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

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