Question 1

Suppose the demand curve for a product is $Q_D = 3,000,000 - 1,000P$ and the supply curve is $Q_S = 1,300P - 450,000$. What is the equilibrium price?

Accepted Answer

$P = 1,500$

Question 2

Consumer surplus is defined as:

Accepted Answer

The area below the demand curve and above the market price

Question 3

If the market price for a good is $P = 4$ and the demand curve is $Q_D = 45 - 2P$, what is the quantity demanded?

Accepted Answer

$Q_D = 37$

Question 4

Producer surplus is maximized when:

Accepted Answer

The market is at equilibrium

Question 5

A price ceiling will only be effective if it is set:

Accepted Answer

Below the equilibrium price

Question 6

If a price floor is set above the equilibrium price, what is the likely market outcome?

Accepted Answer

A surplus

Question 7

Deadweight loss occurs when:

Accepted Answer

There is underproduction or overproduction

Question 8

Given $Q_D = 600 - 100P$ and $Q_S = 150 + 150P$, what is the equilibrium price?

Accepted Answer

$P = 2$

Question 9

If a price ceiling of $P = 4$ is set in the market with $Q_D = 600 - 100P$ and $Q_S = 150 + 150P$, what is the quantity supplied?

Accepted Answer

$Q_S = 750$

Question 10

Which of the following is NOT a source of market failure?

Accepted Answer

Perfect competition

Question 11

The economic surplus in a market is:

Accepted Answer

The sum of consumer surplus and producer surplus

Question 12

If the supply curve is $Q_S = 15 + P$ and the demand curve is $Q_D = 45 - 2P$, what is the equilibrium quantity?

Accepted Answer

$Q = 25$

Question 13

A price floor is the legally determined ______ price for a good.

Accepted Answer

minimum

Question 14

If a price ceiling is set below the equilibrium price, what will happen?

Accepted Answer

A shortage will occur

Question 15

Which of the following is a problem associated with price ceilings?

Accepted Answer

Chronic excess demand

Question 16

If the demand curve for Nickelback's new album is downward sloping and the price rises from $2 to $3, what happens to consumer surplus?

Accepted Answer

It falls by more than $100

Question 17

Which of the following statements about price floors and price ceilings is FALSE?

Accepted Answer

A price ceiling above the competitive equilibrium price will result in a surplus.

Question 18

If a price ceiling of $20 is set in a market where equilibrium price is $25, what is the likely result?

Accepted Answer

A shortage of 1,000 units

Question 19

Which of the following is an example of a black market?

Accepted Answer

Hiring workers at less than minimum wage

Question 20

If the supply curve is $Q_S = 1,300P - 450,000$ and the demand curve is $Q_D = 3,000,000 - 1,000P$, what is the producer surplus at equilibrium?

Accepted Answer

$1,312,500$

Consumer Surplus, Producer Surplus, and Market Efficiency: Algebraic and Graphical Analysis

Study Guide - Practice Questions