Question 1

Figure 7-16  
-Refer to Figure 7-16. If the price of the good is $600, then

Accepted Answer

A) consumer surplus is $800. 
B) consumer surplus is $900. 
C) producer surplus is $900. 
D) producer surplus is $1,000. 
A) consumer surplus is $800. 
B) consumer surplus is $900. 
C) producer surplus is $900. 
D) producer surplus is $1,000. D

Question 2

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's consumer surplus is

Accepted Answer

A) $500. 
B) $3,000. 
C) $3,500. 
D) $6,500. 
A) $500. 
B) $3,000. 
C) $3,500. 
D) $6,500. A

Question 3

Scenario 7-1
Suppose market demand is given by the equation  
-Refer to Scenario 7-1. If the market equilibrium price rises from $10 to $15, what is the change in total consumer surplus in the market?

Accepted Answer

Consumer surplus decreases by $75.

Question 4

Figure 7-29  
-Refer to Figure 7-29. Which of the following statements is correct?

Accepted Answer

A) The market is in equilibrium at Q1. 
B) At Q2, the cost to sellers exceeds the value to buyers. 
C) At Q4, the value to buyers is less than the cost to sellers. 
D) At Q3, the market is producing too much output. 
A) The market is in equilibrium at Q1. 
B) At Q2, the cost to sellers exceeds the value to buyers. 
C) At Q4, the value to buyers is less than the cost to sellers. 
D) At Q3, the market is producing too much output.

Question 5

If the government allowed a free market for transplant organs such as kidneys to exist, the

Accepted Answer

A) shortage of organs would be eliminated, and there would be no surplus of organs. 
B) shortage of organs would be eliminated, but a surplus of organs would develop. 
C) shortage of organs would persist. 
D) overall well-being of society would remain unchanged. 
A) shortage of organs would be eliminated, and there would be no surplus of organs. 
B) shortage of organs would be eliminated, but a surplus of organs would develop. 
C) shortage of organs would persist. 
D) overall well-being of society would remain unchanged.

Question 6

Table 7-10
The following table represents the costs of five possible sellers.  
-Refer to Table 7-10. If the market price is $1,200, the producer surplus in the market is

Accepted Answer

A) $100. 
B) $800. 
C) $400. 
D) $500. 
A) $100. 
B) $800. 
C) $400. 
D) $500.

Question 7

Abraham drinks Mountain Dew. He can buy as many cans of Mountain Dew as he wishes at a price of $0.55 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Abraham is rational in deciding how many cans to buy. His consumer surplus is

Accepted Answer

A) $0.50. 
B) $0.60. 
C) $0.70. 
D) $1.00. 
A) $0.50. 
B) $0.60. 
C) $0.70. 
D) $1.00.

Question 8

Figure 7-17  
-Refer to Figure 7-17. Suppose the market starts out in equilibrium with demand curve D and supply curve S. Next, suppose demand shifts left so as to decrease the quantity demanded by 20 units at every price. What is the change in producer surplus as a result of this demand shift?

Accepted Answer

A) $80 
B) $160 
C) $240 
D) $320 
A) $80 
B) $160 
C) $240 
D) $320

Question 9

Efficiency in a market is achieved when

Accepted Answer

A) a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. 
B) the sum of producer surplus and consumer surplus is maximized. 
C) all firms are producing the good at the same low cost per unit. 
D) no buyer is willing to pay more than the equilibrium price for any unit of the good. 
A) a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. 
B) the sum of producer surplus and consumer surplus is maximized. 
C) all firms are producing the good at the same low cost per unit. 
D) no buyer is willing to pay more than the equilibrium price for any unit of the good.

Question 10

Table 7-11
The only four producers in a market have the following costs:  
-Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for

Accepted Answer

A) $50 or slightly more. 
B) $100 or slightly less. 
C) $150 or slightly less. 
D) $200 or slightly more. 
A) $50 or slightly more. 
B) $100 or slightly less. 
C) $150 or slightly less. 
D) $200 or slightly more.

Question 11

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Accepted Answer

A) True 
 B)False

Question 12

Figure 7-25  
-Refer to Figure 7-25. Suppose the government imposes a price floor of $28 in this market. If the sellers with the lowest cost are the ones who sell the good and the government does not purchase any excess units produced, then total surplus will be

Accepted Answer

A) $400. 
B) $800. 
C) $1,120. 
D) $1,184. 
A) $400. 
B) $800. 
C) $1,120. 
D) $1,184.

Question 13

Figure 7-33  
-Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?

Accepted Answer

Total surp

Question 14

The current policy on kidney donation effectively sets a price ceiling of zero.

Accepted Answer

A) True 
 B)False

Question 15

Inefficiency can be caused in a market by the presence of

Accepted Answer

A) market power. 
B) externalities. 
C) imperfectly competitive markets. 
D) All of the above are correct. 
A) market power. 
B) externalities. 
C) imperfectly competitive markets. 
D) All of the above are correct.

Question 16

Figure 7-24  
-Refer to Figure 7-24. At equilibrium, producer surplus is measured by the area

Accepted Answer

A) ABD. 
B) ABF. 
C) CDI. 
D) BDF. 
A) ABD. 
B) ABF. 
C) CDI. 
D) BDF.

Question 17

Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field.  
-Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, who will buy the ticket?

Accepted Answer

A) Dan 
B) David 
C) Ken 
D) Lisa 
A) Dan 
B) David 
C) Ken 
D) Lisa

Question 18

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market

Accepted Answer

A) decreases. 
B) is unchanged. 
C) increases. 
D) may increase, decrease, or remain unchanged. 
A) decreases. 
B) is unchanged. 
C) increases. 
D) may increase, decrease, or remain unchanged.

Question 19

Market power and externalities are examples of market failures.

Accepted Answer

A) True 
 B)False

Question 20

Willingness to pay

Accepted Answer

A) measures the value that a buyer places on a good. 
B) is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C) is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D) is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
A) measures the value that a buyer places on a good. 
B) is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C) is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D) is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

Exam 7: Consumers, Producers, and the Efficiency of Markets

Figure 7-16 -Refer to Figure 7-16. If the price of the good is $600, then

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's consumer surplus is

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price rises from $10 to $15, what is the change in total consumer surplus in the market?

Figure 7-29 -Refer to Figure 7-29. Which of the following statements is correct?

If the government allowed a free market for transplant organs such as kidneys to exist, the

Table 7-10 The following table represents the costs of five possible sellers. -Refer to Table 7-10. If the market price is $1,200, the producer surplus in the market is

Figure 7-17 -Refer to Figure 7-17. Suppose the market starts out in equilibrium with demand curve D and supply curve S. Next, suppose demand shifts left so as to decrease the quantity demanded by 20 units at every price. What is the change in producer surplus as a result of this demand shift?

Efficiency in a market is achieved when

Table 7-11 The only four producers in a market have the following costs: -Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Figure 7-25 -Refer to Figure 7-25. Suppose the government imposes a price floor of $28 in this market. If the sellers with the lowest cost are the ones who sell the good and the government does not purchase any excess units produced, then total surplus will be

Figure 7-33 -Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?

The current policy on kidney donation effectively sets a price ceiling of zero.

Inefficiency can be caused in a market by the presence of

Figure 7-24 -Refer to Figure 7-24. At equilibrium, producer surplus is measured by the area

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, who will buy the ticket?

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market

Market power and externalities are examples of market failures.

Willingness to pay

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

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