Question 1

Use the following to answer question:  
-(Figure: Producer Surplus)Look at the figure Producer Surplus.Total producer surplus is _____ when the price is $45.

Accepted Answer

A) $40 
B) $60 
C) $100 
D) $85 
A) $40 
B) $60 
C) $100 
D) $85

Question 2

Total surplus is:

Accepted Answer

A) the sum of consumer and producer surplus. 
B) measured as the area between the supply and demand curves from their beginnings to their ends. 
C) the total net gain to consumers from trading in the market. 
D) the total net gain to producers from trading in the market. 
A) the sum of consumer and producer surplus. 
B) measured as the area between the supply and demand curves from their beginnings to their ends. 
C) the total net gain to consumers from trading in the market. 
D) the total net gain to producers from trading in the market.

Question 3

Which statement(s)is/are TRUE about market failures? I.They arise when property rights are clearly defined.
II.They arise when information is available to all decision makers.
III.They arise when external costs are not considered in production decisions by producers.

Accepted Answer

A) I 
B) I and II 
C) III 
D) I,II,and III 
A) I 
B) I and II 
C) III 
D) I,II,and III

Question 4

Use the following to answer question:  
-(Table: Firm's Willingness)The table Firm's Willingness explains the relation between the number of reports a firm is willing to produce and the lowest price it is willing to accept to prepare those reports.If the price of a report is $6,how many reports will be produced?

Accepted Answer

A) five 
B) four 
C) three 
D) two 
A) five 
B) four 
C) three 
D) two

Question 5

Along a given downward-sloping demand curve,an increase in the price of a good will:

Accepted Answer

A) increase consumer surplus. 
B) decrease consumer surplus. 
C) have no effect on consumer surplus. 
D) decrease producer surplus. 
A) increase consumer surplus. 
B) decrease consumer surplus. 
C) have no effect on consumer surplus. 
D) decrease producer surplus.

Question 6

(Table: Willingness to Pay for Peanuts)Using the table Willingness to Pay for Peanuts,if the price of a bag of peanuts is $6,what is the total value of consumer surplus?

Accepted Answer

A) $4 
B) $3 
C) $6 
D) $10 
A) $4 
B) $3 
C) $6 
D) $10

Question 7

Use the following to answer question:  
-(Figure: Consumer Surplus I)Look at the figure Consumer Surplus I.At a price of P2,consumer surplus equals the area:

Accepted Answer

A) ABP2. 
B) AFP1. 
C) AQ30. 
D) P1P2BF. 
A) ABP2. 
B) AFP1. 
C) AQ30. 
D) P1P2BF.

Question 8

When a monopolist prevents mutually beneficial trades from occurring,total surplus increases.

Accepted Answer

A) True 
 B)False

Question 9

Use the following to answer question:  
-(Figure: Consumer Surplus III)In the figure Consumer Surplus III,when the price rises from $30 to $35,consumer surplus _____ for a total consumer surplus of _____.

Accepted Answer

A) decreases by $15;$34 
B) increases by $15;$64 
C) increases by $25;$74 
D) decreases by $5;$44 
A) decreases by $15;$34 
B) increases by $15;$64 
C) increases by $25;$74 
D) decreases by $5;$44

Question 10

Use the following to answer question:  
-(Figure: The Gains from Trade)Look at the figure The Gains from Trade.When demand increases from D1 to D2,equilibrium total surplus:

Accepted Answer

A) decreases by $10.00. 
B) increases by $12.75. 
C) decreases by $15.00. 
D) increases by $27.50. 
A) decreases by $10.00. 
B) increases by $12.75. 
C) decreases by $15.00. 
D) increases by $27.50.

Question 11

Use the following to answer question:  
-(Figure: Consumer Surplus I)Look at the figure Consumer Surplus I.If the price rises from P1 to P2,consumer surplus decreases by the area:

Accepted Answer

A) ABP2. 
B) AFP1. 
C) BGF. 
D) P1P2BF. 
A) ABP2. 
B) AFP1. 
C) BGF. 
D) P1P2BF.

Question 12

Total surplus shows the total benefit to society from production and consumption of a good.

Accepted Answer

A) True 
 B)False

Question 13

Use the following to answer question:  
-(Figure: Consumer Surplus I)Look at the figure Consumer Surplus I.If the price falls from P2 to P1,consumer surplus increases by the area:

Accepted Answer

A) ABP2. 
B) AFP1. 
C) BGF. 
D) P1P2BF. 
A) ABP2. 
B) AFP1. 
C) BGF. 
D) P1P2BF.

Question 14

A competitive market for cell phone chargers is in equilibrium.If the price temporarily falls below the equilibrium price:

Accepted Answer

A) producer surplus will rise. 
B) producer surplus will fall. 
C) the change in producer surplus is indeterminate. 
D) there will be no change in producer surplus. 
A) producer surplus will rise. 
B) producer surplus will fall. 
C) the change in producer surplus is indeterminate. 
D) there will be no change in producer surplus.

Question 15

Use the following to answer question:  
-(Figure: Consumer Surplus I)Look at the figure Consumer Surplus I.At a price of P1,consumer surplus equals the area:

Accepted Answer

A) ABP2. 
B) AFP1. 
C) AQ30. 
D) P1P2BF. 
A) ABP2. 
B) AFP1. 
C) AQ30. 
D) P1P2BF.

Question 16

(Table: Willingness to Pay for Peanuts)Using the table Willingness to Pay for Peanuts,if the price of a bag of peanuts is $2,_____ would purchase a bag.

Accepted Answer

A) all of the consumers. 
B) everyone except Dave. 
C) everyone except George. 
D) no one. 
A) all of the consumers. 
B) everyone except Dave. 
C) everyone except George. 
D) no one.

Question 17

(Figure: Market Demand)Look at the figure Market Demand.The amount by which the total benefits to consumers exceed their total expenditure is called _____,and if the price is B,is depicted by the area _____.

Accepted Answer

A) producer surplus;BCD 
B) consumer surplus;0CDE 
C) consumer surplus;BCD 
D) net benefit;0BDE 
A) producer surplus;BCD 
B) consumer surplus;0CDE 
C) consumer surplus;BCD 
D) net benefit;0BDE

Question 18

When a market is in equilibrium and there is no outside intervention to change the equilibrium price:

Accepted Answer

A) total surplus is minimized. 
B) inefficiency is maximized. 
C) no mutually beneficial trades are missed. 
D) some mutually beneficial trades may be missed. 
A) total surplus is minimized. 
B) inefficiency is maximized. 
C) no mutually beneficial trades are missed. 
D) some mutually beneficial trades may be missed.

Question 19

One way to measure the gain to consumers from a drug that has the potential to reduce obesity is to measure what people are willing to pay for the good and subtract the amount they have to pay.

Accepted Answer

A) True 
 B)False

Question 20

Well-functioning markets allow:

Accepted Answer

A) mutually beneficial trades to take place. 
B) consumers to gain at the expense of producers. 
C) producers to reap greater benefits,since they have greater power in the market. 
D) property rights to be unnecessary components of effective distribution. 
A) mutually beneficial trades to take place. 
B) consumers to gain at the expense of producers. 
C) producers to reap greater benefits,since they have greater power in the market. 
D) property rights to be unnecessary components of effective distribution.

Exam 4: Consumer and Producer Surplus

Use the following to answer question: -(Figure: Producer Surplus)Look at the figure Producer Surplus.Total producer surplus is _____ when the price is $45.

Total surplus is:

Which statement(s)is/are TRUE about market failures? I.They arise when property rights are clearly defined. II.They arise when information is available to all decision makers. III.They arise when external costs are not considered in production decisions by producers.

Along a given downward-sloping demand curve,an increase in the price of a good will:

(Table: Willingness to Pay for Peanuts)Using the table Willingness to Pay for Peanuts,if the price of a bag of peanuts is $6,what is the total value of consumer surplus?

Use the following to answer question: -(Figure: Consumer Surplus I)Look at the figure Consumer Surplus I.At a price of P2,consumer surplus equals the area:

When a monopolist prevents mutually beneficial trades from occurring,total surplus increases.

Use the following to answer question: -(Figure: Consumer Surplus III)In the figure Consumer Surplus III,when the price rises from $30 to $35,consumer surplus _____ for a total consumer surplus of _____.

Use the following to answer question: -(Figure: The Gains from Trade)Look at the figure The Gains from Trade.When demand increases from D1 to D2,equilibrium total surplus:

Use the following to answer question: -(Figure: Consumer Surplus I)Look at the figure Consumer Surplus I.If the price rises from P1 to P2,consumer surplus decreases by the area:

Total surplus shows the total benefit to society from production and consumption of a good.

Use the following to answer question: -(Figure: Consumer Surplus I)Look at the figure Consumer Surplus I.If the price falls from P2 to P1,consumer surplus increases by the area:

A competitive market for cell phone chargers is in equilibrium.If the price temporarily falls below the equilibrium price:

Use the following to answer question: -(Figure: Consumer Surplus I)Look at the figure Consumer Surplus I.At a price of P1,consumer surplus equals the area:

(Table: Willingness to Pay for Peanuts)Using the table Willingness to Pay for Peanuts,if the price of a bag of peanuts is $2,_____ would purchase a bag.

(Figure: Market Demand)Look at the figure Market Demand.The amount by which the total benefits to consumers exceed their total expenditure is called _____,and if the price is B,is depicted by the area _____.

When a market is in equilibrium and there is no outside intervention to change the equilibrium price:

One way to measure the gain to consumers from a drug that has the potential to reduce obesity is to measure what people are willing to pay for the good and subtract the amount they have to pay.

Well-functioning markets allow:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Use the following to answer question: -(Figure: Consumer Surplus I)Look at the figure Consumer Surplus I.At a price of P₂,consumer surplus equals the area:

Use the following to answer question: -(Figure: Consumer Surplus III)In the figure Consumer Surplus III,when the price rises from $30 to $35,consumer surplus _ for a total consumer surplus of _.

Use the following to answer question: -(Figure: The Gains from Trade)Look at the figure The Gains from Trade.When demand increases from D₁ to D₂,equilibrium total surplus:

Use the following to answer question: -(Figure: Consumer Surplus I)Look at the figure Consumer Surplus I.If the price rises from P₁ to P₂,consumer surplus decreases by the area:

Use the following to answer question: -(Figure: Consumer Surplus I)Look at the figure Consumer Surplus I.If the price falls from P₂ to P₁,consumer surplus increases by the area:

Use the following to answer question: -(Figure: Consumer Surplus I)Look at the figure Consumer Surplus I.At a price of P₁,consumer surplus equals the area:

(Figure: Market Demand)Look at the figure Market Demand.The amount by which the total benefits to consumers exceed their total expenditure is called _,and if the price is B,is depicted by the area _.