Question 1

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

Accepted Answer

A) $650. 
B) $800. 
C) $900. 
D) $1,000. 
A) $650. 
B) $800. 
C) $900. 
D) $1,000.

Question 2

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

Accepted Answer

A) ABD. 
B) ABF. 
C) FBD. 
D) HGCI. 
A) ABD. 
B) ABF. 
C) FBD. 
D) HGCI.

Question 3

All else equal, what happens to consumer surplus if the price of a good decreases?

Accepted Answer

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

Question 4

Figure 7-32  
-Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is consumer surplus?

Accepted Answer

Consumer s

Question 5

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 price of Vanilla Coke is $6.90, who will purchase the good?

Accepted Answer

A) all five individuals 
B) Megan, Mallory and Audrey 
C) David, Laura and Megan 
D) David and Laura 
A) all five individuals 
B) Megan, Mallory and Audrey 
C) David, Laura and Megan 
D) David and Laura

Question 6

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is

Accepted Answer

A) $150. 
B) $200. 
C) $350. 
D) $550. 
A) $150. 
B) $200. 
C) $350. 
D) $550.

Question 7

The area below the demand curve and above the supply curve measures the producer surplus in a market.

Accepted Answer

A) True 
 B)False

Question 8

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be

Accepted Answer

A) $3. 
B) $8. 
C) $5. 
D) $11. 
A) $3. 
B) $8. 
C) $5. 
D) $11.

Question 9

Table 7-15
The following table represents the costs of five possible sellers.  
-Refer to Table 7-15. If each producer has one unit available for sale, and if the market equilibrium price is $70, how much is the combined total cost of all participating sellers in the market?

Accepted Answer

A) $100 
B) $150 
C) $250 
D) $350 
A) $100 
B) $150 
C) $250 
D) $350

Question 10

Producer surplus is the amount a seller is paid minus the cost of production.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following will cause no change 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

Question 12

Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline 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 13

Answer each of the following questions about supply and producer surplus.
a.What is producer surplus, and how is it measured?
b.What is the relationship between the cost to sellers and the supply curve?
c.Other things equal, what happens to producer surplus when the price of a good rises? Illustrate your answer on a supply curve.

Accepted Answer

a.Producer surplus measures the benefit

Question 14

Figure 7-24  
-Refer to Figure 7-24. If 4 units of the good are produced and sold, then

Accepted Answer

A) producer surplus is greater than consumer surplus. 
B) consumer surplus is $16. 
C) total surplus is minimized. 
D) total surplus is not maximized. 
A) producer surplus is greater than consumer surplus. 
B) consumer surplus is $16. 
C) total surplus is minimized. 
D) total surplus is not maximized.

Question 15

Figure 7-34  
-Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase for those consumers who were purchasing the good when the price floor was in place?

Accepted Answer

Those consumers who were alrea

Question 16

The Surgeon General announces that eating apples promotes healthy teeth. As a result, the equilibrium price of apples

Accepted Answer

A) increases, and producer surplus increases. 
B) increases, and producer surplus decreases. 
C) decreases, and producer surplus increases. 
D) decreases, and producer surplus decreases. 
A) increases, and producer surplus increases. 
B) increases, and producer surplus decreases. 
C) decreases, and producer surplus increases. 
D) decreases, and producer surplus decreases.

Question 17

Table 7-16  
-Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, consumer surplus will be

Accepted Answer

A) $21. 
B) $28. 
C) $36. 
D) $42. 
A) $21. 
B) $28. 
C) $36. 
D) $42.

Question 18

Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market.

Accepted Answer

A) True 
 B)False

Question 19

Total surplus is

Accepted Answer

A) equal to consumer surplus minus producer surplus. 
B) equal to the total value to buyers minus the total cost to sellers. 
C) equal to consumers' willingness to pay plus producers' cost. 
D) greater than the sum of consumer surplus plus producer surplus. 
A) equal to consumer surplus minus producer surplus. 
B) equal to the total value to buyers minus the total cost to sellers. 
C) equal to consumers' willingness to pay plus producers' cost. 
D) greater than the sum of consumer surplus plus producer surplus.

Question 20

If the current allocation of resources in the market for wallpaper is efficient, then it must be the case that

Accepted Answer

A) producer surplus equals consumer surplus in the market for wallpaper. 
B) the market for wallpaper is in equilibrium. 
C) on the last unit of wallpaper that was produced and sold, the value to buyers exceeded the cost to sellers. 
D) All of the above are correct. 
A) producer surplus equals consumer surplus in the market for wallpaper. 
B) the market for wallpaper is in equilibrium. 
C) on the last unit of wallpaper that was produced and sold, the value to buyers exceeded the cost to sellers. 
D) All of the above are correct.

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 producer surplus amounts to

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

All else equal, what happens to consumer surplus if the price of a good decreases?

Figure 7-32 -Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is 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 price of Vanilla Coke is $6.90, who will purchase the good?

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is

The area below the demand curve and above the supply curve measures the producer surplus in a market.

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be

Table 7-15 The following table represents the costs of five possible sellers. -Refer to Table 7-15. If each producer has one unit available for sale, and if the market equilibrium price is $70, how much is the combined total cost of all participating sellers in the market?

Producer surplus is the amount a seller is paid minus the cost of production.

Which of the following will cause no change in producer surplus?

Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market

Figure 7-24 -Refer to Figure 7-24. If 4 units of the good are produced and sold, then

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase for those consumers who were purchasing the good when the price floor was in place?

The Surgeon General announces that eating apples promotes healthy teeth. As a result, the equilibrium price of apples

Table 7-16 -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, consumer surplus will be

Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market.

Total surplus is

If the current allocation of resources in the market for wallpaper is efficient, then it must be the case that

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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