It's really only about a few questions I'm stuck on but I figured it might be worth while seeing how I did with them all.
Caiden
econ-quiz.pdf
Question 1 Consider a market with the following supply (Qs) and demand (Qd) curves: Qd= 200-2p Qs=25 At the market equilibrium, what is the value of consumer surplus? Answer
0
156.25
625
3750
Infinite
Question 2 Consider a market with the following supply (Qs) and demand (Qd) curves: Qd= 12-0.2p Qs=p At the market equilibrium, what is the value of total surplus? Answer
10
50
100
200
300
Question 3 Consider a market with the following supply (Qs) and demand (Qd) curves: Qd= 200-2p Qs=25 Suppose the government imposes a tax of 15 dollars for each unit sold on buyers. For each unit sold, what is the amount received and kept by producers in the post tax equilibrium? Answer
170
150
145
25
None of the above
Question 4 Consider a market with the following supply (Qs) and demand (Qd) curves: Qd= 200-2p Qs=25 Suppose the government imposes on the buyer a tax of 15 dollars for each unit sold. What is the total tax revenue raised and deadweight loss following the imposition of the tax? Answer
Revenue = 15, DWL= 0
Revenue = 15, DWL= 375
Revenue = 375, DWL = 0
Revenue =375, DWL = 375
None of the above
Question 5 Assume that demand is perfectly elastic and the supply curve is upward sloping. The amount received and kept by sellers after a specific tax is imposed on buyers: Answer
Is greater than prior to the tax
Is less than prior to the tax.
Is unchanged compared with the situation prior to the tax.
Depends on the own price elasticity of supply.
Both b and d are correct.
Question 6 Consider the valuations placed on a piece of art by the following five buyers:
If a second price auction is held and each bidder follows an optimal bidding strategy: Answer
Catherine wins and receives positive surplus
Catherine wins and receives zero surplus
Bob wins and receives a positive surplus
Bob wins and receives zero surplus.
None of the above.
Question 7 Assume that supply is perfectly elastic and demand is downward sloping. If a specific tax is imposed on buyers then following the imposition of the tax: Answer
Consumer surplus is equal to zero.
Producer surplus is equal to zero.
The price paid by buyers will increase.
The price received and kept by sellers remains unchanged.
b, c and d are correct.
Question 8 Assume that supply is perfectly elastic and demand is downward sloping. If a specific tax is imposed on buyers then following the imposition of the tax: Answer
Total economic surplus is unchanged.
Total economic surplus increases.
Total economic surplus decreases.
Producer surplus decreases and consumer surplus is unchanged.
c and d are correct.
Question 9 Consider a labour market in which the supply curve is given by: w= 100 + Ls (where w is the wage rate and Ls is the quantity of labour supplied). Further, assume that the demand for labour is given by w = 400 – 2Ld (where w is the wage rate and Ld is the quantity of labour demanded). Assume that the government imposes a minimum wage of 250. In this case the resulting deadweight loss is equal to: Answer
0.
312.5
625
937.5
None of the above
Question 10 Consider a labour market in which the supply curve is given by: w= 100 + Ls (where w is the wage rate and Ls is the quantity of labour supplied). Further, assume that the demand for labour is given by w = 400 – 2Ld (where w is the wage rate and Ld is the quantity of labour demanded). Assume that the government imposes a minimum wage of 150. Following the imposition of the minimum wage consumer surplus is equal to: Answer
0
5625
10000
15000
None of the above.
Question 11 Assume that Tony and Julie have the following demand curves for milk: QTony = 100-4p QJulie =50 - p Assume that the market for milk is competitive and the market price is equal to 10. At the market price, in the competitive equilibrium: Answer
Tony and Julie both consume the same amount of milk but have different total consumer surpluses
Tony and Julie both consume the same amount of milk and have the same total consumer surplus
Tony and Julie consume different amounts of milk and have different total consumer surpluses
Tony and Julie consume different amounts of milk but have the same total consumer surplus
None of the above.
Question 12 Assume that the demand curve and supply curves for computer tablets is given by the following: Qd= 10000 - 2p Qs= 4p - 200
If the government imposes a tax of 60 that must be paid by the seller the total amount of tax revenue raised is equal to: Answer
0
60
6520
391200
396000
Question 13 The supply curve of LNG, a substitute for petrol is given by the following: p=100+Qs.The demand curve for LNG is given by p=120-3Qd. Assume that the government has decided that one way to reduce greenhouse gas emissions is to encourage the use of ethanol. As a result, the government provides a subsidy of 40 to suppliers. Following the imposition of the subsidy, what is the new equilibrium price? Answer
40
45
65
75
105
Question 14 The supply curve of LNG, a substitute for petrol is given by the following: p=100+Qs.The demand curve for LNG is given by p=120-3Qd. Assume that the government has decided that one way to reduce greenhouse gas emissions is to encourage the use of ethanol. As a result, the government provides a subsidy of 40 to suppliers. What is the total subsidy payment that will the government make as a result of this policy? Answer
40
105
600
1800
4275
Question 15 The valuations for a rare 18th century French vase for five individuals are listed below. In the event that the vase is auctioned via a second price sealed bid auction where individuals follow their optimal strategy which of the following is true?
Individual Valuation John 1000 Kate 5500
Lenny 4500 Molly 5000 Nerida 5000
Answer
Kate wins and has positive surplus.
Lenny wins and has positive surplus.
Lenny wins but has zero surplus
John wins and has positive surplus.
Either Molly or Nerida win but additional information is required to determine who actually gets the vase.
Question 16 Consider if the demand curve for insulin is given by Qd=100. If the supply curve is given by p=100 + Qs and the government pays a subsidy of 20 to insulin sellers for each unit of insulin sold, the total amount paid out for the subsidy will be qual to: Answer
0
20
100
1000
2000
Question 17 Which of the following is true? Answer
Efficiency requires that the marginal COST of the last item produced is higher for more efficient producers. At an efficient outcome, the total benefit of consuming a good is equal for all consumers.
At an efficient outcome all producers have the same marginal cost of production for the last item produced. At an efficient outcome it is possible to make one person better off without making some one else worse off. Both b and c are correct.
Question 18 Consider if the demand curve for insulin is given by Qd=100. If the supply curve is given by p=100 + Qs and the government pays a subsidy of 20 to insulin sellers for each unit of insulin sold which of the following is true? Answer
In the new equilibrium producer surplus is higher but there is a deadweight loss
In the new equilibrium producer surplus is lower and there is a deadweight loss
In the new equilibrium producer surplus is higher but there is no deadweight loss
In the new equilibrium producer surplus is lower but there is no deadweight loss
None of the above
Question 19 The demand curve for carrots is downward sloping and the supply curve is vertical. Assume that poor weather leads to a decrease in supply. If total expenditure on carrots increases, we can say that: Answer
Price has increased in the new equilibrium
Price has decreased in the new equilibrium
In terms of own price elasticity, demand is inelastic over the relevant range of the demand curve
Both a and c are correct
Both b and c are correct
Question 20 Assume that the demand curve is given by the following: p=100 and the supply curve is given by Q=p-25. If the government puts in place a tax of 10 that must be paid by the buyer the deadweight loss that results is equal to: Answer
0.
5.
12.5.
50.
None of the above
