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Arthur buys a new mobile phone for $150. He receives consumer surplus of $150 from the purchase. How much does Arthur value his cell phone?


A) $0
B) $150
C) $225
D) $300

E) A) and D)
F) B) and C)

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-Refer to Table 5-7. The equations above describe the demand and supply for Bubba's Fried Jellybeans. What are the equilibrium price and quantity (in thousands) for Bubba's Fried Jellybeans? A) $80 and 40 thousand B) $60 and 10 thousand C) $20 and 20 thousand D) $40 and 5 thousand -Refer to Table 5-7. The equations above describe the demand and supply for Bubba's Fried Jellybeans. What are the equilibrium price and quantity (in thousands) for Bubba's Fried Jellybeans?


A) $80 and 40 thousand
B) $60 and 10 thousand
C) $20 and 20 thousand
D) $40 and 5 thousand

E) A) and B)
F) All of the above

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The demand and supply equations for the apple market are: Demand: P = 12 - 0.01Q Supply: P = 0.02Q where P= price per bushel, and Q = quantity. a. Calculate the equilibrium price and quantity. b. Suppose the government guaranteed producers a price of $10 per bushel. What would be the effect on quantity supplied? Provide a numerical value. c. By how much would the $10 price change the quantity of apples demanded? Provide a numerical value. d. Would there be a shortage or surplus of apples? e. What is the size of this shortage or surplus? Provide a numerical value.

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a. Q = 400 bushels, P = $8.
b....

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A ________ curve shows the marginal cost of producing one more unit of a good or service.


A) demand
B) supply
C) production possibilities
D) marginal benefit

E) A) and D)
F) B) and C)

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-Refer to Figure 5-1. If the market price is $1.50, what is the consumer surplus on the second burrito? A) $0.50 B) $1.00 C) $1.50 D) $3.50 -Refer to Figure 5-1. If the market price is $1.50, what is the consumer surplus on the second burrito?


A) $0.50
B) $1.00
C) $1.50
D) $3.50

E) A) and B)
F) C) and D)

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-Refer to Figure 5-2. What area represents producer surplus at a price of P<sub>2</sub>? A) A + B B) B + D C) A + B + C D) A + B + C + D + E -Refer to Figure 5-2. What area represents producer surplus at a price of P2?


A) A + B
B) B + D
C) A + B + C
D) A + B + C + D + E

E) A) and B)
F) A) and C)

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Marginal cost is


A) the total cost of producing one unit of a good or service.
B) the average cost of producing a good or service.
C) the difference between the lowest price a firm would have been willing to accept and the price it actually receives.
D) the additional cost to a firm of producing one more unit of a good or service.

E) B) and C)
F) A) and D)

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-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, A) economic surplus is maximised. B) too many consumers want to buy pecans. C) the quantity supplied is greater than the economically efficient quantity. D) the quantity demanded is economically efficient, but the quantity supplied is economically inefficient. -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,


A) economic surplus is maximised.
B) too many consumers want to buy pecans.
C) the quantity supplied is greater than the economically efficient quantity.
D) the quantity demanded is economically efficient, but the quantity supplied is economically inefficient.

E) A) and D)
F) All of the above

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-Refer to Figure 5-3. At a price of $18, consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity? A) No, the marginal benefit of the 40th unit exceeds the marginal cost of that 80th unit. B) Yes, otherwise consumers would not buy 40 units. C) Yes, because $18 shows what consumers are willing to pay for the product. D) No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th unit. -Refer to Figure 5-3. At a price of $18, consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity?


A) No, the marginal benefit of the 40th unit exceeds the marginal cost of that 80th unit.
B) Yes, otherwise consumers would not buy 40 units.
C) Yes, because $18 shows what consumers are willing to pay for the product.
D) No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th unit.

E) B) and D)
F) A) and B)

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The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called


A) producer surplus.
B) the substitution effect.
C) the income effect.
D) consumer surplus.

E) All of the above
F) A) and C)

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Suppliers will be willing to supply a product only if


A) the price received is less than the additional cost of producing the product.
B) the price received is at least equal to the additional cost of producing the product.
C) the price is higher than the average cost of producing the product.
D) the price received is at least double the additional cost of producing the product.

E) A) and C)
F) C) and D)

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The total amount of producer surplus in a market is equal to


A) the difference between quantity supplied and quantity demanded.
B) the area above the market supply curve and below the market price.
C) the area above the market supply curve.
D) the area between the demand curve and the supply curve below the market price.

E) B) and D)
F) A) and C)

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Suppose the demand curve for a product is vertical and the supply curve is upward sloping. If a unit tax is imposed in the market for this product,


A) sellers bear the entire burden of the tax.
B) buyers bear the entire burden of the tax.
C) the tax burden will be shared equally between buyers and sellers.
D) buyers share the burden of the tax with the government.

E) A) and C)
F) All of the above

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-Refer to Table 5-4. Suppose that the quantity of labour demanded decreases by 80 000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?


A) W = $8.50; Q = 550 000
B) W = $12.50; Q = 630 000
C) W = $9.50; Q = 570 000
D) W = $9.50; Q = 590 000

E) All of the above
F) A) and C)

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If the quantity of donuts supplied is represented by the equation QS = -15 + 5P, then the corresponding price of donuts is represented by the equation


A) P = 0.2QS + 3.
B) P = 5QS + 75.
C) P = QS - 7.5.
D) P = 15 - 0.5QS.

E) A) and D)
F) None of the above

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-Refer to Table 5-7. The equations above describe the demand and supply for Bubba's Fried Jellybeans. The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units. What is the value of economic surplus in this market? A) $5 thousand B) $12.5 thousand C) $25 thousand D) $37.5 thousand -Refer to Table 5-7. The equations above describe the demand and supply for Bubba's Fried Jellybeans. The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units. What is the value of economic surplus in this market?


A) $5 thousand
B) $12.5 thousand
C) $25 thousand
D) $37.5 thousand

E) B) and C)
F) B) and D)

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-Refer to Figure 5-1. Arnold's marginal benefit from consuming the third burrito is A) $1.25. B) $1.50. C) $2.50. D) $6.00. -Refer to Figure 5-1. Arnold's marginal benefit from consuming the third burrito is


A) $1.25.
B) $1.50.
C) $2.50.
D) $6.00.

E) B) and D)
F) B) and C)

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What is a black market?

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A black market is a market in ...

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Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.


A) demand
B) supply
C) production possibilities
D) marginal cost

E) A) and B)
F) B) and C)

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Marginal cost is the additional cost to a firm of producing one more unit of a good or service.

A) True
B) False

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