Question 1

When markets fail, public policy can potentially remedy the problem and increase economic efficiency.

Accepted Answer

A) True 
 B)False

Question 2

If John's willingness to pay for a good is $20 and the price of the good is $15, how much is John's consumer surplus from purchasing the good?

Accepted Answer

Consumer s

Question 3

Table 7-17
The following table shows the willingness to pay for a good for the only four consumers in a market.  
-Refer to Table 7-17. If the price of the good is $20, how many units will be demanded?

Accepted Answer

Three unit

Question 4

Figure 7-23  
-Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

Accepted Answer

A) A+B+C. 
B) A+B+D+F. 
C) A+B+C+D+H+F. 
D) A+B+C+D+H+F+G+I. 
A) A+B+C. 
B) A+B+D+F. 
C) A+B+C+D+H+F. 
D) A+B+C+D+H+F+G+I.

Question 5

Figure 7-30  
-Refer to Figure 7-30. If the market equilibrium price is $120, how much is total consumer surplus?

Accepted Answer

Consumer s

Question 6

Figure 7-26  
-Refer to Figure 7-26. At the equilibrium price, total surplus is

Accepted Answer

A) $600. 
B) $1,200. 
C) $1,500. 
D) $1,800. 
A) $600. 
B) $1,200. 
C) $1,500. 
D) $1,800.

Question 7

Table 7-14  
-Refer to Table 7-14. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. You hire Kevin for a price of $500. What is his producer surplus?

Accepted Answer

A) $500 
B) $150 
C) $100 
D) $50 
A) $500 
B) $150 
C) $100 
D) $50

Question 8

Table 7-10
The following table represents the costs of five possible sellers.  
-Refer to Table 7-10. If the price is $1,l50, who would be willing to supply the product?

Accepted Answer

A) Abby and Bobby 
B) Abby, Bobby, and Dianne 
C) Carlos, Dianne, and Evaline 
D) Dianne and Evaline only 
A) Abby and Bobby 
B) Abby, Bobby, and Dianne 
C) Carlos, Dianne, and Evaline 
D) Dianne and Evaline only

Question 9

Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise

Accepted Answer

A) buys the dishwasher, and on her purchase she experiences a consumer surplus of $150. 
B) buys the dishwasher, and on her purchase she experiences a consumer surplus of $-150. 
C) does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $150. 
D) does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $0. 
A) buys the dishwasher, and on her purchase she experiences a consumer surplus of $150. 
B) buys the dishwasher, and on her purchase she experiences a consumer surplus of $-150. 
C) does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $150. 
D) does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $0.

Question 10

If an allocation of resources is efficient, then

Accepted Answer

A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) all potential gains from trade among buyers are sellers are being realized. 
D) the allocation achieves equality as well. 
A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) all potential gains from trade among buyers are sellers are being realized. 
D) the allocation achieves equality as well.

Question 11

Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is

Accepted Answer

A) $1.40. 
B) $14. 
C) $3.80. 
D) $52. 
A) $1.40. 
B) $14. 
C) $3.80. 
D) $52.

Question 12

If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will

Accepted Answer

A) increase producer surplus. 
B) reduce producer surplus. 
C) not affect producer surplus. 
D) Any of the above are possible. 
A) increase producer surplus. 
B) reduce producer surplus. 
C) not affect producer surplus. 
D) Any of the above are possible.

Question 13

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.  
-Refer to Table 7-2. Which of the following is not true?

Accepted Answer

A) At a price of $9.00, no buyer is willing to purchase Vanilla Coke. 
B) At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not buying one. 
C) At a price of $4.00, total consumer surplus in the market will be $9.00. 
D) All of the above are correct. 
A) At a price of $9.00, no buyer is willing to purchase Vanilla Coke. 
B) At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not buying one. 
C) At a price of $4.00, total consumer surplus in the market will be $9.00. 
D) All of the above are correct.

Question 14

Figure 7-19  
-Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be

Accepted Answer

A) $137.50. 
B) $125.00. 
C) $187.50. 
D) $275.00. 
A) $137.50. 
B) $125.00. 
C) $187.50. 
D) $275.00.

Question 15

Tom tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $155 per tuning. One particular week, Tom is willing to tune the first piano for $120, the second piano for $125, the third piano for $140, and the fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. His producer surplus is

Accepted Answer

A) $95. 
B) $80. 
C) $75. 
D) $60. 
A) $95. 
B) $80. 
C) $75. 
D) $60.

Question 16

Which of the following is not correct?

Accepted Answer

A) Market power can cause markets to be inefficient. 
B) When the decisions of buyers and sellers affect nonparticipants, markets may be inefficient. 
C) The tools of welfare economics cannot help economists when markets are inefficient. 
D) Externalities can cause markets to be inefficient. 
A) Market power can cause markets to be inefficient. 
B) When the decisions of buyers and sellers affect nonparticipants, markets may be inefficient. 
C) The tools of welfare economics cannot help economists when markets are inefficient. 
D) Externalities can cause markets to be inefficient.

Question 17

A supply curve can be used to measure producer surplus because it reflects

Accepted Answer

A) the actions of sellers. 
B) quantity supplied. 
C) sellers' costs. 
D) the amount that will be purchased by consumers in the market. 
A) the actions of sellers. 
B) quantity supplied. 
C) sellers' costs. 
D) the amount that will be purchased by consumers in the market.

Question 18

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 is $0.65, then consumer surplus amounts to

Accepted Answer

A) $3.90. 
B) $6.75. 
C) $3.60. 
D) $7.50. 
A) $3.90. 
B) $6.75. 
C) $3.60. 
D) $7.50.

Question 19

When the demand for a good increases and the supply of the good remains unchanged, consumer surplus

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 20

If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the

Accepted Answer

A) consumer has consumer surplus of $2 if he or she buys the good. 
B) consumer does not purchase the good. 
C) market is not a competitive market. 
D) price of the good will fall due to market forces. 
A) consumer has consumer surplus of $2 if he or she buys the good. 
B) consumer does not purchase the good. 
C) market is not a competitive market. 
D) price of the good will fall due to market forces.

When markets fail, public policy can potentially remedy the problem and increase economic efficiency.

If John's willingness to pay for a good is $20 and the price of the good is $15, how much is John's consumer surplus from purchasing the good?

Table 7-17 The following table shows the willingness to pay for a good for the only four consumers in a market. -Refer to Table 7-17. If the price of the good is $20, how many units will be demanded?

Figure 7-23 -Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price is $120, how much is total consumer surplus?

Figure 7-26 -Refer to Figure 7-26. At the equilibrium price, total surplus is

Table 7-14 -Refer to Table 7-14. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. You hire Kevin for a price of $500. What is his producer surplus?

Table 7-10 The following table represents the costs of five possible sellers. -Refer to Table 7-10. If the price is $1,l50, who would be willing to supply the product?

Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise

If an allocation of resources is efficient, then

Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is

If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. Which of the following is not true?

Figure 7-19 -Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be

Which of the following is not correct?

A supply curve can be used to measure producer surplus because it reflects

When the demand for a good increases and the supply of the good remains unchanged, consumer surplus

If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the

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

When markets fail, public policy can potentially remedy the problem and increase economic efficiency.

If John's willingness to pay for a good is $20 and the price of the good is $15, how much is John's consumer surplus from purchasing the good?

Table 7-17 The following table shows the willingness to pay for a good for the only four consumers in a market. -Refer to Table 7-17. If the price of the good is $20, how many units will be demanded?

Figure 7-23 -Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price is $120, how much is total consumer surplus?

Figure 7-26 -Refer to Figure 7-26. At the equilibrium price, total surplus is

Table 7-14 -Refer to Table 7-14. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. You hire Kevin for a price of $500. What is his producer surplus?

Table 7-10 The following table represents the costs of five possible sellers. -Refer to Table 7-10. If the price is $1,l50, who would be willing to supply the product?

Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise

If an allocation of resources is efficient, then

Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is

If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. Which of the following is not true?

Figure 7-19 -Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be

Which of the following is not correct?

A supply curve can be used to measure producer surplus because it reflects

When the demand for a good increases and the supply of the good remains unchanged, consumer surplus

If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the

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