Informative Quiz On Aspects Of Microeconomics

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Informative Quiz On Aspects Of Microeconomics

The market would not exist if there were no consumers and producers. The level of consumption or production in a market is dependent on a lot of variables and we have covered them all in our past classes. Do you think that you have what it takes to handle the informative quiz on aspects of economics? Take it and find out!


Questions and Answers
  • 1. 
    Consumer surplus is the amount a buyer is willing to pay for a good minus the seller's cost
    • A. 

      True

    • B. 

      False

  • 2. 
    If the demand curve in a market is stationary, consumer surplus decreases when the price in the market increases
    • A. 

      True

    • B. 

      False

  • 3. 
    If your willingness to pay for a hamburger is $3.00 and the price is $2.00, your consumer surplus is $5.00
    • A. 

      True

    • B. 

      False

  • 4. 
    Producer surplus is a measure of the unsold inventories of suppliers in a market
    • A. 

      True

    • B. 

      False

  • 5. 
    Consumer surplus is a good measure of buyers' benefits if buyers are rational
    • A. 

      True

    • B. 

      False

  • 6. 
    Cost to the seller includes the opportunity cost of the seller's time
    • A. 

      True

    • B. 

      False

  • 7. 
    The height of the supply curve is the marginal seller's cost
    • A. 

      True

    • B. 

      False

  • 8. 
    Total surplus is the cost to sellers minus the value to buyers
    • A. 

      True

    • B. 

      False

  • 9. 
    • A. 

      True

    • B. 

      False

  • 10. 
    Producer surplus is the area above the supply curve and below the price
    • A. 

      True

    • B. 

      False

  • 11. 
    The major advantage of allowing free markets to allocate resources is that the outcome of the allocation is efficent
    • A. 

      True

    • B. 

      False

  • 12. 
    Equilibrium in a competitive market maximizes total surplus
    • A. 

      True

    • B. 

      False

  • 13. 
    The two main types of market failure are market power and externalities
    • A. 

      True

    • B. 

      False

  • 14. 
    Externalities are side effects, such as pollution, that are not taken into account by the buyers and sellers in a market
    • A. 

      True

    • B. 

      False

  • 15. 
    Producing more of a product always adds to total surplus
    • A. 

      True

    • B. 

      False

  • 16. 
    Consumer surplus is the area
    • A. 

      Above the supply curve and below the price

    • B. 

      Below the supply curve and above the price

    • C. 

      Above the demand curve and below the price

    • D. 

      Below the demand curve and above the price

    • E. 

      Below the demand curve and above the supply curve

  • 17. 
    • A. 

      That buyer's consumer surplus

    • B. 

      That buyer's producer surplus

    • C. 

      That buyer's maximum amount he is willing to pay for a good

    • D. 

      That buyer's minimum amount he is willing to pay for a good

    • E. 

      None of the above

  • 18. 
    If a buyer's willingness to pay for a new Honda is $20,000 and she i able to actually buy it for $18,000, her consumer surplus is
    • A. 

      $0

    • B. 

      $2,000

    • C. 

      $18,000

    • D. 

      $20,000

    • E. 

      $38,000

  • 19. 
    An increase in the price of a good along a stationary demand curve
    • A. 

      Increases consumer surplus

    • B. 

      Decreases consumer surplus

    • C. 

      Improves the material welfare of the buyers

    • D. 

      Improves market efficiency

  • 20. 
    • A. 

      One vase will be sold, and consumer surplus is $30

    • B. 

      One vase will be sold, and consumer surplus is $5

    • C. 

      Two vases will be sold, and consumer surplus is $5

    • D. 

      Three vases will be sold, and consumer surplus is $0

    • E. 

      Three vases will be sold, and consumer surplus is $80

  • 21. 
    Producer surplus is the area
    • A. 

      Above the supply curve and below the price

    • B. 

      Below the supply curve and above the price

    • C. 

      Above the demand curve and below the price

    • D. 

      Below the demand curve and above the price

    • E. 

      Below the demand curve and above the supply curve

  • 22. 
    If a benevolent planner chooses to produce less than the equilibrium quantity of a good, then
    • A. 

      Producer surplus is maximized

    • B. 

      Consumer surplus is maximized

    • C. 

      Total surplus is maximized

    • D. 

      The value placed on the last unit of production by buyers exceeds the cost of production

    • E. 

      The cost of production on the last unit produced exceeds the value placed on it by buyers

  • 23. 
    • A. 

      Producer surplus is maximized

    • B. 

      Consumer surplus is maximized

    • C. 

      Total surplus is maximized

    • D. 

      The value placed on the last unit of production by buyers exceeds the cost of production

    • E. 

      The cost of production on the last unit produced exceeds the value placed on it by buyers

  • 24. 
    The seller's cost of production is
    • A. 

      The seller's consumer surplus

    • B. 

      The seller's producer surplus

    • C. 

      The maximum amount the seller is willing to accept for a good

    • D. 

      The minimum amount the seller is willing to accept for a good

    • E. 

      None of the above

  • 25. 
    Total surplus is the area
    • A. 

      Above the supply curve and below the price

    • B. 

      Below the supply curve and above the price

    • C. 

      Above the demand curve and below the price

    • D. 

      Below the demand curve and above the price

    • E. 

      Below the demand curve and above the supply curve

  • 26. 
    An increase in the price of a good along a stationary supply curve
    • A. 

      Increases producer surplus

    • B. 

      Decreases producer surplus

    • C. 

      Improves market equity

    • D. 

      Does all of the above

  • 27. 
    Adam Smith's "invisible hand" concept suggests that a competitive market outcome
    • A. 

      Minimizes total suprlus

    • B. 

      Maximizes total surplus

    • C. 

      Generates equality among the members of society

    • D. 

      Does both b and c

  • 28. 
    In general, if a benevolent social planner wanted to maximize the total benefits received by buyers and sellers in a market, the planner should
    • A. 

      Choose a price above the market equilibrium price

    • B. 

      Choose a price below the market equilibrium price

    • C. 

      Allow the market to seek equilibrium on its own

    • D. 

      Choose any price the planner wants because the losses to the sellers (buyers) from any change in price are exactly offset by the gains to the buyers (sellers)

  • 29. 
    If buyers are rational and there is no market failure,
    • A. 

      Free market solutions are efficient

    • B. 

      Free market solutions generate equality

    • C. 

      Free market solutions maximize total surplus

    • D. 

      All of the above are true

    • E. 

      A and c are correct

  • 30. 
    If a producer has market power (can influence the price of the product in the market) then free market solutions
    • A. 

      Generate equality

    • B. 

      Are efficient

    • C. 

      Are inefficient

    • D. 

      Maximize consumer surlus

  • 31. 
    • A. 

      The market allocates outputs to the buyers who value it the most

    • B. 

      The market allocates buyers to the sellers who can produce the good at least cost

    • C. 

      The quantity produced in the market maximizes the sum of consumer and producer surplus

    • D. 

      All of the above are true

    • E. 

      None of the above are true

  • 32. 
    If a market generates a side effect or externality, then free market solutions
    • A. 

      Generate equality

    • B. 

      Are efficient

    • C. 

      Are inefficient

    • D. 

      Maximize producer surplus

  • 33. 
    • A. 

      Everyone has as much as they would like

    • B. 

      The benefit buyers place on medical care is equal to the cost of producing it

    • C. 

      Buyers receive no benefit from another unit of medical care

    • D. 

      We must cut back on the consumption of other goods

  • 34. 
    • A. 

      Efficiency, Joe should receive the glove

    • B. 

      Efficiency, Sue should receive the glove

    • C. 

      Consumer surplus, both should receive a glove

    • D. 

      Equity, Joe should receive the glove

  • 35. 
    Suppose that the price of a new bicycle is $300.  Sue values a new bicycle at $400.  If costs $200 for the seller to produce the new bicycle.  What is the value of total surplus if Sue buys a bew bike?
    • A. 

      $100

    • B. 

      $200

    • C. 

      $300

    • D. 

      $400

    • E. 

      $500