FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 4: Markets and Government

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 161

True/False

Review LaterAdd Note

Review Later

In theory, markets left alone should be competitive; however, when they are not, governments can promote competition in the marketplace.

Correct Answer

verified

Show Answer

Question 162

Multiple Choice

Review LaterAdd Note

Review Later

Suppose that a customer's willingness-to-pay for a product is $120, and the seller's willingness-to-sell is $110. If the negotiated price is $119, how much is consumer surplus?

A) $1
B) $9
C) $10
D) $20

Correct Answer

verified

Show Answer

Question 163

True/False

Review LaterAdd Note

The French term for "let it be" is ceteris paribus.

Suppose that a customer's willingness-to-pay for a product is $5, and the seller's willingness-to-sell is $4. If the negotiated price is $3, how much is consumer surplus?

At times, there are conflicts between market outcomes that are efficient and outcomes that society deems fair.

The gap between the demand curve and the market price is called deadweight loss.

A price floor is binding when it

If consumer surplus is $6 million and producer surplus is $4 million, then we know that deadweight loss is $2 million.

A price ceiling usually results in a surplus and a misallocation of resources.

An effective price ceiling results in

If there is only one provider of electricity in a city, that market is likely to fail due to

(Figure: Understanding Price Ceilings and Floors) In the graph, which price would allow for a binding price ceiling?

If total surplus equals $45,000 at the equilibrium price, then total surplus will rise if the price falls below equilibrium.

Suppose that a customer's willingness-to-pay for a product is $5, and the seller's willingness-to-sell is $2. If the negotiated price is $3, producer surplus is greater than consumer surplus.

If tariffs on lumber from Canada increase construction costs, producer surplus for new homes increases.

In the market for medicine, if surplus is transferred from producers to consumers, from the standpoint of efficiency

(Figure: Determining Surplus 2) In the graph, consumer surplus is $15.

Markets tend to produce

Nonrivalry means that once a good is provided, others cannot be excluded from enjoying it.

(Figure: Understanding Price Ceilings and Floors) In the graph, a maximum price of $75 would allow for a binding price ceiling.