________ is maximized in a competitive market when marginal benefit equals marginal cost.
Answer
Correct Answer:
Economic surplus
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An effective price ceiling occurs at a price _____ the equilibrium price and causes a _____.
Answer
Correct Answer:
Below; shortage
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One can determine the consumers' surplus if the _______________ are known
Answer
Correct Answer:
Maximum buying price and price paid
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___________ means producing the desired result.
Answer
Correct Answer:
Effectiveness
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Who receives most government agricultural subsidies?
Answer
Correct Answer:
Large commercial operations
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The equilibrium price of soybeans is $4 per bushel, and the government believes farmers need the help of a price floor. Which price level is the government most likely to set for a bushel of soybeans?
Answer
Correct Answer:
$5
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In the short term, the supply of rental units is ______.
Answer
Correct Answer:
Inelastic
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Clarence believes rent is too high in his city, and he would like to pay less rent. Which government action would Clarence most likely support?
Answer
Correct Answer:
Price ceilings
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How does a subsidy affect production?
Answer
Correct Answer:
The market overproduces relative to efficient output.
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A subsidy can be thought of as a ______ tax.
Answer
Correct Answer:
Negative
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How does elasticity of a supply or demand curve affect deadweight loss?
Answer
Correct Answer:
A more elastic curve increases deadweight loss.
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When an economy maximizes the sum of consumer and producer surplus, it has reached ______.
Answer
Correct Answer:
Market efficiency
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A supply curve is smooth when there ______.
Answer
Correct Answer:
Are many producers
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Producer surplus for a particular unit is the difference between the market price and the ______.
Answer
Correct Answer:
Seller’s cost of producing the unit
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Marginal cost is the cost of ______.
Answer
Correct Answer:
Producing one more unit of a good
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A decrease in price ______ consumer surplus.
Answer
Correct Answer:
Increases
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The existence of a consumer surplus on a product means ______.
Answer
Correct Answer:
Consumers believe they have received a good deal
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What happens as people consume additional units of a good?
Answer
Correct Answer:
They are less willing to pay for additional units.
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Consumer surplus occurs when the market price is ______ customers are willing and able to pay.
Answer
Correct Answer:
Less than
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Welfare effects is The ___ associated with government intervention in markets
Answer
Correct Answer:
Both of these
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The Sum of ______ Surpluses is called Total welfare gains
Answer
Correct Answer:
Consumer and producer
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The area above the market supply curve and below the market price is known as
Answer
Correct Answer:
Producer surplus
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The cost of producing one more unit of a good is known as
Answer
Correct Answer:
Marginal cost
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Deadweight loss is The net loss of ____ that results from an action that alters a market equilibrium
Answer
Correct Answer:
Total surplus
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The area below the market demand curve and above the market price is called
Answer
Correct Answer:
Consumer Surplus
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