1.deadweight losses occur when the quantity of an output produced is A.less than
ID: 1140589 • Letter: 1
Question
1.deadweight losses occur when the quantity of an output produced is
A.less than or greater than the competitive equilibrium quantity.
B.greater than the competitive equilibrium quantity.
C.less than the competitive equilibrium quantity.
D.such that the marginal benefit of the output is just equal to the marginal cost
2.The intention of a price ceiling is to help consumers by forcing a price that is below the equilibrium price. What is one unintended consequence of this policy?
rev:
Multiple Choice
a.Foreign producers are hurt by the lower price and economic surplus is increased.
b.Producers face a shortage or resources and economic surplus is decreased.
c.Consumers face a shortage of the good and increased consumer surplus.
d.Consumers face a shortage of the good and decreased consumer surplus
3.The intention of a price ceiling is to help consumers by forcing a price that is below the equilibrium price. What is one unintended consequence of this policy?
a.Foreign producers are hurt by the lower price and economic surplus is increased.
b.Producers face a shortage or resources and economic surplus is decreased.
c.Consumers face a shortage of the good and increased consumer surplus.
d.Consumers face a shortage of the good and decreased consumer surplus.
4.The difference between the actual price that a producer receives and the minimum acceptable price the producer is willing to accept is called the producer
costs.
revenues.
utility.
5.
Producer surplus
a.is the difference between the maximum price consumers are willing to pay for a product and the lower equilibrium price.
b.is the difference between the minimum price producers are willing to accept for a product and the higher equilibrium price.
c.rises as equilibrium price falls.
d.is the difference between the maximum price consumers are willing to pay for a product and the minimum pr ice producers are willing to accept.
Explanation / Answer
1. C.less than the competitive equilibrium quantity. Deadweight loss occurs because of market efficiency and there is loss of welfare due to taxes, subsidies, and other governmnet intervention like price floors, price ceilings.
2.The intention of a price ceiling is to help consumers by forcing a price that is below the equilibrium price. What is one unintended consequence of this policy?
b.Producers face a shortage or resources and economic surplus is decreased.
Producers face a shortage and the producer surplus is decreased. The consumer surplus is increased because the buyers can now get the product at a lower cost.
The difference between the actual price that a producer receives and the minimum acceptable price the producer is willing to accept is called the producer surplus.
5.
Producer surplus is b.is the difference between the minimum price producers are willing to accept for a product and the higher equilibrium price.
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