Market Efficiency and Welfare MCQs
Market Efficiency and Welfare MCQs
The following Elasticities in Microeconomics MCQs have been compiled by our experts through research, in order to test your knowledge of the subject of Elasticities in Microeconomics. We encourage you to answer these 20 multiple-choice questions to assess your proficiency.
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1: The area below the market demand curve and above the market price is called
A. Consumer Surplus
B. Producer surplus
C. Supplier Surplus
D. Total surplus
2: Deadweight loss is The net loss of ____ that results from an action that alters a market equilibrium
A. Consumer Surplus
B. Producer surplus
C. Supplier Surplus
D. Total surplus
3: The cost of producing one more unit of a good is known as
A. Fixed Cost
B. Variable Cost
C. Marginal cost
D. Total Cost
4: The area above the market supply curve and below the market price is known as
A. Consumer Surplus
B. Producer surplus
C. Supplier Surplus
D. Saller Surplus
5: The Sum of ______ Surpluses is called Total welfare gains
A. Consumer
B. Producer
C. Consumer and producer
D. None of these
6: Welfare effects is The ___ associated with government intervention in markets
A. Gains
B. Losses
C. Both of these
D. None of these
7: Consumer surplus occurs when the market price is ______ customers are willing and able to pay.
A. More than
B. Less than
C. Exactly what
D. An estimate of what
8: What happens as people consume additional units of a good?
A. They are willing to pay more for each additional unit.
B. They are less willing to pay for additional units.
C. They willingly pay the same price repeatedly until they have no funds left.
D. They become unpredictable, sometimes willing to pay more and sometimes less.
9: The existence of a consumer surplus on a product means ______.
A. Consumers believe they have received a good deal
B. Consumers have taken advantage of producers
C. Producers have taken advantage of consumers
D. Consumers have received a good deal
10: A decrease in price ______ consumer surplus.
A. Increases
B. Decreases
C. Eliminates
D. Freezes
11: Marginal cost is the cost of ______.
A. Producing one more unit of a good
B. Labor used to make a certain good
C. Producing one good instead of another
D. A consumer’s time spent shopping for a good
12: Producer surplus for a particular unit is the difference between the market price and the ______.
A. Seller’s tax expense on the unit
B. Seller’s cost of producing the unit
C. Consumer’s initial offer for the unit
D. Consumer’s highest offer for the unit.
13: A supply curve is smooth when there ______.
A. Are no producers
B. Is one producer
C. Are few producers
D. Are many producers
14: When an economy maximizes the sum of consumer and producer surplus, it has reached ______.
A. The equilibrium point
B. A deadweight loss
C. Market efficiency
D. Marginal cost
15: How does elasticity of a supply or demand curve affect deadweight loss?
A. A highly elastic curve has an unpredictable effect on deadweight loss.
B. A highly elastic curve signals the elimination of deadweight loss.
C. A more elastic curve decreases deadweight loss.
D. A more elastic curve increases deadweight loss.
16: A subsidy can be thought of as a ______ tax.
A. Negative
B. Positive
C. Neutral
D. Progressive
17: How does a subsidy affect production?
A. The market produces at peak efficiency.
B. The market overproduces relative to efficient output.
C. The market underproduces relative to efficient output.
D. The market abandons production of the subsidized good.
18: 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?
A. Price increases
B. Price floors
C. Price ceilings
D. Price minimums
19: In the short term, the supply of rental units is ______.
A. Correlated with huge deadweight losses
B. Highly responsive to price controls
C. Inelastic
D. Flexible
20: 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?
A. $1
B. $2
C. $3
D. $5
21: Who receives most government agricultural subsidies?
A. New farmers
B. Poor farmers
C. Small family farms
D. Large commercial operations
22: ___________ means producing the desired result.
A. Effectiveness
B. Technology
C. E-production
D. Productivity
23: One can determine the consumers' surplus if the _______________ are known
A. Maximum buying price and price paid
B. Maximum buying price
C. Price paid
D. None of the above
24: An effective price ceiling occurs at a price _____ the equilibrium price and causes a _____.
A. Below; shortage
B. Below; surplus
C. Above; shortage
D. Above; surplus
25: ________ is maximized in a competitive market when marginal benefit equals marginal cost.
A. Deadweight loss
B. Marginal profit
C. Economic surplus
D. Selling price
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Market Efficiency and Welfare MCQs
