Question 1

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

Accepted Answer

A) maximizes costs of the seller. 
B) maximizes tax revenue for the government. 
C) maximizes the combined welfare of buyers and sellers. 
D) minimizes the expenditure of buyers. 
A) maximizes costs of the seller. 
B) maximizes tax revenue for the government. 
C) maximizes the combined welfare of buyers and sellers. 
D) minimizes the expenditure of buyers.

Question 2

The maximum price that a buyer will pay for a good is called

Accepted Answer

A) consumer surplus. 
B) willingness to pay. 
C) equilibrium. 
D) efficiency. 
A) consumer surplus. 
B) willingness to pay. 
C) equilibrium. 
D) efficiency.

Question 3

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

Accepted Answer

A) True 
 B)False

Question 4

Figure 7-13  
-Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producers in the market?

Accepted Answer

A) $1,200 
B) $2,400 
C) $3,600 
D) $4,800 
A) $1,200 
B) $2,400 
C) $3,600 
D) $4,800

Question 5

Figure 7-34  
-Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. How much is total producer surplus with the price ceiling in place?

Accepted Answer

Total producer surpl

Question 6

Table 7-7  
-Refer to Table 7-7. You have an extra ticket to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the ticket. Michael bids $410 for the ticket, and you sell him the ticket. What is his consumer surplus?

Accepted Answer

A) $410 
B) $90 
C) $10 
D) $0 
A) $410 
B) $90 
C) $10 
D) $0

Question 7

Table 7-9
The only four consumers in a market have the following willingness to pay for a good:  
-Refer to Table 7-9. If the market price for the good is $20, who will purchase the good?

Accepted Answer

A) Danita only 
B) Carolyn and Danita only 
C) Ashleigh, Barb, and Carolyn only 
D) All four buyers would purchase the good. 
A) Danita only 
B) Carolyn and Danita only 
C) Ashleigh, Barb, and Carolyn only 
D) All four buyers would purchase the good.

Question 8

Figure 7-22  
-Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus due to new producers entering the market would be

Accepted Answer

A) $400. 
B) $800. 
C) $1,200. 
D) $900. 
A) $400. 
B) $800. 
C) $1,200. 
D) $900.

Question 9

Figure 7-4  
-Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

Accepted Answer

A) BDF 
B) AFG 
C) BCGD 
D) ABC 
A) BDF 
B) AFG 
C) BCGD 
D) ABC

Question 10

Market failure is the inability of

Accepted Answer

A) buyers to interact harmoniously with sellers in the market. 
B) a market to establish an equilibrium price. 
C) buyers to place a value on the good or service. 
D) some unregulated markets to allocate resources efficiently. 
A) buyers to interact harmoniously with sellers in the market. 
B) a market to establish an equilibrium price. 
C) buyers to place a value on the good or service. 
D) some unregulated markets to allocate resources efficiently.

Question 11

Efficiency is related to the size of the economic pie, whereas equality is related to how the pie gets sliced and distributed.

Accepted Answer

A) True 
 B)False

Question 12

Table 7-7  
-Refer to Table 7-7. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You offer to sell the tickets for $400. How many tickets do you sell, and what is the total consumer surplus in the market?

Accepted Answer

A) one ticket; $100 
B) two tickets; $100 
C) two tickets; $0 
D) three tickets; $0 
A) one ticket; $100 
B) two tickets; $100 
C) two tickets; $0 
D) three tickets; $0

Question 13

Tammy loves donuts. The table shown reflects the value Tammy places on each donut she eats:   
a.Use this information to construct Tammy's demand curve for donuts.
b.If the price of donuts is $0.20, how many donuts will Tammy buy?
c.Show Tammy's consumer surplus on your graph. How much consumer surplus would she have at a price of $0.20?
d.If the price of donuts rose to $0.40, how many donuts would she purchase now? What would happen to Tammy's consumer surplus? Show this change on your graph.

Accepted Answer

a. @#IMG-DLM& b.At a price of $0.20, Tammy would b

Question 14

Figure 7-23  
-Refer to Figure 7-23. The equilibrium price is

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P4. 
A) P1. 
B) P2. 
C) P3. 
D) P4.

Question 15

Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day.  
-Refer to Table 7-5. If the market price of an orange increases from $0.80 to $1.05, then consumer surplus

Accepted Answer

A) increases by $0.75. 
B) decreases by $0.95. 
C) decreases by $0.75. 
D) decreases by $1.00. 
A) increases by $0.75. 
B) decreases by $0.95. 
C) decreases by $0.75. 
D) decreases by $1.00.

Question 16

On a graph, the area below a demand curve and above the price measures

Accepted Answer

A) producer surplus. 
B) consumer surplus. 
C) deadweight loss. 
D) willingness to pay. 
A) producer surplus. 
B) consumer surplus. 
C) deadweight loss. 
D) willingness to pay.

Question 17

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $90.

Accepted Answer

A) True 
 B)False

Question 18

Chad is willing to pay $5.00 to get his first cup of morning latté; he is willing to pay $4.50 for a second cup. He buys his first cup from a vendor selling latté for $3.75 per cup. He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup. Chad buys a second cup. Which of the following statements is correct?

Accepted Answer

A) Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté. 
B) Chad's consumer surplus on his second cup of latté was larger than his consumer surplus on his first cup of latté. 
C) Chad is irrational in that he is willing to pay a different price for his second cup of latté than what he is willing to pay for his first cup of latté. 
D) Chad places a higher value on his second cup of latté than on his first cup of latté. 
A) Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté. 
B) Chad's consumer surplus on his second cup of latté was larger than his consumer surplus on his first cup of latté. 
C) Chad is irrational in that he is willing to pay a different price for his second cup of latté than what he is willing to pay for his first cup of latté. 
D) Chad places a higher value on his second cup of latté than on his first cup of latté.

Question 19

Figure 7-10  
-Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

Accepted Answer

A) BCG 
B) ACH 
C) DGH 
D) AHGB 
A) BCG 
B) ACH 
C) DGH 
D) AHGB

Question 20

Which of the following will cause a decrease in producer surplus?

Accepted Answer

A) the imposition of a nonbinding price ceiling in the market 
B) buyers expect the price of a good to be higher next month 
C) the price of a substitute increases 
D) income increases and buyers consider the good to be inferior 
A) the imposition of a nonbinding price ceiling in the market 
B) buyers expect the price of a good to be higher next month 
C) the price of a substitute increases 
D) income increases and buyers consider the good to be inferior

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

The maximum price that a buyer will pay for a good is called

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

Figure 7-13 -Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producers in the market?

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. How much is total producer surplus with the price ceiling in place?

Table 7-9 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-9. If the market price for the good is $20, who will purchase the good?

Figure 7-22 -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus due to new producers entering the market would be

Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

Market failure is the inability of

Efficiency is related to the size of the economic pie, whereas equality is related to how the pie gets sliced and distributed.

Figure 7-23 -Refer to Figure 7-23. The equilibrium price is

On a graph, the area below a demand curve and above the price measures

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $90.

Figure 7-10 -Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

Which of the following will cause a decrease in producer surplus?

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

Filters

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

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

The maximum price that a buyer will pay for a good is called

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

Figure 7-13 -Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producers in the market?

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. How much is total producer surplus with the price ceiling in place?

Table 7-9 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-9. If the market price for the good is $20, who will purchase the good?

Figure 7-22 -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus due to new producers entering the market would be

Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

Market failure is the inability of

Efficiency is related to the size of the economic pie, whereas equality is related to how the pie gets sliced and distributed.

Figure 7-23 -Refer to Figure 7-23. The equilibrium price is

On a graph, the area below a demand curve and above the price measures

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $90.

Figure 7-10 -Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

Which of the following will cause a decrease in producer surplus?

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

Filters