Question 1

Which of the following best describes consumer surplus?

Accepted Answer

The difference between the highest price a consumer is willing to pay for a good or service and the actual price the consumer pays.

Question 2

Suppose the demand for apartments in New York City is given by $$ Q_D = 4,750,000 - 1,000P $$ and the supply is $$ Q_S = -1,000,000 + 1,300P . $$What is the equilibrium price?

Accepted Answer

$$ P = 2,500 $$

Question 3

A market is considered economically efficient if:

Accepted Answer

The marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and the sum of consumer and producer surplus is maximized.

Question 4

If a government imposes a price ceiling below the equilibrium price, what is the most likely outcome?

Accepted Answer

A shortage of the good or service.

Question 5

What is deadweight loss?

Accepted Answer

The reduction in economic surplus resulting from a market not being in competitive equilibrium.

Question 6

A $$1.00$$ per-pack tax on cigarettes shifts the supply curve up by $$1.00. If $$the equilibrium price before tax is $$5.00$$ and after tax consumers pay $$5.90$$, what price do producers receive after paying the tax?

Accepted Answer

$$4.90$$

Question 7

If the government imposes a price floor above the equilibrium price in the wheat market, what will happen?

Accepted Answer

There will be a surplus of wheat.

Question 8

Which formula correctly calculates the area of consumer surplus in a market with a linear demand curve?

Accepted Answer

$$ CS = \frac{1}{2} (base)(height) $$

Question 9

Suppose a rent ceiling is imposed at $$1,500$$ per month, and the quantity of apartments supplied falls to $$950,000. If $$the equilibrium quantity was $$2,250,000$$, what is the deadweight loss if area B is $$845$$ million and area C is $$650$$ million?

Accepted Answer

$$1,495$$ million

Question 10

Which of the following statements about tax incidence is correct?

Accepted Answer

The side of the market (buyers or sellers) that is less sensitive to price changes bears more of the tax burden.

Question 11

If the demand for gasoline is relatively inelastic compared to supply, who will bear most of the burden of a gasoline tax?

Accepted Answer

Consumers

Question 12

Which of the following is a real-world example of a price floor?

Accepted Answer

Minimum wage

Question 13

If a market is not in equilibrium and the marginal benefit of the last unit is greater than the marginal cost, what should happen to the quantity traded?

Accepted Answer

It should increase.

Question 14

What is the effect of a binding rent ceiling on the market for apartments?

Accepted Answer

It creates a shortage of apartments.

Question 15

Which of the following best describes producer surplus?

Accepted Answer

The difference between the lowest price a firm would accept for a good or service and the price it actually receives.

Question 16

Suppose the government imposes a per-unit tax on a good. What happens to the supply curve?

Accepted Answer

It shifts upward by the amount of the tax.

Question 17

If Uber enters a city with restrictive taxi-licensing laws, what is the likely effect on economic surplus?

Accepted Answer

Economic surplus will increase.

Question 18

Given $$ Q_D = 4,750,000 - 1,000P $$ and $$ Q_S = -1,000,000 + 1,300P $$, what is the equilibrium quantity of apartments rented?

Accepted Answer

$$2,250,000$$

Question 19

Which of the following is NOT a likely result of a binding price floor?

Accepted Answer

A shortage of the good.

Question 20

If the government collects tax revenue equal to the green shaded box in a supply and demand diagram, what does the yellow-shaded area represent?

Accepted Answer

Deadweight loss

Economic Efficiency, Government Price Setting, and Taxes: Microeconomics Study Notes

Guida di studio - Domande di pratica

Study guide - Flashcard