Question 1

When a monopolist prevents mutually beneficial trades from occurring, total surplus increases.

Accepted Answer

A) True 
 B)False

Question 2

Mountain River Adventures offers whitewater rafting trips down the Colorado River. It costs the firm $100 for the first raft trip per day, $120 for the second, $140 for the third, and $160 for the fourth. If the market price for a raft trip is $150, Mountain River Adventures will offer _____ trips per day and will have producer surplus equal to _____.

Accepted Answer

A)  three; $90 
B)  three; $10 
C)  two; $220 
D)  four; $80 
A)  three; $90 
B)  three; $10 
C)  two; $220 
D)  four; $80

Question 3

Prices are important economic signals because they convey information about how much producers are willing to pay for a good and how much it costs consumers to produce a good.

Accepted Answer

A) True 
 B)False

Question 4

Use the following to answer questions:  
-(Table: Consumer Surplus and Phantom Tickets) The table shows Consumer Surplus and Phantom Tickets each student's willingness to pay for a Phantom of the Opera ticket. Assume that each student wants to buy one ticket. If the box office price of a ticket to see Phantom of the Opera is $50 and there is no other market for tickets, the total consumer surplus for the five students is:

Accepted Answer

A)  $100. 
B)  $175. 
C)  $230. 
D)  $240. 
A)  $100. 
B)  $175. 
C)  $230. 
D)  $240.

Question 5

Use the following to answer questions:
Figure: The Gains from Trade  
-(Figure: The Gains from Trade) Look at the figure The Gains from Trade. What is the total surplus in this market when the demand curve is D1 and the market is in equilibrium?

Accepted Answer

A)  $25.00 
B)  $31.25 
C)  $62.50 
D)  $90.00 
A)  $25.00 
B)  $31.25 
C)  $62.50 
D)  $90.00

Question 6

Use the following to answer questions:  
-(Table: Willingness to Pay for Basketball Sneakers) The table Willingness to Pay for Basketball Sneakers shows each player's willingness to pay for basketball sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the price of basketball sneakers is $145, which player will purchase sneakers?

Accepted Answer

A)  Jamichael 
B)  Corey 
C)  Rudy 
D)  Ray 
A)  Jamichael 
B)  Corey 
C)  Rudy 
D)  Ray

Question 7

Suppose the United States removes sugar quotas and the market price of sugar drops. If the demand curve for candy bars is downward-sloping, in the candy bar market we would expect:

Accepted Answer

A)  the consumer surplus to increase. 
B)  the consumer surplus to decrease. 
C)  the consumer surplus to be unchanged. 
D)  the deadweight loss to increase. 
A)  the consumer surplus to increase. 
B)  the consumer surplus to decrease. 
C)  the consumer surplus to be unchanged. 
D)  the deadweight loss to increase.

Question 8

Use the following to answer question:  
-(Table: Economics Textbooks) The table Economics Textbooks shows how much money four consumers would be willing to pay for a new economics textbook. If the price of the textbook is $100, what is the total consumer surplus received by these consumers?

Accepted Answer

A)  $125 
B)  $500 
C)  $100 
D)  $75 
A)  $125 
B)  $500 
C)  $100 
D)  $75

Question 9

Market failure refers to a situation in which:

Accepted Answer

A)  markets fail to reach a fair outcome. 
B)  markets establish a high price for necessities. 
C)  market-determined wages are not high enough to raise all workers above the poverty line. 
D)  markets fail to reach an efficient outcome. 
A)  markets fail to reach a fair outcome. 
B)  markets establish a high price for necessities. 
C)  market-determined wages are not high enough to raise all workers above the poverty line. 
D)  markets fail to reach an efficient outcome.

Question 10

Use the following to answer questions:
Figure: Producer Surplus III  
-(Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the price of the good is $2, producer surplus will equal:

Accepted Answer

A)  $20. 
B)  $40. 
C)  $60. 
D)  $80. 
A)  $20. 
B)  $40. 
C)  $60. 
D)  $80.

Question 11

Policies designed to promote efficiency will never decrease equity; however, policies designed to promote equity will usually decrease efficiency.

Accepted Answer

A) True 
 B)False

Question 12

Use the following to answer questions:
Figure: The Market for Hamburgers  
-(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Tuscaloosa. If the price of a burger is $2, consumer surplus will equal:

Accepted Answer

A)  $650. 
B)  $400. 
C)  $225. 
D)  $450. 
A)  $650. 
B)  $400. 
C)  $225. 
D)  $450.

Question 13

If the technology of producing peanuts improves, total surplus in the peanut butter market:

Accepted Answer

A)  will increase. 
B)  will decrease. 
C)  will not change. 
D)  may change, but we cannot determine the change without more information. 
A)  will increase. 
B)  will decrease. 
C)  will not change. 
D)  may change, but we cannot determine the change without more information.

Question 14

Molly must drive across a bridge over a river eight times each week. Because the bridge is narrow and traffic is congested, Molly's willingness to pay for the eighth and final weekly trip is $0.50. Now the governor has promised to refurbish this old bridge and widen it to lessen the congestion and increase traffic flow over the river. Molly will have to pay extra taxes to finance the repair, but the toll for crossing the bridge will fall, and she expects to make 10 trips instead of just 8. How would you figure out how much Molly is willing to pay in taxes for the bridge repair?

Accepted Answer

Molly gains consumer surplus for the 8 t

Question 15

Use the following to answer questions:
Figure: Market for Hamburgers  
-(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Irvine, Kentucky. If 400 hamburgers are sold, producer surplus will equal:

Accepted Answer

A)  $650. 
B)  $400. 
C)  $510. 
D)  $200. 
A)  $650. 
B)  $400. 
C)  $510. 
D)  $200.

Question 16

Floyd's cost of selling haircuts is the lowest price at which he is willing to sell haircuts.

Accepted Answer

A) True 
 B)False

Question 17

Use the following to answer questions:  
-(Table: Willingness to Pay for Basketball Sneakers) The table Willingness to Pay for Basketball Sneakers shows each player's willingness to pay for basketball sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the price of basketball sneakers is $130, how many pairs will be purchased?

Accepted Answer

A)  none 
B)  one 
C)  two 
D)  three 
A)  none 
B)  one 
C)  two 
D)  three

Question 18

Use the following to answer questions:
Figure: The Wireless Mouse Market  
-(Figure: Wireless Mouse Market) Look at the figure Wireless Mouse Market. Calculate the change in producer surplus when the price increases from $10 to $15.

Accepted Answer

A)  $250 
B)  $1,000 
C)  $625 
D)  $1,125 
A)  $250 
B)  $1,000 
C)  $625 
D)  $1,125

Question 19

Suppose purchases do not occur because the value of the good to the potential seller exceeds the value to a potential consumer. This situation will occur in:

Accepted Answer

A)  a market dominated by government regulation. 
B)  well-functioning markets. 
C)  a market made up of many buyers and sellers. 
D)  a centralized market system. 
A)  a market dominated by government regulation. 
B)  well-functioning markets. 
C)  a market made up of many buyers and sellers. 
D)  a centralized market system.

Question 20

If the market for concert tickets is in equilibrium and the concert promoter tries to increase the number of tickets sold, all other things constant, total surplus will increase.

Accepted Answer

A) True 
 B)False

When a monopolist prevents mutually beneficial trades from occurring, total surplus increases.

Prices are important economic signals because they convey information about how much producers are willing to pay for a good and how much it costs consumers to produce a good.

Use the following to answer questions: Figure: The Gains from Trade -(Figure: The Gains from Trade) Look at the figure The Gains from Trade. What is the total surplus in this market when the demand curve is D₁and the market is in equilibrium?

Suppose the United States removes sugar quotas and the market price of sugar drops. If the demand curve for candy bars is downward-sloping, in the candy bar market we would expect:

Use the following to answer question: -(Table: Economics Textbooks) The table Economics Textbooks shows how much money four consumers would be willing to pay for a new economics textbook. If the price of the textbook is $100, what is the total consumer surplus received by these consumers?

Market failure refers to a situation in which:

Use the following to answer questions: Figure: Producer Surplus III -(Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the price of the good is $2, producer surplus will equal:

Policies designed to promote efficiency will never decrease equity; however, policies designed to promote equity will usually decrease efficiency.

Use the following to answer questions: Figure: The Market for Hamburgers -(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Tuscaloosa. If the price of a burger is $2, consumer surplus will equal:

If the technology of producing peanuts improves, total surplus in the peanut butter market:

Use the following to answer questions: Figure: Market for Hamburgers -(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Irvine, Kentucky. If 400 hamburgers are sold, producer surplus will equal:

Floyd's cost of selling haircuts is the lowest price at which he is willing to sell haircuts.

Use the following to answer questions: Figure: The Wireless Mouse Market -(Figure: Wireless Mouse Market) Look at the figure Wireless Mouse Market. Calculate the change in producer surplus when the price increases from $10 to $15.

Suppose purchases do not occur because the value of the good to the potential seller exceeds the value to a potential consumer. This situation will occur in:

If the market for concert tickets is in equilibrium and the concert promoter tries to increase the number of tickets sold, all other things constant, total surplus will increase.

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 4: Consumer and Producer Surplus

When a monopolist prevents mutually beneficial trades from occurring, total surplus increases.

Prices are important economic signals because they convey information about how much producers are willing to pay for a good and how much it costs consumers to produce a good.

Use the following to answer questions: Figure: The Gains from Trade -(Figure: The Gains from Trade) Look at the figure The Gains from Trade. What is the total surplus in this market when the demand curve is D1 and the market is in equilibrium?

Suppose the United States removes sugar quotas and the market price of sugar drops. If the demand curve for candy bars is downward-sloping, in the candy bar market we would expect:

Use the following to answer question: -(Table: Economics Textbooks) The table Economics Textbooks shows how much money four consumers would be willing to pay for a new economics textbook. If the price of the textbook is $100, what is the total consumer surplus received by these consumers?

Market failure refers to a situation in which:

Use the following to answer questions: Figure: Producer Surplus III -(Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the price of the good is $2, producer surplus will equal:

Policies designed to promote efficiency will never decrease equity; however, policies designed to promote equity will usually decrease efficiency.

Use the following to answer questions: Figure: The Market for Hamburgers -(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Tuscaloosa. If the price of a burger is $2, consumer surplus will equal:

If the technology of producing peanuts improves, total surplus in the peanut butter market:

Use the following to answer questions: Figure: Market for Hamburgers -(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Irvine, Kentucky. If 400 hamburgers are sold, producer surplus will equal:

Floyd's cost of selling haircuts is the lowest price at which he is willing to sell haircuts.

Use the following to answer questions: Figure: The Wireless Mouse Market -(Figure: Wireless Mouse Market) Look at the figure Wireless Mouse Market. Calculate the change in producer surplus when the price increases from $10 to $15.

Suppose purchases do not occur because the value of the good to the potential seller exceeds the value to a potential consumer. This situation will occur in:

If the market for concert tickets is in equilibrium and the concert promoter tries to increase the number of tickets sold, all other things constant, total surplus will increase.

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Use the following to answer questions: Figure: The Gains from Trade -(Figure: The Gains from Trade) Look at the figure The Gains from Trade. What is the total surplus in this market when the demand curve is D₁and the market is in equilibrium?