Question 1

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

Accepted Answer

Total producer surpl

Question 2

Figure 7-31  
-Refer to Figure 7-31. If the market equilibrium price is $25, how much is total producer surplus in this market?

Accepted Answer

Total prod

Question 3

Figure 7-17  
-Refer to Figure 7-17. Suppose the market starts out in equilibrium with demand curve D and supply curve S. Next, suppose demand shifts left so as to decrease the quantity demanded by 20 units at every price. What is the change in producer surplus as a result of this demand shift?

Accepted Answer

A) $80 
B) $160 
C) $240 
D) $320 
A) $80 
B) $160 
C) $240 
D) $320

Question 4

Figure 7-8  
-Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

Accepted Answer

A) $150. 
B) $325. 
C) $650. 
D) $675. 
A) $150. 
B) $325. 
C) $650. 
D) $675.

Question 5

Producer surplus measures the benefit to sellers from receiving a price above their costs.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It remains unchanged. 
D) It may increase, decrease, or remain unchanged. 
A) It increases. 
B) It decreases. 
C) It remains unchanged. 
D) It may increase, decrease, or remain unchanged.

Question 8

When markets fail, public policy can

Accepted Answer

A) do nothing to improve the situation. 
B) potentially remedy the problem and increase economic efficiency. 
C) always remedy the problem and increase economic efficiency. 
D) in theory, remedy the problem, but in practice, public policy has proven to be ineffective. 
A) do nothing to improve the situation. 
B) potentially remedy the problem and increase economic efficiency. 
C) always remedy the problem and increase economic efficiency. 
D) in theory, remedy the problem, but in practice, public policy has proven to be ineffective.

Question 9

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?

Accepted Answer

With the removal of the price

Question 10

Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor. On a particular day, he is willing to tutor the first hour for $10, the second hour for $18, the third hour for $28, and the fourth hour for $40. Assume Allen is rational in deciding how many hours to tutor. His producer surplus is

Accepted Answer

A) $40. 
B) $64. 
C) $12. 
D) $56. 
A) $40. 
B) $64. 
C) $12. 
D) $56.

Question 11

Figure 7-19  
-Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

Accepted Answer

A) $187.50. 
B) $125.00. 
C) $250.00. 
D) $266.67. 
A) $187.50. 
B) $125.00. 
C) $250.00. 
D) $266.67.

Question 12

Unless markets are perfectly competitive, they may fail to maximize the total benefits to buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 13

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window-cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $200.

Accepted Answer

A) True 
 B)False

Question 14

Figure 7-15  
-Refer to Figure 7-15. When the price rises from P1 to P2, what area represents the increase in producer surplus?

Accepted Answer

A) A 
B) A+B 
C) A+B+C 
D) G 
A) A 
B) A+B 
C) A+B+C 
D) G

Question 15

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 16

A consumer's willingness to pay directly measures

Accepted Answer

A) the extent to which advertising and other external forces have influenced the consumer's preferences. 
B) the cost of a good to the buyer. 
C) how much a buyer values a good. 
D) consumer surplus. 
A) the extent to which advertising and other external forces have influenced the consumer's preferences. 
B) the cost of a good to the buyer. 
C) how much a buyer values a good. 
D) consumer surplus.

Question 17

Figure 7-3  
-Refer to Figure 7-3. When the price is P2, consumer surplus is

Accepted Answer

A) A. 
B) B. 
C) A+B. 
D) A+B+C. 
A) A. 
B) B. 
C) A+B. 
D) A+B+C.

Question 18

The study of how the allocation of resources affects economic well-being is called

Accepted Answer

A) consumer economics. 
B) macroeconomics. 
C) willingness-to-pay economics. 
D) welfare economics. 
A) consumer economics. 
B) macroeconomics. 
C) willingness-to-pay economics. 
D) welfare economics.

Question 19

An example of positive analysis is studying

Accepted Answer

A) how market forces produce equilibrium. 
B) whether equilibrium outcomes are fair. 
C) whether equilibrium outcomes are socially desirable. 
D) if income distributions are fair. 
A) how market forces produce equilibrium. 
B) whether equilibrium outcomes are fair. 
C) whether equilibrium outcomes are socially desirable. 
D) if income distributions are fair.

Question 20

Figure 7-15  
-Refer to Figure 7-15. When the price rises from P1 to P2, which area represents the increase in producer surplus due to new producers entering the market?

Accepted Answer

A) A 
B) B 
C) A+B 
D) G 
A) A 
B) B 
C) A+B 
D) G

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

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

Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price is $25, how much is total producer surplus in this market?

Figure 7-17 -Refer to Figure 7-17. Suppose the market starts out in equilibrium with demand curve D and supply curve S. Next, suppose demand shifts left so as to decrease the quantity demanded by 20 units at every price. What is the change in producer surplus as a result of this demand shift?

Figure 7-8 -Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

Producer surplus measures the benefit to sellers from receiving a price above their costs.

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

Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?

When markets fail, public policy can

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?

Figure 7-19 -Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

Unless markets are perfectly competitive, they may fail to maximize the total benefits to buyers and sellers.

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window-cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $200.

Figure 7-15 -Refer to Figure 7-15. When the price rises from P1 to P2, what area represents the increase in producer surplus?

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

A consumer's willingness to pay directly measures

Figure 7-3 -Refer to Figure 7-3. When the price is P2, consumer surplus is

The study of how the allocation of resources affects economic well-being is called

An example of positive analysis is studying

Figure 7-15 -Refer to Figure 7-15. When the price rises from P1 to P2, which area represents the increase in producer surplus due to new producers entering the market?

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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