Question 1

Graph 7-5  
-In Graph 7-5, for the quantity Q₃, willingness to buy:

Accepted Answer

A) and willingness to sell are both P₂ 
B) is P₁ and willingness to sell is P₃ 
C) and willingness to sell are both P₃ 
D) is P₃ and willingness to sell is P₂ 
A) and willingness to sell are both P₂ 
B) is P₁ and willingness to sell is P₃ 
C) and willingness to sell are both P₃ 
D) is P₃ and willingness to sell is P₂

Question 2

Use the information in Table A to fill in the blanks in Table
B.Table B
 $\begin{array}{|c|c|c|}
\hline\text { Price } & \text { Buyers } & \text { Quantity demanded } \
\hline>\$ 90 & & \
\hline \$ 86-90 & & \
\hline \$ 81-85 & & \
\hline \$ 76-80 & & \
\hline \$ 70-75 & & \
\hline
\end{array}$

Accepted Answer

Table B
 \(\begin{array}{|c|l|c|}
\hline

Question 3

Producer surplus is the:

Accepted Answer

A) amount represented by the area under the demand curve 
B) amount a seller is paid less the cost of production 
C) amount represented by the area under the supply curve 
D) amount a seller is paid plus the cost of production 
A) amount represented by the area under the demand curve 
B) amount a seller is paid less the cost of production 
C) amount represented by the area under the supply curve 
D) amount a seller is paid plus the cost of production

Question 4

Does a zero market price mean there is no benefit to society from providing or maintaining these natural areas?

Accepted Answer

The existence of con

Question 5

In a competitive market, sales go to those producers who are willing to supply the product with the best after-sales service.

Accepted Answer

A) True 
 B)False

Question 6

Graph 7-2  
-Refer to Graph 7-2.When the price rises from P₁ to P₂, consumer surplus:

Accepted Answer

A) increases by an amount equal to A 
B) decreases by an amount equal to B + C 
C) increases by an amount equal to B + C 
D) decreases by an amount equal to C 
A) increases by an amount equal to A 
B) decreases by an amount equal to B + C 
C) increases by an amount equal to B + C 
D) decreases by an amount equal to C

Question 7

Many economists believe that a market in human organs would lead to both an efficient allocation and fair distribution of organs.

Accepted Answer

A) True 
 B)False

Question 8

Normative analysis refers to what:

Accepted Answer

A) is 
B) should be 
C) maximises efficiency 
D) is politically correct 
A) is 
B) should be 
C) maximises efficiency 
D) is politically correct

Question 9

Graph 7-1  
-Refer to Graph 7-1.What area represents total surplus in the market when the price is P₁?

Accepted Answer

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

Question 10

The 'invisible hand' refers to the:

Accepted Answer

A) marketplace guiding the self-interests of market participants into promoting general economic wellbeing 
B) marketplace as a place where government looks out for the self-interests of individual participants in the market 
C) equity that results from market forces allocating the goods produced in the market 
D) automatic maximisation of consumer surplus in free markets 
A) marketplace guiding the self-interests of market participants into promoting general economic wellbeing 
B) marketplace as a place where government looks out for the self-interests of individual participants in the market 
C) equity that results from market forces allocating the goods produced in the market 
D) automatic maximisation of consumer surplus in free markets

Question 11

The Health Ministry announces that eating chocolate increases tooth decay.As a result, the equilibrium market price _____ and producer surplus of chocolate _____.

Accepted Answer

A) increases and increases 
B) increases and decreases 
C) decreases and decreases 
D) decreases and increases 
A) increases and increases 
B) increases and decreases 
C) decreases and decreases 
D) decreases and increases

Question 12

Market failure refers to firms that go bankrupt because they do not produce the goods and services that consumers want.

Accepted Answer

A) True 
 B)False

Question 13

In all markets consumer surplus measures the economic wellbeing in that market.

Accepted Answer

A) True 
 B)False

Question 14

Table 7-1
This table refers to five possible buyers' willingness to pay for good Z. $\begin{array}{|c|c|}
\hline \text { Buyer } & \text { Willingness to pay ( } \$ \text { ) } \
\hline \text { Cassie } & 15.00 \
\hline \text { Jamie } & 11.00 \
\hline \text { John } & 9.50 \
\hline \text { Jeremy } & 6.00 \
\hline \text { Sarah } & 4.50 \
\hline
\end{array}$
-Refer to Table 7-1.If the market price is $6.00, the consumer surplus in the market will be:

Accepted Answer

A) $1.50 
B) $17.50 
C) $6.00 
D) $0 
A) $1.50 
B) $17.50 
C) $6.00 
D) $0

Question 15

Gene earns $9000 operating a safari tour.His producer surplus is $5000.His willingness to sell is:

Accepted Answer

A) $0 
B) $9000 
C) $5000 
D) $14 000 
A) $0 
B) $9000 
C) $5000 
D) $14 000

Question 16

Producer surplus measures the cost to sellers of participating in a market.

Accepted Answer

A) True 
 B)False

Question 17

Graph 7-4  
-In Graph 7-4, the equilibrium (market-clearing) price is:

Accepted Answer

A) P₁ 
B) P₂ 
C) P₃ 
D) P₄ 
A) P₁ 
B) P₂ 
C) P₃ 
D) P₄

Question 18

Table 7-7
 $\begin{array}{|c|c|c|}\hline \text { Price of pizza }&\text { Quantity of pizza demanded }\
\hline & \text { Fred } & \text { Frieda } \
\hline>\$ 15 & 0 & 0 \
\hline \$ 14 & 1 & 0 \
\hline \$ 13 & 3 & 1 \
\hline \$ 12 & 5 & 3 \
\hline \$ 11 & 7 & 5 \
\hline \$ 10 & 9 & 7 \
\hline \$ 9 & 11 & 9 \
\hline
\end{array}$ Antonio's Pizza
 $\begin{array}{|c|c|}
\hline \text { Price } & \text { Quantity supplied } \
\hline \$ 15 & 28 \
\hline \$ 14 & 24 \
\hline \$ 13 & 20 \
\hline \$ 12 & 16 \
\hline \$ 11 & 12 \
\hline \$ 10 & 8 \
\hline \$ 9 & 4 \
\hline<\$ 9 & 0 \
\hline
\end{array}$
-Refer to Table 7-7.Is the pizza market described in the above tables efficient? Explain.Is it equitable? Explain.

Accepted Answer

The pizza market is efficient because it

Question 19

When the market price of a good falls, consumer surplus increases because (1) the consumer surplus received by existing buyers becomes larger and (2) more buyers enter the market at the lower price.

Accepted Answer

A) True 
 B)False

Question 20

Laissez-faire is a French expression that literally means:

Accepted Answer

A) 'to make profits' 
B) 'no more taxes' 
C) 'allow them to do' 
D) 'we need protection' 
A) 'to make profits' 
B) 'no more taxes' 
C) 'allow them to do' 
D) 'we need protection'

Exam 7: Consumers, Producers and the Efficiency of Markets

Graph 7-5 -In Graph 7-5, for the quantity Q₃, willingness to buy:

Use the information in Table A to fill in the blanks in Table B.Table B Price Buyers Quantity demanded >\ 90 \ 86-90 \ 81-85 \ 76-80 \ 70-75

Producer surplus is the:

Does a zero market price mean there is no benefit to society from providing or maintaining these natural areas?

In a competitive market, sales go to those producers who are willing to supply the product with the best after-sales service.

Graph 7-2 -Refer to Graph 7-2.When the price rises from P₁ to P₂, consumer surplus:

Many economists believe that a market in human organs would lead to both an efficient allocation and fair distribution of organs.

Normative analysis refers to what:

Graph 7-1 -Refer to Graph 7-1.What area represents total surplus in the market when the price is P₁?

The 'invisible hand' refers to the:

The Health Ministry announces that eating chocolate increases tooth decay.As a result, the equilibrium market price _____ and producer surplus of chocolate _____.

Market failure refers to firms that go bankrupt because they do not produce the goods and services that consumers want.

In all markets consumer surplus measures the economic wellbeing in that market.

Table 7-1 This table refers to five possible buyers' willingness to pay for good Z. Buyer Willingness to pay ( \ ) Cassie 15.00 Jamie 11.00 John 9.50 Jeremy 6.00 Sarah 4.50 -Refer to Table 7-1.If the market price is $6.00, the consumer surplus in the market will be:

Gene earns $9000 operating a safari tour.His producer surplus is $5000.His willingness to sell is:

Producer surplus measures the cost to sellers of participating in a market.

Graph 7-4 -In Graph 7-4, the equilibrium (market-clearing) price is:

When the market price of a good falls, consumer surplus increases because (1) the consumer surplus received by existing buyers becomes larger and (2) more buyers enter the market at the lower price.

Laissez-faire is a French expression that literally means:

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

Filters

The Health Ministry announces that eating chocolate increases tooth decay.As a result, the equilibrium market price _ and producer surplus of chocolate _.