Question 1

Total surplus can be increased if:

Accepted Answer

A)   new markets are created.
B)   new technology is banned.
C)   deadweight loss is increased.
D)   All of these can increase total surplus.E) B) and D)
F) B) and C)

Question 2

Assume there are three bakeries, each willing to sell one dozen cupcakes in a given time period. The Sweet Treat can offer a dozen cupcakes for a minimum of $6. The Cake Corner can offer a dozen cupcakes for a minimum of $9. Pastry Place can offer a dozen cupcakes for a minimum of $13.If the market price of one dozen cupcakes increased from $8 to $12:

Accepted Answer

A)   The Sweet Treat's producer surplus would increase by $6.
B)   Pastry Place's producer surplus would increase by $1.
C)   The Cake Corner's producer surplus would remain unchanged.
D)   All of these statements are true.E) B) and C)
F) C) and D)

Question 3

Assume the market depicted in the graph is in equilibrium. Producer surplus is the area:

Accepted Answer

A)   under the demand curve and above the market price.
B)   under the supply curve and above the market price.
C)   above the supply curve and below the market price.
D)   above the demand curve and below the market price.E) All of the above
F) A) and C)

Question 4

In a well-functioning competitive market, total surplus equals:

Accepted Answer

A)   producer surplus plus consumer surplus.
B)   producer surplus minus consumer surplus.
C)   consumer surplus minus producer surplus.
D)   the total amount spent on a good in a market.E) None of the above
F) A) and B)

Question 5

Assume the market depicted in the graph is in equilibrium. If supply increases:

Accepted Answer

A)   consumer surplus will increase.
B)   producer surplus will increase.
C)   total surplus will increase.
D)   quantity will increase.E) A) and B)
F) A) and D)

Question 6

When the quantity of a good bought and sold is below the equilibrium quantity, the loss of total surplus that results is called:

Accepted Answer

A)   deadweight loss.
B)   producer surplus.
C)   consumer surplus.
D)   total surplus.E) B) and D)
F) A) and C)

Question 7

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Accepted Answer

A)   $27.00
B)   $54.00
C)   $40.50
D)   $67.50E) A) and B)
F) All of the above

Question 8

According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Accepted Answer

A)   deadweight loss will become bigger than total surplus.
B)   consumer surplus will definitely fall.
C)   total surplus may rise or fall.
D)   $12 of surplus will be transferred from producers to consumers.E) A) and B)
F) All of the above

Question 9

Assume the market depicted in the graph is in equilibrium. Total surplus consists of area(s) :

Accepted Answer

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

Question 10

When a market is missing:

Accepted Answer

A)   deadweight loss will increase, but only if more units are exchanged.
B)   the government must create the market artificially.
C)   total surplus could increase through the creation of a new market.
D)   consumers' willingness to pay is too low to sustain the efficient quantity.E) B) and C)
F) A) and C)

Question 11

A market has four individuals, each considering buying a grill. Assume that grills come in only one size and model. Martina considers herself a grill-master, and finds a grill a necessity, so she is willing to pay $400 for a grill. Javier is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Kamal wants to impress his friends with his vegetable grilling skills and is willing to pay $320 for a grill. Lina loves grilled shrimp and thinks it might be cheaper in the long run if she grills her own shrimp instead of eating out at a restaurant, so she is willing to pay $200 for a grill.If the market price of grills is $300, what would total consumer surplus be?

Accepted Answer

A)   $1,070
B)   $170
C)   $200
D)   $80E) A) and B)
F) C) and D)

Question 12

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers decreased from $17 to $12:

Accepted Answer

A)   producer participation in the market would increase.
B)   producer participation in the market would decrease.
C)   producer participation in the market would not be affected.
D)   total producer surplus would remain unchanged.E) C) and D)
F) A) and D)

Question 13

When a market is efficient:

Accepted Answer

A)   any additional changes to make someone better off will make someone else worse off.
B)   a central planner must be involved.
C)   total surplus is zero.
D)   any additional changes to make someone better off will reduce the deadweight loss.E) B) and C)
F) A) and D)

Question 14

According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Accepted Answer

A)   deadweight loss will occur.
B)   seven fewer units will be exchanged.
C)   consumer surplus will decrease.
D)   All of these are correct.E) A) and B)
F) C) and D)

Question 15

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Accepted Answer

A)   $30
B)   $80
C)   $120
D)   $200E) A) and C)
F) A) and B)

Question 16

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 a pre-existing market to the one that was previously missing.E) All of the above
F) A) and D)

Question 17

Assume the market depicted in the graph is in equilibrium. Producer surplus consists of area(s) :

Accepted Answer

A)   A.
B)   A + B + C.
C)   A + B + C + D + E.
D)   D + E.E) None of the above
F) A) and B)

Question 18

Assume the market depicted in the graph is in equilibrium. What is total surplus?

Accepted Answer

A)   $150
B)   $175
C)   $200
D)   $400E) A) and D)
F) B) and D)

Question 19

1) . If the supply curve shifts to S2, total surplus falls by: A)  $50. B)  $75. C)  $150. D)  $200." class="answers-bank-image d-inline" rel="preload" > Assume the market shown in the graph is in equilibrium at demand (D)  and supply (S1) . If the supply curve shifts to S2, total surplus falls by:

Accepted Answer

A)   $50.
B)   $75.
C)   $150.
D)   $200.E) A) and B)
F) A) and C)

Question 20

Assume a market has an equilibrium price of $8. If the market price is set at $7: I. Total surplus rises if the change in quantity is large enough.
II)  Consumer surplus rises for some because of the decreased price.
III)  Consumer surplus decreases for some because fewer transactions are taking place.

Accepted Answer

A)   I and II only
B)   II and III only
C)   III only
D)   I and III onlyE) A) and D)
F) B) and C)

Exam 5: Efficiency

Total surplus can be increased if:

Correct Answer
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Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Correct Answer
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Assume the market depicted in the graph is in equilibrium. What is total surplus?

Correct Answer
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When the quantity of a good bought and sold is below the equilibrium quantity, the loss of total surplus that results is called:

Correct Answer
verified

Assume the market depicted in the graph is in equilibrium. Total surplus consists of area(s) :

Correct Answer
verified

Assume the market depicted in the graph is in equilibrium. Producer surplus is the area:

Correct Answer
verified

In a well-functioning competitive market, total surplus equals:

Correct Answer
verified

Assume the market shown in the graph is in equilibrium at demand (D) and supply (S₁) . If the supply curve shifts to S₂, total surplus falls by:

Correct Answer
verified

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Correct Answer
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When a market is efficient:

Correct Answer
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Assume the market depicted in the graph is in equilibrium. Producer surplus consists of area(s) :

Correct Answer
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According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Correct Answer
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When a market is missing:

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

Correct Answer
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According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Correct Answer
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Correct Answer
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Assume the market depicted in the graph is in equilibrium. If supply increases:

Correct Answer
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Exam 5: Efficiency

Total surplus can be increased if:

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. What is total surplus?

Correct AnswerverifiedShow Answer

When the quantity of a good bought and sold is below the equilibrium quantity, the loss of total surplus that results is called:

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. Total surplus consists of area(s) :

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. Producer surplus is the area:

Correct AnswerverifiedShow Answer

In a well-functioning competitive market, total surplus equals:

Correct AnswerverifiedShow Answer

Assume the market shown in the graph is in equilibrium at demand (D) and supply (S1) . If the supply curve shifts to S2, total surplus falls by:

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Correct AnswerverifiedShow Answer

When a market is efficient:

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. Producer surplus consists of area(s) :

Correct AnswerverifiedShow Answer

According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Correct AnswerverifiedShow Answer

When a market is missing:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Creating a market that was previously missing:

Correct AnswerverifiedShow Answer

According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. If supply increases:

Correct AnswerverifiedShow Answer

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Correct Answer
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Assume the market shown in the graph is in equilibrium at demand (D) and supply (S₁) . If the supply curve shifts to S₂, total surplus falls by:

Correct Answer
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Correct Answer
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