net benefit to consumers, defined as the excess of consumer surplus over producer surplus. the sum of consumer surplus and producer surplus. Peanut butter is an inferior good. If there is an increase in income, total surplus in the peanut butter market: A) B) C) D) will increase. will decrease. will not change. may change, but we cannot determine the change without more information. Suppose apartments rent for $1,600 in Boston. If the city of Boston forces each landlord to charge $1,200, there will be: A) B) C) D) an increase in producer surplus for each landlord. a surplus of new apartments in Boston. an increase in consumer surplus for Bostonians who can find apartments for $1,200. an increase in total surplus. If there is an increase in demand, totai surplus: A) B) C) D) will increase. will decrease. will remain the same. may change, but we can't tell how. If there is an increase in supply, total surplus: A) 13) C) D) Will increase. will decrease. will remain the same. may change, but we can't tell how. If total surplus falls, which of the fotlowing must have occurred? A) B) C) D) There was an increase in demand or a decrease in supply. There was an increase in demand and an increase in supply. There was a decrease in demand or a decrease in supply. There was a decrease in demand and an increase in supply. If the market for grapefruit is in equiiibrium without any government intervention: A) B) C) D) total surplus is minimized. there is some deadweight loss. a few mutually beneficial trades are missed. consumer and producer surplus are maximized. Chapter Four Page 3 21. 22. 23. 24. 25. 26. 27. If a frost destroys much of the grape'fiuit crop, total surplus: A) will increase. B) will decrease. C) will not change. D) may change, but we cannot determine the change without more information. When a market is efficient, then: A) there is no way to make some people better off without making other people worse off. consumers who value buying a good the least are the ones who are able to purchase the good. producers whose willingness to accept a price is greater than the market price are able to sell their good. there are ways to make everyone better off. 13) C) D) Maximum total surplus in the market for chocolate occurs when: A) total net gain to producers is generated from trading in the market. B) all consumers who value chocolate are able to buy chocolate. C) all producers are able to sell their chocolate. D) the market is in equilibrium. Which of the following is a key factor in the effectiveness of well—functioning markets? A) Outcomes which are equitable for consumers and producers B) The role of government to deliver economic signals to consumers and producers C) A significant degree of government intervention to maximize efficiency D) Your right to use and dispose of your private property as you see fit Floyd's cost of selling haircuts is the lowest price at which he is willing to sell haircuts. A) True B) False Well-defined property rights: A) can allow for mutually beneficial trades. B) will result in government regulation. C) often result in more market failures. D) lead to more centralized decision making. The market works to allocate sales to those potential sellers who most value the right to sell a good, as indicated by their ability to produce the good at the lowest cost. This statement illustrates: A) producer surplus. B) consumer surplus. C) total surplus. D) deadweight loss. Chapter Four Page 4 28. Along the supply curve for brownies, a decrease in the price of brownies will: A) increase producer surplus. B) decrease producer surplus. C) increase consumer surplus. D) increase producer surplus and consumer surplus. 29. Peanut butter and jelly are complements. If there is a decrease in the price of jelly, producer surplus in the peanut butter market: A) will increase. B) will decrease. C) will not change. D) may change, but it is impossible to tell if it will increase or decrease. Chapter Four Page 5 ...
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This note was uploaded on 02/03/2012 for the course ECONOMICS 202 taught by Professor Black during the Spring '08 term at Boise State.

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SCAN0806_000 - Chapter Four. Name: Date: 1. Consider the...

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