Question 1

When a buyer's willingness to pay for a good is equal to the price of the good, the

Accepted Answer

A) buyer's consumer surplus for that good is maximized. 
B) buyer will buy as much of the good as the buyer's budget allows. 
C) price of the good exceeds the value that the buyer places on the good. 
D) buyer is indifferent between buying the good and not buying it. 
A) buyer's consumer surplus for that good is maximized. 
B) buyer will buy as much of the good as the buyer's budget allows. 
C) price of the good exceeds the value that the buyer places on the good. 
D) buyer is indifferent between buying the good and not buying it.

Question 2

Market power and externalities are examples of

Accepted Answer

A) laissez-faire economics. 
B) public policy. 
C) market failure. 
D) welfare economics. 
A) laissez-faire economics. 
B) public policy. 
C) market failure. 
D) welfare economics.

Question 3

Table 7-1  
-Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product?

Accepted Answer

A) Calvin 
B) Calvin and Sam 
C) Calvin, Sam, and Andrew 
D) Calvin, Sam, Andrew, and Lori 
A) Calvin 
B) Calvin and Sam 
C) Calvin, Sam, and Andrew 
D) Calvin, Sam, Andrew, and Lori

Question 4

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. Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40?

Accepted Answer

A) Allison 
B) Bob 
C) Charisse 
D) All three individuals experience the same loss of consumer surplus. 
A) Allison 
B) Bob 
C) Charisse 
D) All three individuals experience the same loss of consumer surplus.

Question 5

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes

Accepted Answer

A) increases, and the consumer surplus in the market for red wine increases. 
B) increases, and the consumer surplus in the market for red wine decreases. 
C) decreases, and the consumer surplus in the market for red wine increases. 
D) decreases, and the consumer surplus in the market for red wine decreases. 
A) increases, and the consumer surplus in the market for red wine increases. 
B) increases, and the consumer surplus in the market for red wine decreases. 
C) decreases, and the consumer surplus in the market for red wine increases. 
D) decreases, and the consumer surplus in the market for red wine decreases.

Question 6

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

Accepted Answer

A) maximizes both the total revenue for firms and the quantity supplied of the product. 
B) maximizes the combined welfare of buyers and sellers. 
C) minimizes costs and maximizes output. 
D) minimizes the level of welfare payments. 
A) maximizes both the total revenue for firms and the quantity supplied of the product. 
B) maximizes the combined welfare of buyers and sellers. 
C) minimizes costs and maximizes output. 
D) minimizes the level of welfare payments.

Question 7

Table 7-12
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.  
-Refer to Table 7-12. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market?

Accepted Answer

A) $0 
B) $300 
C) $400 
D) $700 
A) $0 
B) $300 
C) $400 
D) $700

Question 8

Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is

Accepted Answer

A) $8,500. 
B) $15,500. 
C) $24,000. 
D) $39,500. 
A) $8,500. 
B) $15,500. 
C) $24,000. 
D) $39,500.

Question 9

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is least likely to occur?

Accepted Answer

A) The supply of kidneys would increase. 
B) The shortage of kidneys would decrease. 
C) Many lives would be saved. 
D) The allocation of kidneys would be fair. 
A) The supply of kidneys would increase. 
B) The shortage of kidneys would decrease. 
C) Many lives would be saved. 
D) The allocation of kidneys would be fair.

Question 10

Consumer surplus

Accepted Answer

A) is the amount of a good that a consumer can buy at a price below equilibrium price. 
B) is the amount a consumer is willing to pay minus the amount the consumer actually pays. 
C) is the number of consumers who are excluded from a market because of scarcity. 
D) measures how much a seller values a good. 
A) is the amount of a good that a consumer can buy at a price below equilibrium price. 
B) is the amount a consumer is willing to pay minus the amount the consumer actually pays. 
C) is the number of consumers who are excluded from a market because of scarcity. 
D) measures how much a seller values a good.

Question 11

Figure 7-18  
-Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

Accepted Answer

A) $100, then the price of the good is $130. 
B) $130, then the price of the good is $120. 
C) $160, then the price of the good is $100. 
D) $120, then the price of the good is $90. 
A) $100, then the price of the good is $130. 
B) $130, then the price of the good is $120. 
C) $160, then the price of the good is $100. 
D) $120, then the price of the good is $90.

Question 12

All else equal, an increase in supply will cause an increase in consumer surplus.

Accepted Answer

A) True 
 B)False

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. If the market price is $5.50, the consumer surplus in the market will be

Accepted Answer

A) $3.00. 
B) $4.50. 
C) $15.50. 
D) $21.00. 
A) $3.00. 
B) $4.50. 
C) $15.50. 
D) $21.00.

Question 14

Table 7-19  
-Refer to Table 7-19. How much is total consumer surplus at the equilibrium price in this market?

Accepted Answer

Total consumer surpl

Question 15

Total surplus is equal to

Accepted Answer

A) value to buyers - profit to sellers. 
B) value to buyers - cost to sellers. 
C) consumer surplus x producer surplus. 
D) (consumer surplus + producer surplus) x equilibrium quantity. 
A) value to buyers - profit to sellers. 
B) value to buyers - cost to sellers. 
C) consumer surplus x producer surplus. 
D) (consumer surplus + producer surplus) x equilibrium quantity.

Question 16

Figure 7-21  
-Refer to Figure 7-21. When the price is P1, area B+C represents

Accepted Answer

A) total surplus. 
B) producer surplus. 
C) consumer surplus. 
D) None of the above is correct. 
A) total surplus. 
B) producer surplus. 
C) consumer surplus. 
D) None of the above is correct.

Question 17

A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that

Accepted Answer

A) both the value of MP3 players to consumers and the cost of producing MP3 players has increased. 
B) both the value of MP3 players to consumers and the cost of producing MP3 players has decreased. 
C) the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased. 
D) the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased. 
A) both the value of MP3 players to consumers and the cost of producing MP3 players has increased. 
B) both the value of MP3 players to consumers and the cost of producing MP3 players has decreased. 
C) the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased. 
D) the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased.

Question 18

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

Accepted Answer

A) not reduce the shortage of organs. 
B) benefit rich people but not poor people. 
C) be inefficient because markets are not good at allocating scarce resources. 
D) be inferior to a plan imposed by a benevolent dictator. 
A) not reduce the shortage of organs. 
B) benefit rich people but not poor people. 
C) be inefficient because markets are not good at allocating scarce resources. 
D) be inferior to a plan imposed by a benevolent dictator.

Question 19

Total surplus

Accepted Answer

A) can be used to measure a market's efficiency. 
B) is the sum of consumer and producer surplus. 
C) is the value to buyers minus the cost to sellers. 
D) All of the above are correct. 
A) can be used to measure a market's efficiency. 
B) is the sum of consumer and producer surplus. 
C) is the value to buyers minus the cost to sellers. 
D) All of the above are correct.

Question 20

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 good will sell for

Accepted Answer

A) $15 or slightly less. 
B) $25 or slightly more. 
C) $35 or slightly more. 
D) $45 or slightly less. 
A) $15 or slightly less. 
B) $25 or slightly more. 
C) $35 or slightly more. 
D) $45 or slightly less.

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

When a buyer's willingness to pay for a good is equal to the price of the good, the

Market power and externalities are examples of

Table 7-1 -Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product?

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

Table 7-12 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-12. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market?

Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is least likely to occur?

Consumer surplus

Figure 7-18 -Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

All else equal, an increase in supply will cause an increase in consumer surplus.

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be

Table 7-19 -Refer to Table 7-19. How much is total consumer surplus at the equilibrium price in this market?

Total surplus is equal to

Figure 7-21 -Refer to Figure 7-21. When the price is P1, area B+C represents

A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that

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

Total surplus

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 good will sell for

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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