Question 1

Figure 5.4 
-Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9,what changes in the market would result in an economically efficient output?

Accepted Answer

At a price of $9, above the equilibrium price, the quantity supplied exceeds the quantity demanded, leading to a surplus. To reach an economically efficient output, the price must decrease to eliminate the surplus, which would decrease the quantity supplied and increase the quantity demanded until equilibrium is reached.

Question 2

Figure 5.4 
-Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9,_________.

Accepted Answer

The answer of Figure 5.4 
-Refer to Figure 5.4.The figure...

Question 3

Figure 5.4 
-Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following statements is true if 4 000 metrics of pecans are sold?

Accepted Answer

The answer of Figure 5.4 
-Refer to Figure 5.4.The figure...

Question 4

Will equilibrium in a market always result in an outcome that is economically efficient? Explain.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The answer of Will equilibrium in a market always result...

Question 5

Figure 5.4 
-Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3,what changes in the market would result in an economically efficient output?

Accepted Answer

At a price of $3, the quantity demanded of pecans exceeds the quantity supplied, indicating a shortage in the market. To achieve an economically efficient output, the price would need to increase, which would decrease the quantity demanded and increase the quantity supplied, eventually reaching a new equilibrium point where the market clears. Therefore, choice D is the correct answer.

Question 6

The graph below represents the market for walnuts.Identify the values of the marginal benefit and the marginal cost at the output levels of 2 000 metrics,4 000 metrics,and 6 000 metrics.At each of these output levels,state whether output is inefficiently high,inefficiently low,or economically efficient.  __________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The answer of The graph below represents the market for...

Question 7

If equilibrium is achieved in a competitive market,_________.

Accepted Answer

In a competitive market, equilibrium is achieved when price equals the marginal cost of production. At this point, there is no dead-weight loss because the quantity demanded equals the quantity supplied and all gains from trade (consumer surplus and producer surplus) are maximized.

Question 8

What is economic surplus? When is economic surplus at a maximum?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The answer of What is economic surplus? When is economic...

Question 9

Figure 5.4 
-Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following statements is true if 8 000 metrics of pecans are sold?

Accepted Answer

In a competitive market, the marginal benefit equals the marginal cost at the equilibrium point. Therefore, D is correct. A and B are incorrect because in a competitive market, economic surplus is maximized and there is no dead-weight loss. C cannot be determined from the information given.

Question 10

Which statement is true when a competitive equilibrium is achieved in a market?

Accepted Answer

When a competitive equilibrium is achieved in a market, the total net benefit to society is maximized, meaning that the total benefits to consumers and producers are balanced and the market operates efficiently. This is because the quantity demanded equals the quantity supplied, and the price is set at a level where both consumers and producers can achieve their respective goals. In contrast, imposing a price ceiling or price floor may lead to market inefficiencies and suboptimal outcomes for some individuals. Economic surplus, which represents the difference between the total benefits and total costs of a transaction, is maximized at equilibrium and dead-weight loss (the loss of economic activity resulting from government intervention) is minimized. Therefore, options A, C, and D are not accurate statements about competitive equilibrium.

Question 11

If marginal benefit is greater than marginal cost,output is inefficiently high.

Accepted Answer

If marginal benefit is greater than marginal cost, it means that there is still room for additional output to be produced before reaching the point of efficiency. Therefore, output cannot be inefficiently high as the production is still increasing.

Question 12

The sum of consumer surplus and producer surplus is called economic surplus.

Accepted Answer

This statement is true. Economic surplus is the total benefit that accrues to both producers and consumers in a market. It can be calculated by subtracting the total cost of production from the total revenue generated by the sale of goods and services in the market. The difference between these two values represents the economic surplus.

Question 13

If the market price is at equilibrium,the dead-weight loss is maximised.

Accepted Answer

The dead-weight loss is minimized at equilibrium, not maximized. If the market is in equilibrium, it means that the supply and demand curves intersect at a point where the quantity demanded and supplied are equal. At this point, there is no excess supply or demand, which means there are no missed opportunities for mutually beneficial transactions. Any deviation from this point would result in either excess supply or demand, leading to a dead-weight loss due to inefficient resource allocation.

Question 14

If the market price is at equilibrium,the producer surplus is minimised.

Accepted Answer

When the market price is at equilibrium, both the producer surplus and consumer surplus are maximized. This is because the price that consumers are willing to pay and the price that producers are willing to sell at are in balance, resulting in the most efficient allocation of goods and services.

Question 15

Dead-weight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.

Accepted Answer

Dead-weight loss occurs when a market is not in competitive equilibrium, resulting in a loss of economic surplus for both producers and consumers.

Question 16

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximised,then __________.

Accepted Answer

When the marginal benefit equals the marginal cost, then economic efficiency is achieved. This means that resources are being allocated in the most efficient way possible, which maximizes the total surplus (consumer and producer surplus). Therefore, there is no deadweight loss and profits are maximized as well.

Question 17

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production,and the sum of consumer surplus and producer surplus is maximised.

Accepted Answer

Economic efficiency occurs when the market maximizes the total surplus, which equals the sum of consumer surplus and producer surplus, and produces at the point where the marginal benefit equals the marginal cost.

Question 18

The graph below represents the market for lychee nuts.The equilibrium price is $7.00 per bushel,but the market price is $5.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and dead-weight loss at the equilibrium price of $7.00 and at the market price of $5.00.  __________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The answer of The graph below represents the market for...

Question 19

Figure 5.4 
-Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3,_________.

Accepted Answer

At a price of $3, the quantity supplied is less than the quantity demanded, indicating that the market is not at equilibrium. This means that the quantity supplied is less than the economically efficient quantity, which would be achieved at the market equilibrium where supply equals demand.

Question 20

Figure 5.4 
-Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following is true?

Accepted Answer

Both 4000 and 12000 metrics are points away from the equilibrium point in a competitive market, indicating inefficiency. The economically efficient output is where supply equals demand, typically not at the extremes of the supply and demand curves.

Quiz 5: Economic Efficiency,government Price Setting and Taxes

Figure 5.4 -Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9,what changes in the market would result in an economically efficient output?

Figure 5.4 -Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9,_________.

Figure 5.4 -Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following statements is true if 4 000 metrics of pecans are sold?

Will equilibrium in a market always result in an outcome that is economically efficient? Explain. __________________________________________________________________________________________________________________________________________________________________________________________

Figure 5.4 -Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3,what changes in the market would result in an economically efficient output?

If equilibrium is achieved in a competitive market,_________.

What is economic surplus? When is economic surplus at a maximum? __________________________________________________________________________________________________________________________________________________________________________________________

Figure 5.4 -Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following statements is true if 8 000 metrics of pecans are sold?