Question 1

Consumer surplus measures the benefit to buyers of participating in a market.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following will cause a decrease in consumer surplus?

Accepted Answer

A) An increase in the production cost of the good 
B) The imposition of a binding price floor in the market 
C) A decrease in the number of sellers of the good 
D) A technological improvement in the production of the good 
A) An increase in the production cost of the good 
B) The imposition of a binding price floor in the market 
C) A decrease in the number of sellers of the good 
D) A technological improvement in the production of the good

Question 3

Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to
 $$Q ^ { S } = P$$ How much total consumer surplus goes to new consumers who enter the market after the supply curve shifts?

Accepted Answer

Total consumer surplus increas

Question 4

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 5

Figure 7-3
  
-Refer to Figure 7-3. If the price of the good is $13.00, then producer surplus is

Accepted Answer

A) $17.00. 
B) $16.00. 
C) $17.50. 
D) $6.00. 
A) $17.00. 
B) $16.00. 
C) $17.50. 
D) $6.00.

Question 6

Tammy loves donuts. The table shown reflects the value Tammy places on each donut she eats:
​
 $$\begin{array} { | l | l | } 
\hline \text { Value of first donut } & \$ 0.60 \
\hline \text { Value of second donut } & \$ 0.50 \
\hline \text { Value of third donut } & \$ 0.40 \
\hline \text { Value of fourth donut } & \$ 0.30 \
\hline \text { Value of fifth donut } & \$ 0.20 \
\hline \text { Value of sixth donut } & \$ 0.10 \
\hline
\end{array}$$ 
a.Use this information to construct Tammy's demand curve for donuts.
b.If the price of donuts is $0.20, how many donuts will Tammy buy?
c.Show Tammy's consumer surplus on your graph.How much consumer surplus would she have at a price of $0.20?
d.If the price of donuts rose to $0.40, how many donuts would she purchase now? What would happen to Tammy's consumer surplus? Show this change on your graph.

Accepted Answer

The answer of Tammy loves donuts. The table shown reflects...

Question 7

Table 7-12
The following table shows the willingness to pay for a good for the only four consumers in a market.
 $$\begin{array} { | l | l | } 
\hline \text { Consumer } & \text { Willingness to Pay } \
\hline \text { A } & \$ 25 \
\hline B & \$ 40 \
\hline \text { C } & \$ 15 \
\hline \text { D } & \$ 30 \
\hline
\end{array}$$
-Refer to Table 7-12. If the price of the good is $20, how much is the total consumer surplus?

Accepted Answer

Total cons

Question 8

All else equal, an increase in demand will cause an increase in producer surplus.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Figure 7-2
  
-Refer to Figure 7-2. If the government imposes a price floor of $110 in this market, then consumer surplus will decrease by

Accepted Answer

A) $2400. 
B) $600. 
C) $1800. 
D) $1200. 
A) $2400. 
B) $600. 
C) $1800. 
D) $1200.

Question 11

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 12

Figure 7-5
  
-Refer to Figure 7-5. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

Accepted Answer

A) Producer surplus increases by $3,125 
B) Producer surplus increases by $5,625 
C) Producer surplus decreases by $3,125 
D) Producer surplus decreases by $5,625 
A) Producer surplus increases by $3,125 
B) Producer surplus increases by $5,625 
C) Producer surplus decreases by $3,125 
D) Producer surplus decreases by $5,625

Question 13

Figure 7-10
   ​
-Refer to Figure 7-10. If the market equilibrium price is $120, how much is total consumer surplus?

Accepted Answer

Consumer s

Question 14

Figure 7-4
  
-Refer to Figure 7-4. 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) BCG 
B) ACH 
C) AHGB 
D) DGH 
A) BCG 
B) ACH 
C) AHGB 
D) DGH

Question 15

Market power and externalities are examples of market failures.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

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

Question 17

Suppose you sell a kayak for $600, but you were willing to sell it for $450. The buyer was willing to pay $650. The total surplus is $200.

Accepted Answer

A) True 
 B)False

Question 18

Mike and Sarah sell lemonade on the corner for $2.10 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $40. How many cups did Mike and Sarah sell?

Accepted Answer

A) 10 
B) 40 
C) 2 
D) 20 
A) 10 
B) 40 
C) 2 
D) 20

Question 19

Steak and chicken are substitutes. A sharp reduction in the supply of steak would

Accepted Answer

A) increase consumer surplus in the market for steak and decrease producer surplus in the market for chicken. 
B) increase consumer surplus in the market for steak and increase producer surplus in the market for chicken. 
C) decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken. 
D) decrease consumer surplus in the market for steak and decrease producer surplus in the market for chicken. 
A) increase consumer surplus in the market for steak and decrease producer surplus in the market for chicken. 
B) increase consumer surplus in the market for steak and increase producer surplus in the market for chicken. 
C) decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken. 
D) decrease consumer surplus in the market for steak and decrease producer surplus in the market for chicken.

Question 20

Producer surplus directly measures

Accepted Answer

A) the well-being of society as a whole. 
B) the well-being of buyers and sellers. 
C) the well-being of sellers. 
D) sellers' willingness to sell. 
A) the well-being of society as a whole. 
B) the well-being of buyers and sellers. 
C) the well-being of sellers. 
D) sellers' willingness to sell.

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

Consumer surplus measures the benefit to buyers of participating in a market.

Which of the following will cause a decrease in consumer surplus?

Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to QS=PQ ^ { S } = PQS=P How much total consumer surplus goes to new consumers who enter the market after the supply curve shifts?

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

Figure 7-3 -Refer to Figure 7-3. If the price of the good is $13.00, then producer surplus is

Table 7-12 The following table shows the willingness to pay for a good for the only four consumers in a market. Consumer Willingness to Pay A \ 25 B \ 40 C \ 15 D \ 30 -Refer to Table 7-12. If the price of the good is $20, how much is the total consumer surplus?

All else equal, an increase in demand will cause an increase in producer surplus.

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.

Figure 7-2 -Refer to Figure 7-2. If the government imposes a price floor of $110 in this market, then consumer surplus will decrease by

As a result of a decrease in price,

Figure 7-5 -Refer to Figure 7-5. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

Figure 7-10 ​ -Refer to Figure 7-10. If the market equilibrium price is $120, how much is total consumer surplus?

Figure 7-4 -Refer to Figure 7-4. When the price rises from P1 to P2, which area represents the increase in producer surplus due to new producers entering the market?

Market power and externalities are examples of market failures.

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

Suppose you sell a kayak for $600, but you were willing to sell it for $450. The buyer was willing to pay $650. The total surplus is $200.

Mike and Sarah sell lemonade on the corner for $2.10 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $40. How many cups did Mike and Sarah sell?

Steak and chicken are substitutes. A sharp reduction in the supply of steak would

Producer surplus directly measures

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 Nations 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

Filters

Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to $Q ^ { S } = P$ How much total consumer surplus goes to new consumers who enter the market after the supply curve shifts?

Figure 7-10 -Refer to Figure 7-10. If the market equilibrium price is $120, how much is total consumer surplus?

Figure 7-4 -Refer to Figure 7-4. When the price rises from P₁ to P₂, which area represents the increase in producer surplus due to new producers entering the market?