Question : 101) Refer to Figure 5-5. At the market-clearing price and : 1384178

101) Refer to Figure 5-5. At the market-clearing price and quantity of $30 per hour and 4000 hours of gardening services purchased, the economic surplus is

A) the sum of the areas below the demand curve, but above the market-clearing price of $30 — i.e., areas 1, 2, 6.

B) the sum of the areas below the demand curve — i.e., areas 1, 2, 3, 4, 5, 6, 7, 8, 9.

C) the sum of the areas above the supply curve, but below the market-clearing price of $30 — i.e., areas 3, 4, 7.

D) the sum of the areas above the supply curve and below the demand curve — i.e., areas 1, 2, 3, 4, 6, 7.

E) the sum of the areas below the demand curve, up to 4000 hours — i.e., areas 1, 2, 3, 4, 5, 6, 7, 8.

102) Refer to Figure 5-5. At the market-clearing price and quantity of $30 per hour and 4000 hours of gardening services, we can say that

A) economic surplus could be increased at a lower price because there would be more value to consumers.

B) economic surplus could be increased at a higher price because firms would generate more revenue.

C) economic surplus is maximized and the market is efficient.

D) the market is inefficient because there are some consumers who are not purchasing at this price.

E) the market is efficient because the government has imposed a market-clearing price and quantity.

103) Refer to Figure 5-5. Suppose this market for gardening services is in a free-market equilibrium. If the government then imposes a price floor of $50 per hour for gardening services, the result would be

A) a loss of economic surplus of the areas 6 and 7.

B) a loss of economic surplus of the areas 2 and 6.

C) a loss of economic surplus of the area 1.

D) a loss of economic surplus of the areas 2, 3, 4, 6, and 7.

E) a loss of economic surplus of the areas 1, 2, 3, and 4.

104) Refer to Figure 5-5. If production and consumption of gardening services were 5000 hours per month

A) the value placed by consumers on the last 1000 hours is less than the additional costs associated with their provision.

B) the provision of the last 1000 hours would decrease the amount of economic surplus in this market.

C) the resources going into the last 1000 hours of gardening service would be more highly valued elsewhere.

D) this market is not achieving efficiency.

E) all of the above.

105) In general (and in the absence of market failures), economic surplus will be maximized and economic efficiency will be achieved

A) when the government is able to impose an equilibrium price.

B) when consumers and producers can agree on the most advantageous division of economic surplus.

C) when resources are allocated such that production of the good is maximized.

D) when the government successfully determines what is best for society as a whole.

E) in a competitive market where price is free to achieve its market-clearing equilibrium level.

106) Which of the following statements most accurately describes the concept of deadweight loss?

A) the loss of production that occurs when a binding price floor or ceiling is imposed

B) the loss of consumption that occurs when a binding price floor or ceiling is imposed

C) the overall loss of economic surplus that occurs when a market is inefficient

D) the total market value of the goods no longer produced when quantity exchanged is below the equilibrium quantity

E) the loss of economic surplus to consumers

107) One measure of the extent of market inefficiency is

A) how far market price deviates from equilibrium.

B) how far quantity exchanged deviates from equilibrium.

C) the size of the economic surplus.

D) the size of the deadweight loss.

E) the difference between total economic surplus and deadweight loss.

108) Refer to Figure 5-6. The market for good X is in equilibrium at P0 and Q0. Economic surplus is represented by

A) areas 1 and 5.

B) areas 2, 3, 4, 6, 7, 8.

C) areas 1, 2, 3, 5, 6.

D) areas 1, 2, 3, 4, 5, 6, 7, 8.

E) areas 2, 3, 4, 6, 7, 8, 9.

109) Refer to Figure 5-6. The market for good X is in equilibrium at P0 and Q0. Now suppose the government imposes a ________ at P1. One result would be ________.

A) price ceiling; an increase in economic surplus represented by areas 5 and 6.

B) price ceiling; a deadweight loss represented by areas 5, 6, 7 and 8.

C) price floor; a deadweight loss represented by areas 5, 6, 7 and 8.

D) price floor; a deadweight loss represented by areas 2, 6 and 7.

E) price ceiling; a deadweight loss represented by areas 5 and 6.

110) Refer to Figure 5-7. The market for good X is in equilibrium at P0 and Q0. Now suppose the government imposes a ________ at P2. One result would be ________.

A) price floor; an increase in economic surplus represented by area 1

B) price floor; a deadweight loss represented by areas 5 and 6

C) price ceiling; an increase in economic surplus represented by areas 2 and 5

D) price floor; a deadweight loss represented by area 8

E) price ceiling; a deadweight loss represented by areas 5 and 6