3) Marginal benefit is the benefit received from ________.

A) consuming more goods or services B) producing the efficient quantity C) consuming the efficient quantity D) consuming one more unit of a good or service Answer: D Topic: Marginal Benefit Skill: Conceptual Question history: Previous edition, Chapter 5 AACSB: Reflective Thinking 4) All of the following statements about marginal benefit are correct EXCEPT the marginal benefit of a good A) is the benefit a person receives from consuming one more unit of the good or service. B) is measured as the maximum amount that a person is willing to pay for one more unit of the good. C) is equal to zero when resource use is efficient. D) decreases as the quantity consumed of the good increases. Answer: C Topic: Marginal Benefit Skill: Conceptual Question history: Previous edition, Chapter 5 AACSB: Reflective Thinking 5) Sal likes to eat pizza. The ________ is the maximum amount that Sal is willing to pay for one more piece of pizza. A) efficient price B) efficient amount C) marginal benefit D) marginal cost Answer: C Topic: Marginal Benefit Skill: Recognition Question history: Previous edition, Chapter 5 AACSB: Reflective Thinking 23) Given the individual demands for video downloads in the above table, and assuming that these three people are the only ones in the market, which of the following statements is NOT true about market demand for video downloads? A) The market quantity demanded at a price of $5 is 10. B) The height of the market demand curve at a quantity demanded of 22 is $3. C) The height of the market demand curve at a quantity demanded of 16 is $5. D) The market quantity demanded at a price of $2 is 28. Answer: C Topic: Individual Demand and Market Demand Skill: Analytical

Question history: Previous edition, Chapter 5 AACSB: Analytical Skills 27) ________ is the value of a good minus the price paid for it summed over the quantity bought. A) Producer surplus B) Consumer surplus C) Surplus D) Shortage Answer: B Topic: Consumer Surplus Skill: Recognition Question history: Modified 10th edition AACSB: Reflective Thinking 28) Consumer surplus is the A) value of a good expressed in dollars. B) price of a good expressed in dollars. C) value of a good minus the price paid for it summed over the quantity bought. D) value of a good plus the price paid for it summed over the quantity bought. Answer: C Topic: Consumer Surplus Skill: Recognition Question history: Previous edition, Chapter 5 AACSB: Reflective Thinking 29) Consider the market for hot dogs. As long as the marginal benefit of consuming hot dogs is greater than the price of hot dogs, A) people receive consumer surplus from eating hot dogs. B) the price of hot dogs will rise. C) the value of hot dogs will rise. D) there is no decreasing marginal benefit of eating hot dogs. Answer: A Topic: Consumer Surplus Skill: Conceptual Question history: Previous edition, Chapter 5 AACSB: Reflective Thinking 33) When the Smith's were shopping for their present home, the asking price from the previous owner was $250,000.00. The Smith's had decided they would pay no more than $245,000.00 for the house. After negotiations, the Smith's actually purchased the house for $239,000.00. They, therefore, enjoyed a consumer surplus of A) $239,000.00. B) $5,000.00. C) $6,000.00. D) $11,000.00. Answer: C

Topic: Consumer Surplus Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills 34) The latest model car in the dealer's showroom has a sticker price of $35,000.00. Fred, the shopper, has decided that he would pay no more than $32,000.00 for the car. After two hours of bargaining with the saleswoman, Fred actually purchases the car for $31,000.00. Fred, therefore, has obtained a consumer surplus of A) $35,000.00. B) $32,000.00. C) $4,000.00. D) $1,000.00. Answer: D Topic: Consumer Surplus Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills 35) Jane is willing to pay $50 for a pair of shoes. The actual price of the shoes is $30. Her consumer surplus on this pair of shoes is A) $20. B) $50. C) $30. D) $80. Answer: A Topic: Consumer Surplus Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills

43) The figure above shows Clara's demand for CDs. If the price for a CD is $15, then Clara A) receives no consumer surplus on the 6th CD she buys. B) receives a total of $10 of consumer surplus. C) will buy no CDs. D) receives a total of $40 of consumer surplus. Answer: A Topic: Consumer Surplus Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills

57) In the figure above, for each CD the price a consumer is willing to pay is equal to the A) economy's marginal social cost of producing that CD. B) consumer's own marginal benefit from consuming that CD. C) consumer's total consumer surplus. D) Both answers A and B are correct. Answer: B Topic: Marginal Benefit Skill: Recognition Question history: Previous edition, Chapter 5 AACSB: Analytical Skills

61) In the figure above, when production is 3 units with a price of $3, the consumer surplus equals A) a + b. B) a + b + f + g. C) a + b + f + g + h + l. D) a + b + f + g + h + l + i + m. Answer: A Topic: Consumer Surplus Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills 84) When the Smith's were shopping for their present home, the asking price from the previous owner was $250,000.00. The Smith's had decided they would pay no more than $245,000.00 for the house. After negotiations, the Smith's actually purchased the house for $239,000.00. Therefore, the previous owner earned a producer surplus of A) $250,000.00. B) $11,000.00. C) $5,000.00. D) an amount unknown given the information in the question. Answer: D Topic: Producer Surplus Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills

90) The figure illustrates the market for hot dogs on Big Foot Island. The producer surplus is ________. A) $240 an hour B) $180 an hour C) $1.20 a hot dog D) $60 an hour Answer: D Topic: Producer Surplus Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills

96) In the figure above, when production is 3 units with a price of $3, the producer surplus in this market equals A) b + g. B) f + g. C) a + b + f + g. D) a + b + f + g + h + i. Answer: B Topic: Producer Surplus Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills 101) Charlie's consumer surplus from the first slice of pizza he buys is greater than the consumer surplus from the second slice because of A) decreasing marginal benefits. B) increasing marginal benefits. C) decreasing marginal costs. D) increasing marginal cost. Answer: A Topic: Study Guide Question, Consumer Surplus Skill: Conceptual Question history: Previous edition, Chapter 5 AACSB: Reflective Thinking 18) At the quantity of 200 bushels of apples, the marginal social benefit of a bushel of apples is $100 and the marginal social cost is $50. To produce the efficient quantity of apples, A) more apples should be produced. B) fewer apples should be produced. C) there should be no change in the amount of apples produced. D) More information on the willingness of consumers to purchase apples is needed to determine the efficient level of apples. Answer: A Topic: Efficiency and Inefficiency Skill: Conceptual Question history: Previous edition, Chapter 5 AACSB: Reflective Thinking 27) When the competitive market is using its resources efficiently, the A) total amount of consumer surplus is maximized. B) total amount of producer surplus is maximized. C) sum of the total amount of consumer surplus plus the total amount of producer surplus is maximized. D) sum of the total amount of consumer surplus plus the total amount of producer surplus equals zero. Answer: C

Topic: Efficiency of Competitive Markets Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Reflective Thinking 61) Underproduction of good ________ create a deadweight loss and overproduction of a good ________ create a deadweight loss. A) will; will B) will; will not C) will not; will D) will not; will not Answer: A Topic: Deadweight Loss Skill: Conceptual Question history: Previous edition, Chapter 5 AACSB: Reflective Thinking 91) The figure illustrates the market for bagels. If the number of bagels is increased from 20 to 30 an hour, consumer surplus plus producer surplus ________ and deadweight loss is ________. A) decreases; negative B) decreases; positive C) increases; positive D) increases; negative Answer: B Topic: Deadweight Loss Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills

101) The above figure shows the competitive market for turkey. The consumer surplus for the 300 millionth pound of turkey is A) $2.00 per pound. B) $225 million. C) $0.80 per pound. D) $0.50 per pound. Answer: D Topic: Consumer Surplus Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills 13) Sherry wants to rent an apartment. Although rents are below what she is willing to pay, she cannot find an apartment. Then after a month of searching, she finds an apartment but she has to pay an additional $1,000 to have the locks changed. Sherry has just experienced the effects of ________. A) a rent floor with a black market B) inelastic demand C) a market working efficiently D) a rent ceiling Answer: D Topic: Rent Ceiling Skill: Conceptual Question history: Previous edition, Chapter 6 AACSB: Communication 14) Price ceilings, such as rent ceilings, set below the equilibrium price A) increase producer surplus. B) decrease producer surplus. C) do not affect producer surplus. D) might increase or decrease producer surplus. Answer: B Topic: Price Ceiling Skill: Recognition Question history: Modified 10th edition AACSB: Reflective Thinking 15) Which of the following is an economic policy that promotes the efficient quantity of apartments? A) a rent floor above the equilibrium rent B) a rent ceiling below the equilibrium rent C) a sales tax imposed on renting an apartment D) none of the above Answer: D Topic: A Regulated Housing Market

Skill: Conceptual Question history: Previous edition, Chapter 6 AACSB: Analytical Skills 24) ________ is an illegal activity between buyers and sellers sometimes used to evade a price ceiling. A) Increased search activity B) A price floor C) Creating a shortage D) A black market Answer: D Topic: Black Markets Skill: Conceptual Question history: Previous edition, Chapter 6 AACSB: Reflective Thinking 29) Which of the following is a result of a rent ceiling set below the equilibrium rent? I. equity in the housing market II. efficient allocation of resources III. a shortage of housing units. A) I and II B) I and III C) II only D) III only Answer: D Topic: Inefficiency of Rent Ceilings Skill: Conceptual Question history: Modified 10th edition AACSB: Ethical Reasoning 33) Assume that your state government has placed a price ceiling of $.20 per kilowatt hour on electricity. The equilibrium price per kilowatt hour for electricity is $.25. The government's action will result in A) a surplus of electricity in the electricity market. B) an increase in the price of electricity to $.25 per kilowatt hour. C) an increase in producer surplus. D) a deadweight loss. Answer: D Topic: Price Ceiling Skill: Conceptual Question history: Previous edition, Chapter 6 AACSB: Analytical Skills

42) The above figure shows the apartment rental market in Bigtown. At what rent will there be neither a shortage nor a surplus of apartments? A) $1250 per month B) $1000 per month C) $750 per month D) $500 per month Answer: C Topic: A Housing Market Skill: Recognition Question history: Previous edition, Chapter 6 AACSB: Analytical Skills

69) The above figure shows the demand and supply curves for housing. What would be the effects of a rent ceiling equal to $500 per month? A) a surplus equal to 3,000 apartments B) a shortage equal to 3,000 apartments C) a shortage equal to 250 apartments D) nothing because the rent ceiling has no effect on the equilibrium price and quantity Answer: B Topic: A Regulated Housing Market Skill: Conceptual Question history: Previous edition, Chapter 6 AACSB: Analytical Skills 3) An example of a price floor is a A) rent control. B) minimum wage. C) subsidy. D) quota. Answer: B Topic: Price Floor Skill: Recognition Question history: Previous edition, Chapter 6 AACSB: Reflective Thinking 15) Suppose that the equilibrium wage in the low-skilled labor market is $9.25. Further, suppose the federal government raises the minimum wage to $9.00 an hour from its present level of $8.15. The government's action of increasing the minimum wage will result in A) a decrease in unemployment. B) an increase in unemployment. C) a shortage of low-skilled labor. D) neither a shortage nor a surplus of labor in the low-skilled labor market. Answer: D Topic: The Minimum Wage Skill: Conceptual Question history: Previous edition, Chapter 6 AACSB: Reflective Thinking 16) Suppose the equilibrium wage is $10 per hour. A minimum wage is a ________ and affects employment if it is set at ________. A) price floor; $12 per hour B) price floor; $8 per hour C) price ceiling; $10 per hour D) price ceiling; $12 per hour Answer: A Topic: The Minimum Wage Skill: Analytical Question history: Previous edition, Chapter 6

AACSB: Analytical Skills

25) The figure shows the market for books before and after a sales tax is introduced. Each week, the tax creates a deadweight loss of ________, decreases consumer surplus by ________ , and decreases producer surplus by ________. A) $15; $10; $5 B) $12; $8; $4 C) $3; $10; $5 D) $3; $2; $1 Answer: C Topic: Tax Incidence Skill: Analytical Question history: Previous edition, Chapter 6 AACSB: Analytical Skills 28) The amount of a tax paid by the buyers will be larger the A) more elastic the demand and the more inelastic the supply. B) more inelastic the demand and the more elastic the supply. C) more inelastic are both the supply and demand. D) more elastic are both the supply and demand. Answer: B Topic: Tax Incidence and Elasticity Skill: Conceptual Question history: Previous edition, Chapter 6 AACSB: Reflective Thinking

106) In the above figure, the deadweight loss is zero if output is A) 0 units. B) 10 units. C) 20 units. D) 30 units. Answer: C Topic: Deadweight Loss Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills 107) In the above figure, of the quantities listed below, for which is the total deadweight loss the largest? A) 0 units. B) 10 units. C) 20 units. D) 30 units. Answer: A Topic: Deadweight Loss Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills

108) In the above figure, as output increases from 0 units to 10 units to 20 units to 30 units, the deadweight loss A) falls. B) falls at first, then rises. C) rises. D) rises at first, then falls. Answer: B Topic: Deadweight Loss Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills 109) In the above figure, if output is 30 units, then the total deadweight loss is A) $5. B) $10. C) $20. D) $60. Answer: B Topic: Deadweight Loss Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills 110) In the above figure, if output is 10 units, then the total deadweight loss is A) $5. B) $10. C) $20. D) $60. Answer: B Topic: Deadweight Loss Skill: Analytical Question history: Previous edition, Chapter 5 AACSB: Analytical Skills