If the government implements a price ceiling on insulin, this will have all of the
following effects on the market for insulin except
A) an increase in consumer surplus.
B) an increase in producer surplus.
C) an increase in deadweight loss.
D) a more efficient equilibrium.
Figure 4-5
Figure 4-5 shows the market for apartments in
Springfield. Recently, the government imposed a rent ceiling of $1,000 per month.
Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000
per month for apartments. What is the quantity of apartments demanded at the new
price?
A) 0
B) 200
C) 300
D) 500
Which of the following is true for a monopolist?
A) Being the only seller in the market, the monopolist faces a perfectly inelastic
demand curve.
B) Being the only seller in the market, the monopolist faces a perfectly elastic demand
curve.
C) Being the only seller in the market, the monopolist faces the market demand curve.
D) Being the only seller in the market, the monopolist faces a downward-sloping
demand curve that lies below the marginal revenue curve.
Market power refers to
A) the ability of consumers to dictate what products should be produced.
B) the ability of a firm to advertise its product and succeed in selling more output.
C) the ability of a firm to sell at a lower price than rival sellers.
D) the ability of a firm to charge a price higher than the marginal cost of production.
An item has utility for a consumer if it
A) is scarce.
B) has a high price.
C) is something everyone else wants.
D) generates enjoyment or satisfaction.
Figure 11-10
Identify the minimum efficient scale of production.
A) Qa
B) Q
C) Qc
D) Qd
Between 2013 and 2014, if an economy’s exports rise by $8 billion and its imports fall
by $8 billion, by how much will GDP change between the two years, all else equal?
A) Net exports will increase GDP by $8 billion.
B) The increase in exports is offset by the decrease in imports, so there is no change in
net exports and no effect on GDP.
C) Net exports will increase GDP by $16 billion.
D) Net exports will decrease GDP by $8 billion.
Figure 4-9 Figure 4-9 shows the market for
cigarettes. The government plans to impose a unit tax in this market.
For each unit sold, the price sellers receive after the tax (net of tax) is
A) $12.
B) $8.
C) $4.40.
D) $3.
Persistent current account deficits for the United States have
A) decreased investment in new plant and equipment.
B) slowed economic growth.
C) increased government budget deficits.
D) None of the above are correct.
An increase in government purchases will increase aggregate demand because
A) government expenditures are a component of aggregate demand.
B) consumption expenditures are a component of aggregate demand.
C) the decline in the price level will increase demand.
D) the decline in the interest rate will increase demand.
A bank will consider a car loan to a customer ________ and a customer’s checking
account to be ________.
A) a liability; an asset
B) an asset; a liability
C) a liability; a liability
D) an asset; an asset
E) an asset; net worth
Table 4-11
The equations above describe the demand and supply for Chef Ernie’s Sushi-on-a-Stick.
The equilibrium price and quantity for Chef Ernie’s sushi are $60 and 20 thousand units.
What is the value of economic surplus in this market?
A) $300 thousand
B) $600 thousand
C) $1,200 thousand
D) $1,600 thousand
Suppose the price of gasoline is $3.50 per gallon, the quantity of gasoline demanded is
150 billion gallons per year, the price elasticity of demand for gasoline is -0.06, and the
federal government decides to increase the excise tax on gasoline by $1.00 per gallon,
which increases the price of gasoline by $0.75 per gallon. How much revenue does the
federal government receive from the tax?
A) $95.44 billion
B) $111.20 billion
C) $148.27 billion
D) $161.61 billion
Consider the following statements:
a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower
price than other rival gas stations in the area.
b. Banks do not take steps to increase security since they believe it is less costly to
allow some bank robberies than to install expensive security monitoring equipment.
c. Firms produce more of a particular DVD when its selling price rises. Which of the
above statements demonstrates that economic agents respond to incentives?
A) a only
B) b only
C) c only
D) a and b
E) a, b, and c
Which of the following generates allocative efficiency in a market economy?
A) national government intervention
B) voluntary exchange between buyers and sellers
C) United Nations rules for competition
D) equity
If a firm is the sole employer of a factor of production, it is known as
A) a monopoly.
B) a competitor.
C) a monopsony.
D) an economically discriminating firm.