Question 1

Donald produces nails at a cost of $700 per ton.If he sells the nails for $900 per ton, his producer surplus is:

Accepted Answer

A) $200 per ton 
B) $1600 per ton 
C) $700 per ton 
D) $900 per ton 
A) $200 per ton 
B) $1600 per ton 
C) $700 per ton 
D) $900 per ton A

Question 2

Caitlin would be willing to pay $120 to see The Lion King musical but buys a ticket for only $40.Caitlin values the performance at:

Accepted Answer

A) $40 
B) $0 
C) $120 
D) $80 
A) $40 
B) $0 
C) $120 
D) $80 D

Question 3

Graph 7-4  
-In Graph 7-4, at the market-clearing equilibrium, total producer surplus is represented by the area:

Accepted Answer

A) F 
B) F + G 
C) D + E + F 
D) D + E + F + G + H 
A) F 
B) F + G 
C) D + E + F 
D) D + E + F + G + H C

Question 4

Jean wants to sell her camera.Greg offers her $250.Lee offers her $300.We can say for sure that she will sell it to Lee, as he has offered the highest price.

Accepted Answer

A) True 
 B)False

Question 5

The total surplus in a market equals:

Accepted Answer

A) the value to buyers plus the amount paid by buyers 
B) the amount received by sellers less the costs of sellers 
C) the value to buyers less the costs of sellers 
D) zero, because producer and consumer surplus cancel each other out 
A) the value to buyers plus the amount paid by buyers 
B) the amount received by sellers less the costs of sellers 
C) the value to buyers less the costs of sellers 
D) zero, because producer and consumer surplus cancel each other out

Question 6

Lee can sell coffee at $3 per cup.The market equilibrium price of coffee is $3.50.Suppose Lee sells 100 cups of coffee.The producer surplus captured by Lee is $100.

Accepted Answer

A) True 
 B)False

Question 7

Graph 7-2  
-Refer to Graph 7-2.When the price is P₁, consumer surplus is:

Accepted Answer

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

Question 8

Use the information in Table A to graph a demand curve for this product.

Accepted Answer

@#IMG-DLM& This question could

Question 9

Each seller of a product is willing to sell as long as the price he or she can receive is less than the opportunity cost of producing the product.

Accepted Answer

A) True 
 B)False

Question 10

Nick's willingness to sell his homemade chocolate chip biscuits is $9 per dozen.He sells them and realises a producer surplus of $5 per dozen.Nick sells his biscuits for:

Accepted Answer

A) $14 a dozen 
B) $9 a dozen 
C) $5 a dozen 
D) $4 a dozen 
A) $14 a dozen 
B) $9 a dozen 
C) $5 a dozen 
D) $4 a dozen

Question 11

Pollution is a classic example of:

Accepted Answer

A) cost minimisation by firms 
B) corporate greed 
C) market failure 
D) an efficient market outcome 
A) cost minimisation by firms 
B) corporate greed 
C) market failure 
D) an efficient market outcome

Question 12

Pollution and other externalities, while bothersome, do not interfere with efficiency.

Accepted Answer

A) True 
 B)False

Question 13

Many economists believe that a market for human organs would lead to an:

Accepted Answer

A) inefficient allocation of organs but a fair distribution of organs 
B) inefficient allocation of organs and an unfair distribution of organs 
C) efficient allocation of organs but an unfair distribution of organs 
D) efficient allocation of organs and a fair distribution of organs 
A) inefficient allocation of organs but a fair distribution of organs 
B) inefficient allocation of organs and an unfair distribution of organs 
C) efficient allocation of organs but an unfair distribution of organs 
D) efficient allocation of organs and a fair distribution of organs

Question 14

For any given quantity, the price on a supply curve represents the marginal buyer's willingness to pay.

Accepted Answer

A) True 
 B)False

Question 15

What is the relationship between the willingness to sell and the supply curve?

Accepted Answer

Because the supply curve shows

Question 16

Information regarding the consumer's willingness to pay can be derived from the demand curve.

Accepted Answer

A) True 
 B)False

Question 17

Total surplus in a market is consumer surplus plus firm profit.

Accepted Answer

A) True 
 B)False

Question 18

Legalising ticket scalping would make everyone worse off.

Accepted Answer

A) True 
 B)False

Question 19

If a seller is able to control the market price, the seller has market power and the market outcome will be inefficient.

Accepted Answer

A) True 
 B)False

Question 20

Graph 7-2  
-According to Graph 7-2, area C represents:

Accepted Answer

A) the decrease in consumer surplus that results from a downward-sloping demand curve 
B) consumer surplus to new consumers who enter the market when the price falls from P₂ to P₁ 
C) an increase in producer surplus when the quantity sold increases from Q₂ to Q₁ 
D) a decrease in consumer surplus to each consumer in the market 
A) the decrease in consumer surplus that results from a downward-sloping demand curve 
B) consumer surplus to new consumers who enter the market when the price falls from P₂ to P₁ 
C) an increase in producer surplus when the quantity sold increases from Q₂ to Q₁ 
D) a decrease in consumer surplus to each consumer in the market

Exam 7: Consumers, Producers and the Efficiency of Markets

Donald produces nails at a cost of $700 per ton.If he sells the nails for $900 per ton, his producer surplus is:

Caitlin would be willing to pay $120 to see The Lion King musical but buys a ticket for only $40.Caitlin values the performance at:

Graph 7-4 -In Graph 7-4, at the market-clearing equilibrium, total producer surplus is represented by the area:

Jean wants to sell her camera.Greg offers her $250.Lee offers her $300.We can say for sure that she will sell it to Lee, as he has offered the highest price.

The total surplus in a market equals:

Lee can sell coffee at $3 per cup.The market equilibrium price of coffee is $3.50.Suppose Lee sells 100 cups of coffee.The producer surplus captured by Lee is $100.

Graph 7-2 -Refer to Graph 7-2.When the price is P₁, consumer surplus is:

Use the information in Table A to graph a demand curve for this product.

Each seller of a product is willing to sell as long as the price he or she can receive is less than the opportunity cost of producing the product.

Nick's willingness to sell his homemade chocolate chip biscuits is $9 per dozen.He sells them and realises a producer surplus of $5 per dozen.Nick sells his biscuits for:

Pollution is a classic example of:

Pollution and other externalities, while bothersome, do not interfere with efficiency.

Many economists believe that a market for human organs would lead to an:

For any given quantity, the price on a supply curve represents the marginal buyer's willingness to pay.

What is the relationship between the willingness to sell and the supply curve?

Information regarding the consumer's willingness to pay can be derived from the demand curve.

Total surplus in a market is consumer surplus plus firm profit.

Legalising ticket scalping would make everyone worse off.

If a seller is able to control the market price, the seller has market power and the market outcome will be inefficient.

Graph 7-2 -According to Graph 7-2, area C represents:

Ten Lessons From 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

Application: 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

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