Question 1

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3

Accepted Answer

The answer of Figure 4-4 
-Refer to Figure 4-4.The figure...

Question 2

Economic surplus

Accepted Answer

Economic surplus refers to the overall benefit that society receives when a product is produced and consumed. It is equal to the sum of consumer surplus (the benefit consumers receive from paying less than their maximum willingness to pay) and producer surplus (the benefit producers receive from selling at a price higher than their minimum willingness to sell). Therefore, choice B is correct.

Question 3

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

Accepted Answer

Economic surplus is the total benefit that is generated in a market, and it is calculated as the sum of consumer surplus and producer surplus.

Question 4

If,in a competitive market,marginal benefit is less than marginal cost,

Accepted Answer

The answer of If,in a competitive market,marginal benefit is less...

Question 5

________ is maximized in a competitive market when marginal benefit equals marginal cost.

Accepted Answer

Economic surplus, also known as social welfare or total surplus, is the sum of consumer surplus and producer surplus. This is maximized in a competitive market when marginal benefit equals marginal cost, as this results in the efficient allocation of resources and maximizes the overall benefit to society.

Question 6

Figure 4-3 
 Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18.
-Refer to Figure 4-3.What is the value of producer surplus at a price of $18??

Accepted Answer

The answer of Figure 4-3 
 Figure 4-3 shows the...

Question 7

________ refers to the reduction in economic surplus resulting from not being in competitive equilibrium.

Accepted Answer

Deadweight loss refers to the reduction in economic surplus that occurs when the quantity of a good or service is not at the market equilibrium level. This can be caused by factors such as taxes, price ceilings or floors, or monopolies. The result is a loss in welfare for both producers and consumers, as some potential trades that would mutually benefit both parties are not taking place.

Question 8

In a competitive market the demand curve shows the ________ received by consumers and the supply curve shows the ________.

Accepted Answer

In a competitive market, the demand curve shows the marginal benefit received by consumers, which is the additional satisfaction or utility they get from consuming one more unit, and the supply curve shows the marginal cost, which is the additional cost incurred by producers to produce one more unit. The equilibrium point where these two curves meet represents the optimal quantity and price for both parties. Thus, choice (B) is the correct answer. Choice (A) is incorrect because utility is not measured in dollars and is not influenced by prices. Choice (C) is incorrect because economic surplus is the difference between the willingness to pay and the cost of production, which is not directly shown on the curves. Choice (D) is incorrect because net benefit and net cost are not commonly used terms in economics, and they do not convey the same meaning as marginal benefit and marginal cost.

Question 9

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

Accepted Answer

Deadweight loss occurs when a market is not in competitive equilibrium, leading to a loss of economic surplus. This can happen due to factors such as monopolies, taxes, or price ceilings/floors.

Question 10

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 11

Figure 4-4 
-Refer to Figure 4-4.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

If the price of pecans is $3, the quantity demanded by consumers would decrease (moving up the demand curve) and the quantity supplied by producers would increase (moving down the supply curve). The economically efficient output is at the point where marginal social benefit (MSB) equals marginal social cost (MSC), which is at the intersection of the supply and demand curves. As the quantity supplied increases and the quantity demanded decreases, the market moves closer to the point of efficient output. Thus, the best choice is D because it describes the changes that would result in a move towards efficient output.

Question 12

Figure 4-3 
 Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18.
-Refer to Figure 4-3.At a price of $18 consumers are willing to buy 40 pounds of tiger shrimp.Is this an economically efficient quantity?

Accepted Answer

The answer of Figure 4-3 
 Figure 4-3 shows the...

Question 13

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 maximized.

Accepted Answer

This is the definition of economic efficiency.

Question 14

If equilibrium is achieved in a competitive market

Accepted Answer

In a competitive market, where equilibrium is achieved, the market is efficient and produces the optimal quantity of goods at the lowest possible cost. This means that there is no deadweight loss, which is the loss of economic efficiency that occurs when the equilibrium quantity is not being produced. Therefore, option A is correct. Options B, C, and D are incorrect because they suggest that there is a deadweight loss in a competitive market in equilibrium.

Question 15

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $9

Accepted Answer

The answer of Figure 4-4 
-Refer to Figure 4-4.The figure...

Question 16

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

Accepted Answer

Economic efficiency is achieved when the market produces a quantity where the marginal benefit to consumers is equal to the marginal cost of production. At this quantity, the sum of consumer surplus (the difference between the amount consumers are willing to pay and the market price) and producer surplus (the difference between the market price and the cost of production) is at a maximum. Therefore, option A is the correct choice.

Question 17

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If 8,000 pounds of pecans are sold

Accepted Answer

In a competitive market, the point at which quantity demanded equals quantity supplied (i.e., equilibrium) occurs where marginal benefit equals marginal cost. Therefore, if 8,000 pounds of pecans are sold, it must be at the equilibrium point where marginal benefit equals marginal cost.

Question 18

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following is true?

Accepted Answer

Point A represents an output level of 40,000 pounds, which is below the economically efficient output level (point C). This means that producing 40,000 pounds of pecans results in a deadweight loss. Point B represents an output level of 12,000 pounds, which is also below the economically efficient output level. Therefore, choice A and D are incorrect.

At a price of $3 (point D), producers will sell 12,000 pounds of pecans, which is below the economically efficient output level. At a price of $9 (point B), consumers will purchase more than the economically efficient output level. Therefore, choice B is also incorrect.

This leaves us with choice C, which is correct. Both 40,000 pounds (point A) and 12,000 pounds (point B) are economically inefficient rates of output. The economically efficient output level is at point C, where the supply and demand curves intersect.

Question 19

Figure 4-3 
 Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18.
-Refer to Figure 4-3.What is the value of the deadweight loss at a price of $18?

Accepted Answer

The answer of Figure 4-3 
 Figure 4-3 shows the...

Question 20

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 maximized,then

Accepted Answer

Economic efficiency is achieved when the marginal benefit to consumers equals the marginal cost of production and when consumer surplus plus producer surplus is maximized. This means that resources are being allocated in the most efficient way and there is no waste or inefficiency (which would result in deadweight loss). Maximizing profits or minimizing costs may not necessarily lead to economic efficiency.

Quiz 4: Economic Efficiency, government Price Setting, and Taxes

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3

Economic surplus

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

If,in a competitive market,marginal benefit is less than marginal cost,

________ is maximized in a competitive market when marginal benefit equals marginal cost.

Figure 4-3 Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. -Refer to Figure 4-3.What is the value of producer surplus at a price of $18??

________ refers to the reduction in economic surplus resulting from not being in competitive equilibrium.

In a competitive market the demand curve shows the received by consumers and the supply curve shows the .

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

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

Figure 4-4 -Refer to Figure 4-4.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?

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 maximized.

If equilibrium is achieved in a competitive market

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $9

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If 8,000 pounds of pecans are sold

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following is true?

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 maximized,then