Question 1

Producer surplus directly measures

Accepted Answer

A) the well-being of sellers. 
B) production costs. 
C) excess demand. 
D) unsold inventories. 
A) the well-being of sellers. 
B) production costs. 
C) excess demand. 
D) unsold inventories.

Question 2

Figure 7-22  
-Refer to Figure 7-22. If the price decreases from $80 to $70 due to a shift in the supply curve, consumer surplus increases by

Accepted Answer

A) $250. 
B) $750. 
C) $1000. 
D) $500. 
A) $250. 
B) $750. 
C) $1000. 
D) $500.

Question 3

The marginal seller is the seller

Accepted Answer

A) for whom the marginal cost of producing one more unit of output is the lowest among all sellers, and the marginal buyer is the buyer for whom the marginal benefit of one more unit of the good is the highest among all buyers. 
B) who supplies the smallest quantity of the good among all sellers, and the marginal buyer is the buyer who demands the smallest quantity of the good among all buyers. 
C) who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher. 
D) who has the largest producer surplus, and the marginal buyer is the buyer who has the largest consumer surplus. 
A) for whom the marginal cost of producing one more unit of output is the lowest among all sellers, and the marginal buyer is the buyer for whom the marginal benefit of one more unit of the good is the highest among all buyers. 
B) who supplies the smallest quantity of the good among all sellers, and the marginal buyer is the buyer who demands the smallest quantity of the good among all buyers. 
C) who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher. 
D) who has the largest producer surplus, and the marginal buyer is the buyer who has the largest consumer surplus.

Question 4

Table 7-14
Seller
Cost
LeBron
$700
Kobe
$600
Kevin
$450
Steve
$400
-Refer to Table 7-14. You and your best friend want to hire a professional photographer to take pictures of your two families. The table shows the costs of the four potential sellers in the local photography market. You and your friend take bids from the sellers. Who offers the two winning bids, and what do they offer to charge for the photography sessions?

Accepted Answer

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

Question 5

David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is

Accepted Answer

A) $-15. 
B) $20. 
C) $30. 
D) $75. 
A) $-15. 
B) $20. 
C) $30. 
D) $75.

Question 6

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

Accepted Answer

A) $700 
B) $2,300 
C) $3,000 
D) $3,700 
A) $700 
B) $2,300 
C) $3,000 
D) $3,700

Question 7

Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

Accepted Answer

A) True 
 B)False

Question 8

All else equal, an increase in demand will always increase consumer surplus.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) $137.50. 
B) $125.00. 
C) $187.50. 
D) $275.00. 
A) $137.50. 
B) $125.00. 
C) $187.50. 
D) $275.00.

Question 10

Table 7-1  
-Refer to Table 7-1. If price of the product is $135, then the total consumer surplus is

Accepted Answer

A) $-50. 
B) $-35. 
C) $15. 
D) $150. 
A) $-50. 
B) $-35. 
C) $15. 
D) $150.

Question 11

Table 7-6
For each of three potential buyers of apples, the table displays the willingness to pay for the first three apples of the day. Assume Xavier, Yadier, and Zavi are the only three buyers of apples, and only three apples can be supplied per day.  
-Refer to Table 7-6. If the market price of an apple increases from $1.40 to $1.60, then consumer surplus

Accepted Answer

A) decreases by $0.15. 
B) decreases by $0.30. 
C) decreases by $0.45. 
D) increases by $0.15. 
A) decreases by $0.15. 
B) decreases by $0.30. 
C) decreases by $0.45. 
D) increases by $0.15.

Question 12

Table 7-10
The following table represents the costs of five possible sellers.
Seller
Cost
Abby
$1,600
Bobby
$1,300
Dianne
$1,100
Evaline
$900
Carlos
$800
-Refer to Table 7-10. If the price is $1,l50, who would be willing to supply the product?

Accepted Answer

A) Abby and Bobby 
B) Abby, Bobby, and Dianne 
C) Carlos, Dianne, and Evaline 
D) Dianne and Evaline only 
A) Abby and Bobby 
B) Abby, Bobby, and Dianne 
C) Carlos, Dianne, and Evaline 
D) Dianne and Evaline only

Question 13

Economists normally assume people's preferences should be

Accepted Answer

A) respected. 
B) adjusted. 
C) overruled. 
D) ignored. 
A) respected. 
B) adjusted. 
C) overruled. 
D) ignored.

Question 14

Scenario 7-2
Suppose market demand and market supply are given by the equations:  
-Refer to Scenario 7-2. How much is total producer surplus at the equilibrium price in this market?

Accepted Answer

Total producer surpl

Question 15

Which of the following is true when the price of a good or service rises?

Accepted Answer

A) Buyers who were already buying the good or service are better off. 
B) Some buyers exit the market. 
C) The total consumer surplus in the market increases. 
D) The total value of purchases before and after the price change is the same. 
A) Buyers who were already buying the good or service are better off. 
B) Some buyers exit the market. 
C) The total consumer surplus in the market increases. 
D) The total value of purchases before and after the price change is the same.

Question 16

Figure 7-4  
-Refer to Figure 7-4. Which area represents consumer surplus at a price of P2?

Accepted Answer

A) BDF 
B) AFG 
C) ABDG 
D) ABC 
A) BDF 
B) AFG 
C) ABDG 
D) ABC

Question 17

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 hire Kevin for a price of $500. What is his producer surplus?

Accepted Answer

A) $500 
B) $150 
C) $100 
D) $50 
A) $500 
B) $150 
C) $100 
D) $50

Question 18

Efficiency is related to the size of the economic pie, whereas equality is related to how the pie gets sliced and distributed.

Accepted Answer

A) True 
 B)False

Question 19

Kristi sells purses. Her cost is $35 per purse. On a certain day, she sells 12 purses, and her producer surplus for that day amounts to $180. Kristi sold each purse for

Accepted Answer

A) $65. 
B) $50. 
C) $45. 
D) $53. 
A) $65. 
B) $50. 
C) $45. 
D) $53.

Question 20

Figure 7-15  
-Refer to Figure 7-15. Suppose producer surplus is larger than C but smaller than A+B+C. The price of the good must be

Accepted Answer

A) lower than P1. 
B) P1. 
C) between P1 and P2. 
D) higher than P2. 
A) lower than P1. 
B) P1. 
C) between P1 and P2. 
D) higher than P2.

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

Producer surplus directly measures

Figure 7-22 -Refer to Figure 7-22. If the price decreases from $80 to $70 due to a shift in the supply curve, consumer surplus increases by

The marginal seller is the seller

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

All else equal, an increase in demand will always increase consumer surplus.

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

Table 7-1 -Refer to Table 7-1. If price of the product is $135, then the total consumer surplus is

Table 7-10 The following table represents the costs of five possible sellers. Seller Cost Abby $1,600 Bobby $1,300 Dianne $1,100 Evaline $900 Carlos $800 -Refer to Table 7-10. If the price is $1,l50, who would be willing to supply the product?

Economists normally assume people's preferences should be

Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. How much is total producer surplus at the equilibrium price in this market?

Which of the following is true when the price of a good or service rises?

Figure 7-4 -Refer to Figure 7-4. Which area represents consumer surplus at a price of P2?

Efficiency is related to the size of the economic pie, whereas equality is related to how the pie gets sliced and distributed.

Kristi sells purses. Her cost is $35 per purse. On a certain day, she sells 12 purses, and her producer surplus for that day amounts to $180. Kristi sold each purse for

Figure 7-15 -Refer to Figure 7-15. Suppose producer surplus is larger than C but smaller than A+B+C. The price of the good must be

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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