Question 1 5 pts
Suppose we are looking at the Automobile market (Supply & Demand), and there is a shift to the right in supply. What will happen to market prices and output, ceteris paribus?
prices increase, output falls.
prices increase, output increases.
prices fall, output increases.
prices fall, output falls.

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Question 2 5 pts

Suppose we are looking at the Corn market (Supply & Demand), and there is a shift to the left in demand. What will happen to market prices and output, ceteris paribus?

prices increase, output falls.
prices increase, output increases.
prices fall, output increases.
prices fall, output falls.

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Question 3 5 pts

We observe that, despite rising gas prices, the consumption of gasoline has increased. What can explain this observation?

An increase in demand for gas.
A decrease in supply for gas.
A decrease in demand for gas along with a increase in supply.
Marketplace actors must be irrational.

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Question 4 5 pts Skip to question text.

Chick-fil-A’s “Eat Mor Chikin” advertising campaign features three cows holding signs that say things like: “Save the cows, eat more chicken.” If consumers began eating more chicken and less beef, would the cattle population increase or decrease?

Increase. In equilibrium the supply curve will have shifted to the right.
Decrease. In equilibrium the supply curve will have shifted to the left.
Increase. In equilibrium, the demand curve will have shifted to the right.
Decrease. In equilibrium, the demand curve will have shifted to the left.

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Question 5 5 pts Skip to question text.
This figure represents the supply and demand for gasoline.
Mod3.PNG

Suppose that D is the demand for gasoline for the United States only, and that D’ is the Demand for Gasoline for the world AFTER there was a suitable increase in their income to allow for a substantial increase in the number of automobiles worldwide. Which of the following is TRUE?
The increase from D to D’ resulted in higher demand from the U.S.
The increase from D to D’ resulted in higher quantity demanded from the U.S.
The increase from D to D’ resulted in lower demand from the U.S.
The increase from D to D’ resulted in lower quantity demanded from the U.S.

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Question 6 5 pts Skip to question text.
Let us make 3 assumptions. First, the marginal benefit of any life saved is equal, regardless of how many lives and the manner in which it was saved. For example, the marginal benefit for the “first” life saved is equal to the “millionth”, and any life saved by the FAA is just as valuable as one that is saved by the CPSC. Second, let’s assume that the federal government’s objective is to allocate resources across regulatory agencies in a manner that maximizes the total number of lives saved. Thirdly each individual regulatory agency within the government experiences increasing marginal costs due to diminishing returns. In other words, each extra life saved was more expensive than the last. With these assumptions in mind, let’s look at the data on the marginal cost (MC) of the last life saved by regulatory agency:
Mod3-1.PNG
According to the assumptions provided, is the government accomplishing its objective efficiently? What concept informs your response?

Yes – Cost-Benefit Analysis
Yes – Comparative Advantage
No – Marginal Cost Analysis
No – Deadweight loss

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Question 7 5 pts

Suppose that the market demand and supply curves for pizza can be described as QD =400-15P and QS = 50 + 20P. What is the market clearing price?

$5
$10
$15
$20

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Question 8 5 pts
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P.

What is the market equilibrium price? $

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Question 9 5 pts
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P.

What is the market equilibrium quantity?

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Question 10 5 pts
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P.

What is consumer surplus in market equilibrium? $

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Question 11 5 pts
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P.

What is producer surplus in market equilibrium? $

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Question 12 5 pts
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P.

What is producer surplus in the event of a price floor of $170? $

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Question 13 5 pts
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P.

What is consumer surplus in the event of a price ceiling of $10? $

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Question 14 5 pts
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P.

How many fewer units are consumed as a consequence of the $10 price ceiling imposed on the market equilibrium?

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Question 15 5 pts
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P. Policy makers want to raise tax revenue with a tax of $2 per apple on producers.

What will be the new market equilibrium quantity?

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Question 16 5 pts
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P. Policy makers want to raise tax revenue with a tax of $2 per apple on producers.

What would be the estimated tax revenue?

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Question 17 5 pts Skip to question text.
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P. Policy makers want to raise tax revenue with a tax of $2 per apple on producers.

How much of this tax revenue came from producers in the form of lower producer surplus? $

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Question 18 5 pts Skip to question text.
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P. Policy makers want to raise tax revenue with a tax of $2 per apple on producers.

How many fewer apples were produced and consumed as a result of the tax (i.e. What is the difference from market equilibrium)?

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Question 19 5 pts Skip to question text.
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P. Policy makers want to raise tax revenue with a tax of $2 per apple on producers.

What will be the amount of the deadweight loss of the tax? $

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Question 20 5 pts Skip to question text.
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=6P. Suppose instead of the $2 producer tax, they instead tax consumers $2 for every apple they consume. What would be the amount of deadweight loss of the tax? (Hint: You can save yourself a lot of work by relying on your knowledge of economic incidence.) $
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Question 21 0 pts Skip to question text.
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=4P. Left alone at these conditions, the market price would be P=25 and output Q=100. Suppose as part of a new program aimed at supporting apple farmers, the federal government becomes a consumer of apples. The budgetary rules that apply to this program essentially create a government demand function of QD=40. The original demand curve plus the government demand curve results in a new social demand curve of QD=240-4P.

Q: With the introduction of the government as a new demander of apples, what will be the market equilibrium price? $

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Question 22 0 pts Skip to question text.
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=4P. Left alone at these conditions, the market price would be P=25 and output Q=100. Suppose as part of a new program aimed at supporting apple farmers, the federal government becomes a consumer of apples. The budgetary rules that apply to this program essentially create a government demand function of QD=40. The original demand curve plus the government demand curve results in a new social demand curve of QD=240-4P.

Q: At this new market price (solved in previous problem), what quantity of apples will be purchased by the private sector/original consumers of apples?

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Question 23 0 pts Skip to question text.
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=4P. Left alone at these conditions, the market price would be P=25 and output Q=100. Suppose as part of a new program aimed at supporting apple farmers, the federal government becomes a consumer of apples. The budgetary rules that apply to this program essentially create a government demand function of QD=40. The original demand curve plus the government demand curve results in a new social demand curve of QD=240-4P.

Q: How many new apples were produced as a result of the new government demand (i.e. Apples produced now versus apples produced in the absence of government demand)?

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Question 24 0 pts Skip to question text.
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=4P. Left alone at these conditions, the market price would be P=25 and output Q=100. Suppose as part of a new program aimed at supporting apple farmers, the federal government becomes a consumer of apples. The budgetary rules that apply to this program essentially create a government demand function of QD=40. The original demand curve plus the government demand curve results in a new social demand curve of QD=240-4P.

Q: What will the total government expenditures on apples be? $

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Question 25 0 pts Skip to question text.
Let a market demand curve be represented by Qd=400-2P and a market supply be Qs=4P. Left alone at these conditions, the market price would be P=25 and output Q=100. Suppose as part of a new program aimed at supporting apple farmers, the federal government becomes a consumer of apples. The budgetary rules that apply to this program essentially create a government demand function of QD=40. The original demand curve plus the government demand curve results in a new social demand curve of QD=240-4P.

Q: What is the social cost of government expenditures on apples? $

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Question 26 5 pts Skip to question text.
The picture below is a supply and demand graph consisting of two individual demand curves (d1 and d2), one market supply curve (S) and one market demand curve (D) for a pure private good.
ma2Bquestion.png
Based on the graph, what is the marginal benefit of the 13th unit to demander 2?

$10
$15
$20
$20-$15=$5

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Question 27 5 pts Skip to question text.
The picture below is a supply and demand graph consisting of two individual demand curves (d1 and d2), one market supply curve (S) and one market demand curve (D) for a pure private good.
ma2Bquestion.png
Based on the graph, in market equilibrium:

Demander 1 will purchase 12 units and demander 2 will purchase 22 units.
Demander 1 will purchase 12 units and demander 2 will purchase 14 units.
Demander 1 will purchase 10 units and demander 2 will purchase 13 units.
Both demander 1 and demander 2 will purchase 23 units each.

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Question 28 5 pts Skip to question text.
The picture below is a supply and demand graph consisting of two individual demand curves (d1 and d2), one market supply curve (S) and one market demand curve (D) for a pure private good.
ma2Bquestion.png
Based on the graph, identify the TRUE Statement

At a price of $15, the quantity demanded by demander 1 will be 11 units.
The marginal cost of the 14th unit is more than $20.
If we were trying to maximize the total benefits of allocating 25 units, then we would want to give 10 units to demander 1 and 15 units to demander 2.

 

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