Question 1

Which of the following statements is not correct?

Accepted Answer

A) An invisible hand leads buyers and sellers to an equilibrium that maximizes total surplus. 
B) Market power can cause markets to be inefficient. 
C) Externalities can cause markets to be inefficient. 
D) The invisible hand can remedy all types of market failures. 
A) An invisible hand leads buyers and sellers to an equilibrium that maximizes total surplus. 
B) Market power can cause markets to be inefficient. 
C) Externalities can cause markets to be inefficient. 
D) The invisible hand can remedy all types of market failures.

Question 2

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 $0.70, then the market quantity of oranges demanded per day is

Accepted Answer

A) 5. 
B) 6. 
C) 4. 
D) 7. 
A) 5. 
B) 6. 
C) 4. 
D) 7.

Question 3

Figure 7-23  
-Refer to Figure 7-23. The efficient price-quantity combination is

Accepted Answer

A) P1 and Q1. 
B) P2 and Q2. 
C) P3 and Q1. 
D) P4 and 0. 
A) P1 and Q1. 
B) P2 and Q2. 
C) P3 and Q1. 
D) P4 and 0.

Question 4

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 5

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is

Accepted Answer

A) $150. 
B) $350. 
C) $500. 
D) $850. 
A) $150. 
B) $350. 
C) $500. 
D) $850.

Question 6

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

Accepted Answer

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

Question 7

Consumer surplus is the

Accepted Answer

A) amount of a good consumers get without paying anything. 
B) amount a consumer pays minus the amount the consumer is willing to pay. 
C) amount a consumer is willing to pay minus the amount the consumer actually pays. 
D) value of a good to a consumer. 
A) amount of a good consumers get without paying anything. 
B) amount a consumer pays minus the amount the consumer is willing to pay. 
C) amount a consumer is willing to pay minus the amount the consumer actually pays. 
D) value of a good to a consumer.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Accepted Answer

A) True 
 B)False

Question 10

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 11

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 12

Which of the following events would increase producer surplus?

Accepted Answer

A) Sellers' costs stay the same and the price of the good increases. 
B) Sellers' costs increase and the price of the good stays the same. 
C) Sellers' costs increase and the price of the good decreases. 
D) All of the above are correct. 
A) Sellers' costs stay the same and the price of the good increases. 
B) Sellers' costs increase and the price of the good stays the same. 
C) Sellers' costs increase and the price of the good decreases. 
D) All of the above are correct.

Question 13

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 14

Willingness to pay

Accepted Answer

A) measures the value that a buyer places on a good. 
B) is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C) is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D) is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
A) measures the value that a buyer places on a good. 
B) is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C) is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D) is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

Question 15

Table 7-11
The only four producers in a market have the following costs:
Seller
Cost
Evan
$50
Selena
$100
Angie
$150
Kris
$200
-Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for

Accepted Answer

A) $50 or slightly more. 
B) $100 or slightly less. 
C) $150 or slightly less. 
D) $200 or slightly more. 
A) $50 or slightly more. 
B) $100 or slightly less. 
C) $150 or slightly less. 
D) $200 or slightly more.

Question 16

Figure 7-24  
-Refer to Figure 7-24. The equilibrium allocation of resources is

Accepted Answer

A) efficient because total surplus is maximized at the equilibrium. 
B) efficient because consumer surplus is maximized at the equilibrium. 
C) inefficient because consumer surplus is larger than producer surplus at the equilibrium. 
D) inefficient because producer surplus is not maximized. 
A) efficient because total surplus is maximized at the equilibrium. 
B) efficient because consumer surplus is maximized at the equilibrium. 
C) inefficient because consumer surplus is larger than producer surplus at the equilibrium. 
D) inefficient because producer surplus is not maximized.

Question 17

Figure 7-24  
-Refer to Figure 7-24. If the government imposes a price ceiling at $12, then producer surplus is

Accepted Answer

A) CDI. 
B) BDF. 
C) BCIF. 
D) HGCD. 
A) CDI. 
B) BDF. 
C) BCIF. 
D) HGCD.

Question 18

Table 7-16  
-Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Accepted Answer

A) $44. 
B) $56. 
C) $72. 
D) $96. 
A) $44. 
B) $56. 
C) $72. 
D) $96.

Question 19

A seller's willingness to sell is

Accepted Answer

A) measured by the seller's cost of production. 
B) related to her supply curve, just as a buyer's willingness to buy is related to his demand curve. 
C) less than the price received if producer surplus is a positive number. 
D) All of the above are correct. 
A) measured by the seller's cost of production. 
B) related to her supply curve, just as a buyer's willingness to buy is related to his demand curve. 
C) less than the price received if producer surplus is a positive number. 
D) All of the above are correct.

Question 20

Figure 7-21  
-Refer to Figure 7-21. Which area represents consumer surplus when the price is P1?

Accepted Answer

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

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

Which of the following statements is not correct?

Figure 7-23 -Refer to Figure 7-23. The efficient price-quantity combination is

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

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is

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

Consumer surplus is the

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

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

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

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

Which of the following events would increase producer surplus?

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

Willingness to pay

Table 7-11 The only four producers in a market have the following costs: Seller Cost Evan $50 Selena $100 Angie $150 Kris $200 -Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for

Figure 7-24 -Refer to Figure 7-24. The equilibrium allocation of resources is

Figure 7-24 -Refer to Figure 7-24. If the government imposes a price ceiling at $12, then producer surplus is

Table 7-16 -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

A seller's willingness to sell is

Figure 7-21 -Refer to Figure 7-21. Which area represents consumer surplus when the price is P1?

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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