Question 1

According to many economists, government restrictions on ticket scalping do all of the following except

Accepted Answer

A) inconvenience the public. 
B) reduce the audience for cultural and sports events. 
C) waste police officers' time. 
D) keep the cost of tickets to all consumers low. 
A) inconvenience the public. 
B) reduce the audience for cultural and sports events. 
C) waste police officers' time. 
D) keep the cost of tickets to all consumers low.

Question 2

As a result of a decrease in price,

Accepted Answer

A) new buyers enter the market, increasing consumer surplus. 
B) new buyers enter the market, decreasing consumer surplus. 
C) existing buyers exit the market, increasing consumer surplus. 
D) existing buyers exit the market, decreasing consumer surplus. 
A) new buyers enter the market, increasing consumer surplus. 
B) new buyers enter the market, decreasing consumer surplus. 
C) existing buyers exit the market, increasing consumer surplus. 
D) existing buyers exit the market, decreasing consumer surplus.

Question 3

Figure 7-9  
-Refer to Figure 7-9. If the price of the good is $14, then producer surplus is

Accepted Answer

A) $19.50. 
B) $22.50. 
C) $20.50. 
D) $25.00. 
A) $19.50. 
B) $22.50. 
C) $20.50. 
D) $25.00.

Question 4

Figure 7-33  
-Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?

Accepted Answer

Total surp

Question 5

Even though participants in the economy are motivated by self-interest, the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.

Accepted Answer

A) True 
 B)False

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

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

Total surplus measures the

Accepted Answer

A) loss to buyers from paying higher prices plus the benefit to sellers from receiving lower prices. 
B) buyers' willingness to pay less the sellers' costs. 
C) fairness of the distribution of resources in society. 
D) value to the government of goods and services sold in society. 
A) loss to buyers from paying higher prices plus the benefit to sellers from receiving lower prices. 
B) buyers' willingness to pay less the sellers' costs. 
C) fairness of the distribution of resources in society. 
D) value to the government of goods and services sold in society.

Question 9

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.

Question 10

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

Accepted Answer

A) consumer surplus is $800. 
B) consumer surplus is $900. 
C) producer surplus is $900. 
D) producer surplus is $1,000. 
A) consumer surplus is $800. 
B) consumer surplus is $900. 
C) producer surplus is $900. 
D) producer surplus is $1,000.

Question 11

A buyer is willing to buy a product at a price greater than or equal to his willingness to pay, but would refuse to buy a product at a price less than his willingness to pay.

Accepted Answer

A) True 
 B)False

Question 12

Figure 7-33  
-Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total producer surplus in this market at the new equilibrium price?

Accepted Answer

Total producer surpl

Question 13

Figure 7-24  
-Refer to Figure 7-24. If 6 units of the good are produced and sold, then

Accepted Answer

A) consumer surplus is greater than producer surplus. 
B) producer surplus is maximized. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) consumer surplus equals producer surplus. 
A) consumer surplus is greater than producer surplus. 
B) producer surplus is maximized. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) consumer surplus equals producer surplus.

Question 14

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 15

Table 7-14
Seller
Cost
LeBron
$700
Kobe
$600
Kevin
$450
Steve
$400
-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 take bids from the sellers. Who offers the winning bid, and what does he offer to charge for the photography session?

Accepted Answer

A) Steve; more than $400 but less than $450 
B) Steve; $399 
C) LeBron; more than $700 
D) LeBron; more than $600 but less than $700 
A) Steve; more than $400 but less than $450 
B) Steve; $399 
C) LeBron; more than $700 
D) LeBron; more than $600 but less than $700

Question 16

In order to calculate consumer surplus in a market, we need to know willingness to pay and price.

Accepted Answer

A) True 
 B)False

Question 17

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?

Accepted Answer

A) Firm A produces a monitor that Cassie buys. David does not purchase a monitor. 
B) Firm A produces a monitor that David buys. 
C) Firm B produces a monitor that Cassie buys. David does not purchase a monitor. 
D) Firm B produces a monitor that David buys. 
A) Firm A produces a monitor that Cassie buys. David does not purchase a monitor. 
B) Firm A produces a monitor that David buys. 
C) Firm B produces a monitor that Cassie buys. David does not purchase a monitor. 
D) Firm B produces a monitor that David buys.

Question 18

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 19

Consumer surplus can be measured as the area between the demand curve and the supply curve.

Accepted Answer

A) True 
 B)False

Question 20

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.

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

According to many economists, government restrictions on ticket scalping do all of the following except

As a result of a decrease in price,

Figure 7-9 -Refer to Figure 7-9. If the price of the good is $14, then producer surplus is

Figure 7-33 -Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?

Even though participants in the economy are motivated by self-interest, the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.

A seller's opportunity cost measures the

Total surplus 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 good will sell for

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

A buyer is willing to buy a product at a price greater than or equal to his willingness to pay, but would refuse to buy a product at a price less than his willingness to pay.

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total producer surplus in this market at the new equilibrium price?

Figure 7-24 -Refer to Figure 7-24. If 6 units of the good are produced and sold, then

Which of the following is not correct?

In order to calculate consumer surplus in a market, we need to know willingness to pay and price.

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?

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

Consumer surplus can be measured as the area between the demand curve and the supply curve.

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?

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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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