Question 1

Figure 7-15  
-Refer to Figure 7-15. When the price falls from P2 to P1, which of the following would not be true?

Accepted Answer

A) The sellers who still sell the good are worse off because they now receive less. 
B) Some sellers leave the market because they are not willing to sell the good at the lower price. 
C) The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price. 
D) Producer surplus would fall by area A + B. 
A) The sellers who still sell the good are worse off because they now receive less. 
B) Some sellers leave the market because they are not willing to sell the good at the lower price. 
C) The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price. 
D) Producer surplus would fall by area A + B.

Question 2

Welfare economics is the study of the welfare system.

Accepted Answer

A) True 
 B)False

Question 3

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?

Accepted Answer

A) $0 
B) $10 
C) $40 
D) $50 
A) $0 
B) $10 
C) $40 
D) $50

Question 4

If the government imposes a binding price floor in a market, then the consumer surplus in that market will increase.

Accepted Answer

A) True 
 B)False

Question 5

Figure 7-9  
-Refer to Figure 7-9. If producer surplus is $19, then the price of the good is

Accepted Answer

A) $11.50. 
B) $14.50. 
C) $13.50. 
D) $9.75. 
A) $11.50. 
B) $14.50. 
C) $13.50. 
D) $9.75.

Question 6

Consumer surplus in a market can be represented by the

Accepted Answer

A) area below the demand curve and above the price. 
B) distance from the demand curve to the horizontal axis. 
C) distance from the demand curve to the vertical axis. 
D) area below the demand curve and above the horizontal axis. 
A) area below the demand curve and above the price. 
B) distance from the demand curve to the horizontal axis. 
C) distance from the demand curve to the vertical axis. 
D) area below the demand curve and above the horizontal axis.

Question 7

A seller's opportunity cost measures the

Accepted Answer

A) value of everything she must give up to produce a good. 
B) amount she is paid for a good minus her cost of providing it. 
C) consumer surplus. 
D) out of pocket expenses to produce a good but not the value of her time. 
A) value of everything she must give up to produce a good. 
B) amount she is paid for a good minus her cost of providing it. 
C) consumer surplus. 
D) out of pocket expenses to produce a good but not the value of her time.

Question 8

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:  
-Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Accepted Answer

A) $0 or slightly more. 
B) $10 or slightly less. 
C) $30 or slightly more. 
D) $45 or slightly less. 
A) $0 or slightly more. 
B) $10 or slightly less. 
C) $30 or slightly more. 
D) $45 or slightly less.

Question 9

Figure 7-3  
-Refer to Figure 7-3. Area C represents the

Accepted Answer

A) decrease in consumer surplus that results from a downward-sloping demand curve. 
B) consumer surplus to new consumers who enter the market when the price falls from P2 to P1. 
C) increase in producer surplus when quantity sold increases from Q2 to Q1. 
D) decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2. 
A) decrease in consumer surplus that results from a downward-sloping demand curve. 
B) consumer surplus to new consumers who enter the market when the price falls from P2 to P1. 
C) increase in producer surplus when quantity sold increases from Q2 to Q1. 
D) decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2.

Question 10

Table 7-1  
-Refer to Table 7-1. If price of the product is $135, then the total consumer surplus is

Accepted Answer

A) $-50. 
B) $-35. 
C) $15. 
D) $150. 
A) $-50. 
B) $-35. 
C) $15. 
D) $150.

Question 11

Table 7-10
The following table represents the costs of five possible sellers.  
-Refer to Table 7-10. If the market price is $1,100, the combined total cost of all participating sellers is

Accepted Answer

A) $2,800. 
B) $2,900. 
C) $1,700. 
D) $4,000. 
A) $2,800. 
B) $2,900. 
C) $1,700. 
D) $4,000.

Question 12

Figure 7-19  
-Refer to Figure 7-19. At the equilibrium price, producer surplus is

Accepted Answer

A) $300. 
B) $150. 
C) $450. 
D) $125. 
A) $300. 
B) $150. 
C) $450. 
D) $125.

Question 13

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. Which of the following graphs represents the market supply curve?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 14

Figure 7-6  
-Refer to Figure 7-6. At the equilibrium price, consumer surplus is

Accepted Answer

A) $1,600. 
B) $800. 
C) $1,400. 
D) $700. 
A) $1,600. 
B) $800. 
C) $1,400. 
D) $700.

Question 15

Figure 7-10  
-Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

Accepted Answer

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

Question 16

Which of the Ten Principles of Economics does welfare economics explain more fully?

Accepted Answer

A) The cost of something is what you give up to get it. 
B) Markets are usually a good way to organize economic activity. 
C) Trade can make everyone better off. 
D) A country's standard of living depends on its ability to produce goods and services. 
A) The cost of something is what you give up to get it. 
B) Markets are usually a good way to organize economic activity. 
C) Trade can make everyone better off. 
D) A country's standard of living depends on its ability to produce goods and services.

Question 17

Which of the following is not equal to total surplus?

Accepted Answer

A) consumer surplus - producer surplus 
B) buyers' willingness to pay - sellers' costs 
C) value to buyers - amount paid by buyers + amount received by sellers - cost to sellers 
D) value to buyers - cost to sellers 
A) consumer surplus - producer surplus 
B) buyers' willingness to pay - sellers' costs 
C) value to buyers - amount paid by buyers + amount received by sellers - cost to sellers 
D) value to buyers - cost to sellers

Question 18

Figure 7-34  
-Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total consumer surplus?

Accepted Answer

Total consumer surpl

Question 19

If Martin sells a shirt for $40, and his producer surplus from the sale is $8, his cost must have been

Accepted Answer

A) $48. 
B) $32. 
C) $8. 
D) $40. 
A) $48. 
B) $32. 
C) $8. 
D) $40.

Question 20

If a market is in equilibrium, then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good.

Accepted Answer

A) True 
 B)False

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

Figure 7-15 -Refer to Figure 7-15. When the price falls from P2 to P1, which of the following would not be true?

Welfare economics is the study of the welfare system.

If the government imposes a binding price floor in a market, then the consumer surplus in that market will increase.

Figure 7-9 -Refer to Figure 7-9. If producer surplus is $19, then the price of the good is

Consumer surplus in a market can be represented by the

A seller's opportunity cost measures the

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Figure 7-3 -Refer to Figure 7-3. Area C represents the

Table 7-1 -Refer to Table 7-1. If price of the product is $135, then the total consumer surplus is

Table 7-10 The following table represents the costs of five possible sellers. -Refer to Table 7-10. If the market price is $1,100, the combined total cost of all participating sellers is

Figure 7-19 -Refer to Figure 7-19. At the equilibrium price, producer 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. Which of the following graphs represents the market supply curve?

Figure 7-6 -Refer to Figure 7-6. At the equilibrium price, consumer surplus is

Figure 7-10 -Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

Which of the Ten Principles of Economics does welfare economics explain more fully?

Which of the following is not equal to total surplus?

Figure 7-34 -Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total consumer surplus?

If Martin sells a shirt for $40, and his producer surplus from the sale is $8, his cost must have been

If a market is in equilibrium, then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good.

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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