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Chapter 4 Flashcards | StudBud

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Chapter 4

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Questions 6

Answers

1
Market failure is said to occur whenever
prices rise.
consumers who want a good do not obtain it because the price is high.
markets do not allocate resources in the economically desirable way.
government intervenes in the functioning of competitive markets.
2
Graphically, if the S and D curves are linear, consumer surplus is measured as the triangle
above the supply curve and below the actual price.
above the supply curve and above the actual price.
under the demand curve and above the actual price.
under the demand curve and below the actual price.
3
C. is willing to pay $10 for a T-shirt that is priced at $9. If C. buys the T-shirt, then his C. surplus is
$1
$0.90
$90
$19
4
Refer to the diagram. If actual production and consumption occur at Q2,
an efficiency loss (or deadweight loss) of a + b + c + d occurs.
an efficiency loss (or deadweight loss) of a + c occurs.
efficiency is achieved.
an efficiency loss (or deadweight loss) of e + f occurs.
5
Graphically, producer surplus is measured as the area
under the demand curve and above the actual price.
above the supply curve and below the actual price.
above the supply curve and above the actual price.
under the demand curve and below the actual price.
6
Refer to the diagram. Which of the following areas best represents the efficiency loss from underproduction?
b + d
a + b + c + d
a + c
e + f