Question 1

Markets can be missing:

Accepted Answer

A)   because a market is taxed.
B)   when the sale of a particular service is banned.
C)   when miscommunication of information between buyers and sellers leads to the wrong equilibrium price.
D)   All of these are true.E) C) and D)
F) A) and B)

Question 2

2 in the graph shown. Total surplus is: A)  $32. B)  $12. C)  $56. D)  $16." class="answers-bank-image d-inline" rel="preload" > Assume an equilibrium price of $7 and equilibrium quantity of 8 units at demand D and supply S2 in the graph shown. Total surplus is:

Accepted Answer

A)   $32.
B)   $12.
C)   $56.
D)   $16.E) All of the above
F) A) and B)

Question 3

Willingness to pay represents:

Accepted Answer

A)   the point at which the benefit that a person will get from a good is equal to the benefit of spending the money on the next best alternative.
B)   the opportunity cost of a good.
C)   the buyer's reservation price.
D)   All of these represent willingness to pay.E) A) and C)
F) A) and B)

Question 4

What consumer surplus is received by someone whose willingness to pay is $35 below the market price of a good?

Accepted Answer

A)   $35
B)   $0
C)   ($35 x P*) 
D)   None of these is correct.E) A) and B)
F) A) and D)

Question 5

Assume the market is in equilibrium in the graph shown at demand D and supply S1 (and a quantity of 5) . If the supply curve shifts to S2, and a new equilibrium is reached (at a quantity of 7) , which of the following is true?

Accepted Answer

A)   Consumer surplus increases by $5.
B)   Consumer surplus decreases by $5.
C)   Consumer surplus increases by $9.
D)   Consumer surplus decreases by $9.E) C) and D)
F) A) and B)

Question 6

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. Given the scenario described, if the market price of grills is $300, who participates in the market?

Accepted Answer

A)   Only Abe, Butch, and Collin participate.
B)   Only Collin and Daniel participate.
C)   Only Abe and Butch participate.
D)   Only Daniel participates.E) C) and D)
F) None of the above

Question 7

When a perfectly competitive, well-functioning market is in equilibrium:

Accepted Answer

A)   total surplus is maximized.
B)   the market is efficient.
C)   deadweight loss is zero.
D)   All of these are true.E) A) and D)
F) None of the above

Exam 5: Efficiency

Assume the market is in equilibrium in the graph shown at demand D and supply S1 (and a quantity of 5) . If the supply curve shifts to S2, and a new equilibrium is reached (at a quantity of 7) , which of the following is true?

Correct Answer
verified

What consumer surplus is received by someone whose willingness to pay is $35 below the market price of a good?

Correct Answer
verified

Correct Answer
verified

Markets can be missing:

Correct Answer
verified

Willingness to pay represents:

Correct Answer
verified

Assume an equilibrium price of $7 and equilibrium quantity of 8 units at demand D and supply S₂ in the graph shown. Total surplus is:

Correct Answer
verified

When a perfectly competitive, well-functioning market is in equilibrium:

Correct Answer
verified

Exam 5: Efficiency

Assume the market is in equilibrium in the graph shown at demand D and supply S1 (and a quantity of 5) . If the supply curve shifts to S2, and a new equilibrium is reached (at a quantity of 7) , which of the following is true?

Correct AnswerverifiedShow Answer

What consumer surplus is received by someone whose willingness to pay is $35 below the market price of a good?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Markets can be missing:

Correct AnswerverifiedShow Answer

Willingness to pay represents:

Correct AnswerverifiedShow Answer

Assume an equilibrium price of $7 and equilibrium quantity of 8 units at demand D and supply S2 in the graph shown. Total surplus is:

Correct AnswerverifiedShow Answer

When a perfectly competitive, well-functioning market is in equilibrium:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Assume an equilibrium price of $7 and equilibrium quantity of 8 units at demand D and supply S₂ in the graph shown. Total surplus is:

Correct Answer
verified

Correct Answer
verified