Question 1

If the cost of soybeans (the major ingredient in tofu) decreases, consumer surplus in the market for tofu will decrease.

Accepted Answer

A) True 
 B)False

Question 2

Use the following to answer questions:  
-(Table: Producer Surplus and Phantom Tickets) The table Producer Surplus and Phantom Tickets shows the minimum price at which each of the students is willing to sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to sell. Given the information in the table, if these students can sell their Phantom tickets for only $5, then:

Accepted Answer

A)  Tim will be the only student not to sell his ticket. 
B)  Laura, Whitney, Ralph, and Rick will sell their tickets. 
C)  the total producer surplus for the five students will be $4. 
D)  the total producer surplus for the five students will be $330. 
A)  Tim will be the only student not to sell his ticket. 
B)  Laura, Whitney, Ralph, and Rick will sell their tickets. 
C)  the total producer surplus for the five students will be $4. 
D)  the total producer surplus for the five students will be $330.

Question 3

Use the following to answer questions:  
-(Table: Willingness to Pay for Peanuts) Using the table Willingness to Pay for Peanuts, if the price of a bag of peanuts is $2:

Accepted Answer

A)  all of the consumers would purchase a bag. 
B)  everyone except Dave would purchase a bag. 
C)  everyone except George would purchase a bag. 
D)  no one would purchase a bag. 
A)  all of the consumers would purchase a bag. 
B)  everyone except Dave would purchase a bag. 
C)  everyone except George would purchase a bag. 
D)  no one would purchase a bag.

Question 4

Markets work because they allocate sales to the potential sellers who most value the right to sell a good, as indicated by their ability to produce the good at the lowest cost. This statement illustrates:

Accepted Answer

A)  producer surplus. 
B)  consumer surplus. 
C)  total surplus. 
D)  deadweight loss. 
A)  producer surplus. 
B)  consumer surplus. 
C)  total surplus. 
D)  deadweight loss.

Question 5

Peanut butter and jelly are complements in consumption. Assuming that the supply curve of peanut butter is upward-sloping, if there is a decrease in the price of jelly, producer surplus in the peanut butter market:

Accepted Answer

A)  will increase. 
B)  will decrease. 
C)  will not change. 
D)  may change, but it is impossible to tell whether it will increase or decrease. 
A)  will increase. 
B)  will decrease. 
C)  will not change. 
D)  may change, but it is impossible to tell whether it will increase or decrease.

Question 6

Which of the following is TRUE concerning the relationship between efficiency and equity?

Accepted Answer

A)  Policies designed to increase efficiency will also increase equity. 
B)  Policies designed to increase equity will also increase efficiency. 
C)  Policies designed to increase efficiency will decrease equity. 
D)  There is no trade-off between efficiency and equity if policies are fair. 
A)  Policies designed to increase efficiency will also increase equity. 
B)  Policies designed to increase equity will also increase efficiency. 
C)  Policies designed to increase efficiency will decrease equity. 
D)  There is no trade-off between efficiency and equity if policies are fair.

Question 7

Alex is willing to buy the last ticket to the Billy Bragg concert for $15, while Jake is willing to pay $25. Alex is first in line and buys a ticket for $15. He then resells his ticket to Jake for $20. By reselling the ticket instead of going to the concert himself, Alex caused:

Accepted Answer

A)  the sum of the consumer and producer surplus to increase. 
B)  the sum of the consumer and producer surplus to decrease. 
C)  a deadweight loss of $5. 
D)  consumer surplus to decrease and producer surplus to increase. 
A)  the sum of the consumer and producer surplus to increase. 
B)  the sum of the consumer and producer surplus to decrease. 
C)  a deadweight loss of $5. 
D)  consumer surplus to decrease and producer surplus to increase.

Question 8

Use the following to answer questions:  
-(Table: Consumer Surplus and Phantom Tickets) The table Consumer Surplus and Phantom Tickets shows 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 $130 and there is no other market for tickets, the total consumer surplus for the five students is:

Accepted Answer

A)  $150. 
B)  $125. 
C)  $20. 
D)  $0. 
A)  $150. 
B)  $125. 
C)  $20. 
D)  $0.

Question 9

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 decreases from $2 to $1, producer surplus will decrease by:

Accepted Answer

A)  $5. 
B)  $15. 
C)  $25. 
D)  $35. 
A)  $5. 
B)  $15. 
C)  $25. 
D)  $35.

Question 10

Use the following to answer questions:
Figure: The Market for Books  
-(Figure: Market for Books) Look at the figure The Market for Books. Suppose the price is temporarily $18. Do consumers gain or lose from this price, and by how much? Do producers gain or lose from this price control, and by how much? How is total surplus affected?

Accepted Answer

The first thing to notice is that only 3

Question 11

Equilibrium in the market for peanut butter is disturbed by an increase in the price of peanuts. Assuming that the supply curve of peanut butter is upward-sloping, producer 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 12

Use the following to answer question:
Figure: Monthly Supply of Bread  
-(Figure: Monthly Supply of Bread) The figure Monthly Supply of Bread represents the monthly supply of bread at a local bakery. At $3 per loaf, the bakery produces 120 loaves per month. The producer surplus received by this bakery is equal to:

Accepted Answer

A)  $120. 
B)  $60. 
C)  $360. 
D)  $180. 
A)  $120. 
B)  $60. 
C)  $360. 
D)  $180.

Question 13

Producer surplus is represented by the area _____ the supply curve and _____ the price.

Accepted Answer

A)  above; above 
B)  above; below 
C)  below; above 
D)  below; below 
A)  above; above 
B)  above; below 
C)  below; above 
D)  below; below

Question 14

If property rights are restricted by government regulation, many more mutually beneficial transactions will occur.

Accepted Answer

A) True 
 B)False

Question 15

Use the following to answer questions:
Figure: Change in the Total Surplus  
-(Figure: Change in Total Surplus) Look at the figure Change in Total Surplus. Which of the following areas represent the change in total surplus when the price falls from P1 to P2?

Accepted Answer

A)  A, B, and C 
B)  B and C 
C)  B, C, D, and E 
D)  C and E 
A)  A, B, and C 
B)  B and C 
C)  B, C, D, and E 
D)  C and E

Question 16

If the price is above the equilibrium price in the market for grapefruit, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus:

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 17

Coffee and tea are substitutes in consumption. If there is an increase in the price of coffee, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus in the tea 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 18

The total producer surplus in the Wisconsin milk market is:

Accepted Answer

A)  the sum of the individual producer surpluses in this market. 
B)  the sum of all prices paid multiplied by the number of gallons of milk sold. 
C)  the total revenue of the milk producers in Wisconsin. 
D)  the total cost of selling milk in Wisconsin. 
A)  the sum of the individual producer surpluses in this market. 
B)  the sum of all prices paid multiplied by the number of gallons of milk sold. 
C)  the total revenue of the milk producers in Wisconsin. 
D)  the total cost of selling milk in Wisconsin.

Question 19

Use the following to answer questions:  
-(Table: Consumer Surplus) Look at the table Consumer Surplus. Assume that each student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is $75, Lois's consumer surplus is:

Accepted Answer

A)  $25. 
B)  $60. 
C)  $75. 
D)  $100. 
A)  $25. 
B)  $60. 
C)  $75. 
D)  $100.

Question 20

Vonda and Aleiyah are shopping together at the mall for new jeans. Vonda is willing to pay $90 and Aleiyah is willing to pay $50 for a pair of jeans. What is the gain in total consumer surplus when the price decreases from $59 to $40?

Accepted Answer

A)  $10 
B)  $29 
C)  $31 
D)  $60 
A)  $10 
B)  $29 
C)  $31 
D)  $60

If the cost of soybeans (the major ingredient in tofu) decreases, consumer surplus in the market for tofu will decrease.

Use the following to answer questions: -(Table: Willingness to Pay for Peanuts) Using the table Willingness to Pay for Peanuts, if the price of a bag of peanuts is $2:

Markets work because they allocate sales to the potential sellers who most value the right to sell a good, as indicated by their ability to produce the good at the lowest cost. This statement illustrates:

Peanut butter and jelly are complements in consumption. Assuming that the supply curve of peanut butter is upward-sloping, if there is a decrease in the price of jelly, producer surplus in the peanut butter market:

Which of the following is TRUE concerning the relationship between efficiency and equity?

Alex is willing to buy the last ticket to the Billy Bragg concert for $15, while Jake is willing to pay $25. Alex is first in line and buys a ticket for $15. He then resells his ticket to Jake for $20. By reselling the ticket instead of going to the concert himself, Alex caused:

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 decreases from $2 to $1, producer surplus will decrease by:

Equilibrium in the market for peanut butter is disturbed by an increase in the price of peanuts. Assuming that the supply curve of peanut butter is upward-sloping, producer surplus in the peanut butter market:

Producer surplus is represented by the area _ the supply curve and _ the price.

If property rights are restricted by government regulation, many more mutually beneficial transactions will occur.

Use the following to answer questions: Figure: Change in the Total Surplus -(Figure: Change in Total Surplus) Look at the figure Change in Total Surplus. Which of the following areas represent the change in total surplus when the price falls from P₁ to P₂?

If the price is above the equilibrium price in the market for grapefruit, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus:

Coffee and tea are substitutes in consumption. If there is an increase in the price of coffee, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus in the tea market:

The total producer surplus in the Wisconsin milk market is:

Use the following to answer questions: -(Table: Consumer Surplus) Look at the table Consumer Surplus. Assume that each student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is $75, Lois's consumer surplus is:

Vonda and Aleiyah are shopping together at the mall for new jeans. Vonda is willing to pay $90 and Aleiyah is willing to pay $50 for a pair of jeans. What is the gain in total consumer surplus when the price decreases from $59 to $40?

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

If the cost of soybeans (the major ingredient in tofu) decreases, consumer surplus in the market for tofu will decrease.

Use the following to answer questions: -(Table: Willingness to Pay for Peanuts) Using the table Willingness to Pay for Peanuts, if the price of a bag of peanuts is $2:

Markets work because they allocate sales to the potential sellers who most value the right to sell a good, as indicated by their ability to produce the good at the lowest cost. This statement illustrates:

Peanut butter and jelly are complements in consumption. Assuming that the supply curve of peanut butter is upward-sloping, if there is a decrease in the price of jelly, producer surplus in the peanut butter market:

Which of the following is TRUE concerning the relationship between efficiency and equity?

Alex is willing to buy the last ticket to the Billy Bragg concert for $15, while Jake is willing to pay $25. Alex is first in line and buys a ticket for $15. He then resells his ticket to Jake for $20. By reselling the ticket instead of going to the concert himself, Alex caused:

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 decreases from $2 to $1, producer surplus will decrease by:

Equilibrium in the market for peanut butter is disturbed by an increase in the price of peanuts. Assuming that the supply curve of peanut butter is upward-sloping, producer surplus in the peanut butter market:

Producer surplus is represented by the area _____ the supply curve and _____ the price.

If property rights are restricted by government regulation, many more mutually beneficial transactions will occur.

Use the following to answer questions: Figure: Change in the Total Surplus -(Figure: Change in Total Surplus) Look at the figure Change in Total Surplus. Which of the following areas represent the change in total surplus when the price falls from P1 to P2?

If the price is above the equilibrium price in the market for grapefruit, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus:

Coffee and tea are substitutes in consumption. If there is an increase in the price of coffee, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus in the tea market:

The total producer surplus in the Wisconsin milk market is:

Use the following to answer questions: -(Table: Consumer Surplus) Look at the table Consumer Surplus. Assume that each student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is $75, Lois's consumer surplus is:

Vonda and Aleiyah are shopping together at the mall for new jeans. Vonda is willing to pay $90 and Aleiyah is willing to pay $50 for a pair of jeans. What is the gain in total consumer surplus when the price decreases from $59 to $40?

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

Producer surplus is represented by the area _ the supply curve and _ the price.

Use the following to answer questions: Figure: Change in the Total Surplus -(Figure: Change in Total Surplus) Look at the figure Change in Total Surplus. Which of the following areas represent the change in total surplus when the price falls from P₁ to P₂?