Question 1

Economists working for Uber,along with economists from the University of Oxford and the University of Chicago,estimated the consumer surplus attributed to Uber.For the entire United States,these economists estimated that the total consumer surplus from Uber in 2015 was
A) almost $0.
B) $13.30 per customer.
C) $2.88 billion.
D) 6.76 billion.

Accepted Answer

The answer of Economists working for Uber,along with economists from...

Question 2

In Venezuela,the government attempted to control rising food prices by implementing price ceilings in the market.These price ceilings were set ________ the market prices,which resulted in ________ of food.
A) above; surpluses
B) above; shortages
C) below; surpluses
D) below; shortages

Accepted Answer

Price ceilings set below market prices lead to shortages, as suppliers are not motivated to provide goods at lower prices, and demand exceeds the available supply. Therefore, option D is the correct answer. Options A and B both suggest price ceilings set above market prices, which would instead lead to surpluses, where the supply exceeds demand. Option C suggests price ceilings set below market prices, which is correct, but it suggests that surpluses would occur, which is incorrect.

Question 3

Figure 4-2
 
-Refer to Figure 4-2.What area represents producer surplus at a price of P₁?
A) C
B) A + C
C) C + E
D) A + C + E

Accepted Answer

Producer surplus is the area above the supply curve and below the price level. At price P₁, this area is represented by C.

Question 4

Figure 4-1
  Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $2.00,what is the consumer surplus on the first burrito?
A) $0.50
B) $1.00
C) $2.00
D) $7.50

Accepted Answer

To calculate consumer surplus, find the point where the market price intersects with the demand curve and then subtract that price from the maximum amount that the consumer is willing to pay. In this case, the consumer surplus on the first burrito is $0.50, which is the difference between the maximum amount that Arnold is willing to pay ($2.50) and the market price ($2.00).

Question 5

Figure 4-1
  Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $1.00,what is the maximum number of burritos that Arnold will buy?
A) 1
B) 2
C) 3
D) 4

Accepted Answer

The answer of Figure 4-1
  Figure 4-1 shows Arnold's...

Question 6

Figure 4-1
  Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $2.00,what is the consumer surplus on the second burrito?
A) $0
B) $1.00
C) $2.00
D) $4.50

Accepted Answer

The answer of Figure 4-1
  Figure 4-1 shows Arnold's...

Question 7

The difference between the ________ and the ________ from the sale of a product is called producer surplus.
A) lowest price a firm would have been willing to accept; price it actually receives
B) highest price a firm would have been willing to accept; lowest price it was willing to accept
C) cost to produce a product; price a firm actually receives
D) cost to produce a product; profit received

Accepted Answer

Producer surplus is the difference between the lowest price a firm would have been willing to accept and the price it actually receives. It represents the benefit that producers receive from selling a product at a higher price than they would have been willing to accept. Option B is incorrect because it mentions the highest price instead of the lowest price, Option C is incorrect because it does not take into account the opportunity cost of the firm, and Option D is incorrect because it only includes profit, but not the price actually received.

Question 8

Figure 4-1
  Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.What is the total amount that Arnold is willing to pay for 2 burritos?
A) $2.00
B) $4.50
C) $7.50
D) $10.00

Accepted Answer

The answer of Figure 4-1
  Figure 4-1 shows Arnold's...

Question 9

Figure 4-1
  Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.What is the total amount that Arnold is willing to pay for 3 burritos?
A) $1.50
B) $6.00
C) $7.00
D) $10.00

Accepted Answer

The answer of Figure 4-1
  Figure 4-1 shows Arnold's...

Question 10

The difference between the ________ for a good and the ________ is called consumer surplus.
A) highest price a consumer is willing to pay; lowest price a consumer is willing to pay
B) lowest price a consumer is willing to pay; price the consumer actually pays
C) highest price a consumer is willing to pay; price the consumer actually pays
D) price the consumer actually pays; actual cost to the producer

Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good and the actual price they pay. Therefore, the highest price a consumer is willing to pay (maximum price) and the price the consumer actually pays (actual price) are the two factors needed to calculate consumer surplus. Choice A only includes the highest price a consumer is willing to pay, while choice B includes the lowest price a consumer is willing to pay (which is not relevant to calculating consumer surplus). Choice D includes the actual cost to the producer, which is not relevant to calculating consumer surplus.

Question 11

Figure 4-1
  Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.What is the total amount that Arnold is willing to pay for 4 burritos?
A) $1.00
B) $4.00
C) $7.00
D) $10.00

Accepted Answer

According to the demand curve, Arnold is willing to pay $1.75 for the first burrito, $1.50 for the second, $1.25 for the third, and $1.00 for the fourth. So the total amount Arnold is willing to pay for 4 burritos is $1.75 + $1.50 + $1.25 + $1.00 = $7.00. Therefore, the best choice is C.

Question 12

Suppose there are two cities that have rent controlled apartments.In one city (Albany)all apartments are subject to rent control; in the other city (Halftrack)one-half of the apartments are rent controlled.Which of the following is most likely to be true?
A) It will be difficult to find a rent-controlled apartment in Albany or Halftrack; rents for the Halftrack apartments not subject to controls will be higher than they would be without rent control.
B) It will be easier to find an affordable apartment in Albany since rents will be low across the board.
C) It will be easier to find an affordable apartment in Halftrack, either a rent-controlled apartment or another apartment, at a reasonable price.
D) It will be impossible to rent an apartment in either city at any price.

Accepted Answer

Rent control typically leads to a shortage of available apartments because it caps how much landlords can charge, making it less profitable for them to rent out apartments. This would make it difficult to find a rent-controlled apartment in both cities. In Halftrack, where only half the apartments are rent-controlled, the non-controlled apartments would likely have higher rents due to increased demand from those unable to find or qualify for rent-controlled housing, as well as the reduced overall supply.

Question 13

Figure 4-2
 
-Refer to Figure 4-2.What area represents producer surplus at a price of P₂?
A) A + B
B) B + D
C) A + B + C
D) A + B + C + D + E

Accepted Answer

The answer of Figure 4-2
 
-Refer to Figure 4-2.What area...

Question 14

Figure 4-1
  Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $3.00,what is the maximum number of burritos that Arnold will buy?
A) 0
B) 2
C) 3
D) 4

Accepted Answer

The answer of Figure 4-1
  Figure 4-1 shows Arnold's...

Question 15

Figure 4-1
  Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $1.50,what is Arnold's consumer surplus?
A) $1.50
B) $2.25
C) $3.00
D) $4.75

Accepted Answer

The answer of Figure 4-1
  Figure 4-1 shows Arnold's...

Question 16

Figure 4-2
 
-Refer to Figure 4-2.What area represents the decrease in producer surplus when the market price falls from P₂ to P₁?
A) C + E
B) A + C + E
C) A + B
D) B + D

Accepted Answer

The answer of Figure 4-2
 
-Refer to Figure 4-2.What area...

Question 17

Figure 4-1
  Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $2.00,what is Arnold's consumer surplus?
A) $0.50
B) $1.00
C) $1.50
D) $3.00

Accepted Answer

The answer of Figure 4-1
  Figure 4-1 shows Arnold's...

Question 18

Suppliers will be willing to supply a product only if
A) the price received is less than the additional cost of producing the product.
B) the price received is at least equal to the additional cost of producing the product.
C) the price is higher than the average cost of producing the product.
D) the price received is at least double the additional cost of producing the product.

Accepted Answer

Suppliers will be willing to supply a product if they can make a profit by selling it. In order to make a profit, the price received for the product has to be at least equal to the additional cost of producing it. If the price received is less than the additional cost of producing it, the supplier will lose money. If the price is higher than the average cost of producing it, the supplier will make a profit but it may not cover all the additional costs of producing it. And if the price received is at least double the additional cost of producing it, it may be a very profitable venture for the supplier but it may not always be feasible or practical. Therefore, B is the best choice.

Question 19

Figure 4-2
 
-Refer to Figure 4-2.What area represents the increase in producer surplus when the market price rises from P₁ to P₂?
A) B + D
B) A + C + E
C) C + E
D) A + B

Accepted Answer

The answer of Figure 4-2
 
-Refer to Figure 4-2.What area...

Question 20

Juanita goes to the Hardware Emporium to buy a new circular saw.She is willing to pay $120 for a new saw,but buys one on sale for $85.Juanita's consumer surplus from the purchase is
A) $35.
B) $85.
C) $120.
D) $205.

Accepted Answer

Consumer surplus is the difference between the price a consumer is willing to pay for a product and the actual price they pay. In this case, Juanita was willing to pay $120 for a circular saw, but she only paid $85. Therefore, her consumer surplus is $120 - $85 = $35. Option A is the correct choice. Option B ($85) is the actual price she paid, not the consumer surplus. Option C ($120) is the maximum amount she was willing to pay, but it doesn't take into account the actual price she paid. Option D ($205) is an incorrect choice as it is the sum of the maximum amount she was willing to pay and the actual price she paid, which doesn't represent her consumer surplus.

Quiz 4: Market Efficiency and Market Failure

Economists working for Uber,along with economists from the University of Oxford and the University of Chicago,estimated the consumer surplus attributed to Uber.For the entire United States,these economists estimated that the total consumer surplus from Uber in 2015 was

In Venezuela,the government attempted to control rising food prices by implementing price ceilings in the market.These price ceilings were set the market prices,which resulted in of food.

Figure 4-2 -Refer to Figure 4-2.What area represents producer surplus at a price of P₁?

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $2.00,what is the consumer surplus on the first burrito?

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $1.00,what is the maximum number of burritos that Arnold will buy?

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $2.00,what is the consumer surplus on the second burrito?

The difference between the and the from the sale of a product is called producer surplus.

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.What is the total amount that Arnold is willing to pay for 2 burritos?

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.What is the total amount that Arnold is willing to pay for 3 burritos?

The difference between the for a good and the is called consumer surplus.

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.What is the total amount that Arnold is willing to pay for 4 burritos?

Suppose there are two cities that have rent controlled apartments.In one city (Albany) all apartments are subject to rent control; in the other city (Halftrack) one-half of the apartments are rent controlled.Which of the following is most likely to be true?

Figure 4-2 -Refer to Figure 4-2.What area represents producer surplus at a price of P₂?

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $3.00,what is the maximum number of burritos that Arnold will buy?

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $1.50,what is Arnold's consumer surplus?

Figure 4-2 -Refer to Figure 4-2.What area represents the decrease in producer surplus when the market price falls from P₂ to P₁?

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $2.00,what is Arnold's consumer surplus?

Suppliers will be willing to supply a product only if

Figure 4-2 -Refer to Figure 4-2.What area represents the increase in producer surplus when the market price rises from P₁ to P₂?

Juanita goes to the Hardware Emporium to buy a new circular saw.She is willing to pay $120 for a new saw,but buys one on sale for $85.Juanita's consumer surplus from the purchase is