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Week 2 Practice: Chapter 4; Market Failures Caused by Extern. And Equilibrium1.Which of the following are signs of a market failure?Falling pricesOverallocation of resourcesHigh demand for goodsUnderallocation of resources2.The difference between the maximum price a consumer is willing to pay for a product and theactual price that they do pay is known as _____.Consumer surplusProducer surplusDeadweight lossEconomic surplus3.What is the difference between the actual price a seller receives and the minimum acceptableprice?Producer profitExtra surplusConsumer surplusProducer surplus4.All markets that have downward-sloping demand curves and upward-sloping supply curves yieldbuyer andseller surplus. (Remember to type only one word per blank.)5.Which of the following refers to reductions of combined consumer and producer surplus associatedwith the underproduction or overproduction of a good or service?Surplus lossInefficiency lossTriangle lossDeadweight loss6.Which term describes the inability of a market to bring about the allocation of resources that bestsatisfies the wants of society?Market failureEconomic recessionImperfect competitionConsumer deficit7.A(n)externality is a cost or benefit accruing to an individual or a group, a third party, that isexternal to a market transaction. (Enter one word in the blank)8.Which of the following describes consumer surplus?It is the difference between the minimum price that consumers are willing to pay for aproduct and the market price for that product.It is the difference between the maximum price that consumers are willing to pay for aproduct and the market price for that product.
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