Question 1

When a market is efficient,

Accepted Answer

A)  there is no exchange that can make anyone better off without someone becoming worse off.
B)  a central planner must be involved.
C)  only increased prices can benefit those involved.
D)  None of these is true.E) A) and D)
F) B) and C)

Question 2

Creating a market that was previously "missing":

Accepted Answer

A)  redistributes surplus from buyer to seller.
B)  redistributes surplus from seller to buyer.
C)  redistributes surplus from one market to the one that was previously missing.
D)  creates more total surplus.E) A) and D)
F) A) and C)

Question 3

Assume there are three hardware stores in the market for hammers and that all three markets produce a single,standard model hammer.House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7.Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10.Bob's Hardware store is a family owned and operated,independent hardware store and can offer hammers at a minimum price of $13.
Given the scenario described,if the market price of hammers decreased from $15 to $10:

Accepted Answer

A)  total producer surplus falls by $5.
B)  producer surplus for each producer falls by $5.
C)  Bob's Hardware no longer sells hammers.
D)  total producer surplus falls by $15.E) A) and D)
F) A) and C)

Question 4

Assume there are three hardware stores in the market for hammers and that all three markets produce a single,standard model hammer.House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7.Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10.Bob's Hardware store is a family owned and operated,independent hardware store and can offer hammers at a minimum price of $13.
Given the scenario described,if the market price of hammers increased from $7 to $11:

Accepted Answer

A)  producer participation in the market would increase.
B)  only Bob's Hardware would still lose surplus.
C)  both Bob's Hardware and Lace Hardware would lose surplus.
D)  House Depot is the only producer that will gain surplus.E) B) and C)
F) A) and C)

Question 5

The market to buy and sell organs:

Accepted Answer

A)  is missing.
B)  has been banned by public policy.
C)  would create surplus for those who would interact in it.
D)  All of these are true.E) None of the above
F) B) and C)

Question 6

Markets can be missing:

Accepted Answer

A)  because public policy prevents the market from existing.
B)  when the production of a particular good is banned.
C)  because of a lack of accurate information between potential buyers and sellers.
D)  All of these are true.E) A) and B)
F) B) and C)

Question 7

At prices above a consumers' reservation price:

Accepted Answer

A)  the opportunity cost is greater than the benefit from having the good.
B)  the opportunity cost is less than the benefit from having the good.
C)  the buyer will purchase the good.
D)  None of these is true.E) A) and B)
F) None of the above

Question 8

Assume there are three hardware stores in the market for hammers and that all three markets produce a single,standard model hammer.House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7.Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10.Bob's Hardware store is a family owned and operated,independent hardware store and can offer hammers at a minimum price of $13.
Given the scenario described,if the market price of hammers increased from $9 to $13:

Accepted Answer

A)  producer surplus would increase for each producer.
B)  producer surplus would increase only for House Depot.
C)  producer surplus would remain unchanged for Bob's Hardware.
D)  producer surplus would increase by $4 for Lace Hardware.E) A) and D)
F) A) and C)

Question 9

A market has four individuals considering buying a grill for his backyard.Further 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.
If the market price of grills is $300,given the scenario described,the total consumer surplus would be:

Accepted Answer

A)  $170.
B)  $1,070.
C)  $200.
D)  None of these is true.E) All of the above
F) C) and D)

Question 10

When someone's willingness to pay is the same as the actual price paid for an item:

Accepted Answer

A)  the individual will not purchase the item.
B)  the individual's surplus is zero.
C)  surplus cannot be maximized.
D)  All of these are true.E) None of the above
F) A) and C)

Question 11

Assume there are three hardware stores in the market for hammers and that all three markets produce a single,standard model hammer.House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7.Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10.Bob's Hardware store is a family owned and operated,independent hardware store and can offer hammers at a minimum price of $13.
Given the scenario described,if the market price of hammers was $12,then total producer surplus would be:

Accepted Answer

A)  $7.
B)  $9.
C)  $17.
D)  $30.E) A) and B)
F) A) and C)

Question 12

Assume there are three hardware stores in the market for hammers and that all three markets produce a single,standard model hammer.House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7.Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10.Bob's Hardware store is a family owned and operated,independent hardware store and can offer hammers at a minimum price of $13.
Given the scenario described,if the market price of hammers was $13,then total producer surplus would be:

Accepted Answer

A)  $9.
B)  $30.
C)  $17.
D)  $7.E) A) and B)
F) None of the above

Question 13

In economics,the concept of surplus:

Accepted Answer

A)  measures the benefit that people receive when they buy something for less than they would have been willing to pay.
B)  measures the benefit that people receive when they sell something for more than they would have been willing to accept.
C)  is the best way to look at the benefits people receive from successful transactions.
D)  All of these are true.E) B) and C)
F) All of the above

Question 14

Deadweight loss:

Accepted Answer

A)  occurs when the market price is set above the equilibrium price.
B)  occurs when the market price is set below the equilibrium price.
C)  is the loss of total surplus that results when the quantity of a good that is bought and sold is below the market equilibrium quantity.
D)  All of these are true.E) B) and D)
F) None of the above

Question 15

Total surplus can be increased if:

Accepted Answer

A)  new markets are created.
B)  existing markets are improved.
C)  markets get closer to equilibrium.
D)  All of these can increase total surplus.E) All of the above
F) A) and D)

Question 16

A consumer's willingness to pay:

Accepted Answer

A)  is the maximum price that a buyer would be willing to pay for a good or service.
B)  is the minimum price that a buyer would be willing to pay for a good or service.
C)  is their reserved maximum bid-price.
D)  must always equal the seller's willingness to sell.E) A) and C)
F) None of the above

Question 17

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

Accepted Answer

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

Question 18

If Thelma's willingness to sell her homemade fudge is $4,then at which of the following prices would Thelma sell her fudge?

Accepted Answer

A)  $2
B)  $3.99
C)  $4.01
D)  Thelma would not sell her fudge at any of these prices.E) A) and B)
F) A) and C)

Question 19

If Sam's opportunity cost of a sweater is $37,which of the following prices would he have to observe in the market in order to sell a sweater?

Accepted Answer

A)  $37
B)  $37.01
C)  $50
D)  Sam would sell a sweater at any of these prices.E) C) and D)
F) A) and B)

Question 20

A market has four individuals considering buying a grill for his backyard.Further 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.
If the market price of grills falls from $375 to $330,given the scenario described,which of the following can be said?

Accepted Answer

A)  Butch will join the market,but receive no consumer surplus.
B)  Butch and Collin will join the market,and together will receive$30 in consumer surplus.
C)  Abe will experience a decrease in consumer surplus of $45.
D)  Abe will experience an increase in consumer surplus of $45.E) A) and D)
F) B) and D)

Exam 5: Efficiency

If Sam's opportunity cost of a sweater is $37,which of the following prices would he have to observe in the market in order to sell a sweater?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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When a market is efficient,

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

Correct Answer
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At prices above a consumers' reservation price:

Correct Answer
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Total surplus can be increased if:

Correct Answer
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Deadweight loss:

Correct Answer
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In economics,the concept of surplus:

Correct Answer
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The market to buy and sell organs:

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

Correct Answer
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When someone's willingness to pay is the same as the actual price paid for an item:

Correct Answer
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A consumer's willingness to pay:

Correct Answer
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Correct Answer
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Correct Answer
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Markets can be missing:

Correct Answer
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Correct Answer
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If Thelma's willingness to sell her homemade fudge is $4,then at which of the following prices would Thelma sell her fudge?

Correct Answer
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Correct Answer
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Exam 5: Efficiency

If Sam's opportunity cost of a sweater is $37,which of the following prices would he have to observe in the market in order to sell a sweater?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a market is efficient,

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

At prices above a consumers' reservation price:

Correct AnswerverifiedShow Answer

Total surplus can be increased if:

Correct AnswerverifiedShow Answer

Deadweight loss:

Correct AnswerverifiedShow Answer

In economics,the concept of surplus:

Correct AnswerverifiedShow Answer

The market to buy and sell organs:

Correct AnswerverifiedShow Answer

Creating a market that was previously "missing":

Correct AnswerverifiedShow Answer

When someone's willingness to pay is the same as the actual price paid for an item:

Correct AnswerverifiedShow Answer

A consumer's willingness to pay:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Markets can be missing:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If Thelma's willingness to sell her homemade fudge is $4,then at which of the following prices would Thelma sell her fudge?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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