Question 1

The study of how the allocation of resources affects economic well-being is called

Accepted Answer

A)  consumer economics. 
B)  macroeconomics. 
C)  willingness-to-pay economics. 
D)  welfare economics. 
A)  consumer economics. 
B)  macroeconomics. 
C)  willingness-to-pay economics. 
D)  welfare economics.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Table 7-7
The following table represents the costs of five possible sellers.
  
-Refer to Table 7-7.Suppose each of the five sellers can supply at most one unit of the good.The market quantity supplied is exactly 4 if the price is

Accepted Answer

A)  $770. 
B)  $970. 
C)  $1,170. 
D)  $1,370. 
A)  $770. 
B)  $970. 
C)  $1,170. 
D)  $1,370.

Question 4

At present,the maximum legal price for a human kidney is $0.The price of $0 maximizes

Accepted Answer

A)  consumer surplus but not producer surplus. 
B)  producer surplus but not consumer surplus. 
C)  both consumer and producer surplus. 
D)  neither consumer nor producer surplus. 
A)  consumer surplus but not producer surplus. 
B)  producer surplus but not consumer surplus. 
C)  both consumer and producer surplus. 
D)  neither consumer nor producer surplus.

Question 5

The marginal seller is the seller

Accepted Answer

A)  for whom the marginal cost of producing one more unit of output is the lowest among all sellers, and the marginal buyer is the buyer for whom the marginal benefit of one more unit of the good is the highest among all buyers. 
B)  who supplies the smallest quantity of the good among all sellers, and the marginal buyer is the buyer who demands the smallest quantity of the good among all buyers. 
C)  who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher. 
D)  who has the largest producer surplus, and the marginal buyer is the buyer who has the largest consumer surplus. 
A)  for whom the marginal cost of producing one more unit of output is the lowest among all sellers, and the marginal buyer is the buyer for whom the marginal benefit of one more unit of the good is the highest among all buyers. 
B)  who supplies the smallest quantity of the good among all sellers, and the marginal buyer is the buyer who demands the smallest quantity of the good among all buyers. 
C)  who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher. 
D)  who has the largest producer surplus, and the marginal buyer is the buyer who has the largest consumer surplus.

Question 6

When the supply of a good increases and the demand for 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 7

Inefficiency exists in an economy when a good is

Accepted Answer

A)  not being consumed by buyers who value it most highly. 
B)  not distributed fairly among buyers. 
C)  not produced because buyers do not value it very highly. 
D)  being produced with less than all available resources. 
A)  not being consumed by buyers who value it most highly. 
B)  not distributed fairly among buyers. 
C)  not produced because buyers do not value it very highly. 
D)  being produced with less than all available resources.

Question 8

Anita sharpens knives in her spare time for extra income.Buyers of her service are willing to pay $3.50 per knife for as many knives as Anita is willing to sharpen.On a particular day,she is willing to sharpen the first knife for $2.00,the second knife for $2.50,the third knife for $3.00,and the fourth knife for $3.50.Assume Anita is rational in deciding how many knives to sharpen.Her producer surplus is

Accepted Answer

A)  $3.50. 
B)  $3.00. 
C)  $2.00. 
D)  $0.50. 
A)  $3.50. 
B)  $3.00. 
C)  $2.00. 
D)  $0.50.

Question 9

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Accepted Answer

A) True 
 B)False

Question 10

Efficiency in a market is achieved when

Accepted Answer

A)  a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. 
B)  the sum of producer surplus and consumer surplus is maximized. 
C)  all firms are producing the good at the same low cost per unit. 
D)  no buyer is willing to pay more than the equilibrium price for any unit of the good. 
A)  a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. 
B)  the sum of producer surplus and consumer surplus is maximized. 
C)  all firms are producing the good at the same low cost per unit. 
D)  no buyer is willing to pay more than the equilibrium price for any unit of the good.

Question 11

Janine would be willing to pay $50 to see Les Misérables,but she buys a ticket for only $30.Janine values the performance at

Accepted Answer

A)  $20. 
B)  $30. 
C)  $50. 
D)  $80. 
A)  $20. 
B)  $30. 
C)  $50. 
D)  $80.

Question 12

Figure 7-19
  
-Refer to Figure 7-19.The efficient price-quantity combination is

Accepted Answer

A)  P1 and Q1. 
B)  P2 and Q2. 
C)  P3 and Q1. 
D)  P4 and 0. 
A)  P1 and Q1. 
B)  P2 and Q2. 
C)  P3 and Q1. 
D)  P4 and 0.

Question 13

Free markets allocate (a)the supply of goods to the buyers who value them most highly and (b)the demand for goods to the sellers who can produce them at least cost.

Accepted Answer

A) True 
 B)False

Question 14

Table 7-8
The only four producers in a market have the following costs:
  
-Refer to Table 7-8.If the sellers bid against each other for the right to sell the good to a consumer,then the producer surplus will be

Accepted Answer

A)  $0 or slightly more. 
B)  $50 or slightly less. 
C)  $150 or slightly less. 
D)  $200 or slightly more. 
A)  $0 or slightly more. 
B)  $50 or slightly less. 
C)  $150 or slightly less. 
D)  $200 or slightly more.

Question 15

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
  
-Refer to Table 7-2.If the market price is $5.50,the consumer surplus in the market will be

Accepted Answer

A)  $3.00. 
B)  $4.50. 
C)  $15.50. 
D)  $21.00. 
A)  $3.00. 
B)  $4.50. 
C)  $15.50. 
D)  $21.00.

Question 16

Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.
  
-Refer to Table 7-5.If the market price of an orange is $1.20,then consumer surplus amounts to

Accepted Answer

A)  $0.70. 
B)  $1.10. 
C)  $1.40. 
D)  $5.00. 
A)  $0.70. 
B)  $1.10. 
C)  $1.40. 
D)  $5.00.

Question 17

Which of the following will cause an increase in consumer surplus?

Accepted Answer

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

Question 18

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Accepted Answer

A)  $15. 
B)  $30. 
C)  $45. 
D)  $90. 
A)  $15. 
B)  $30. 
C)  $45. 
D)  $90.

Question 19

Figure 7-19
  
-Refer to Figure 7-19.If the price were P3,consumer surplus would be represented by the area

Accepted Answer

A)  A. 
B)  A+B+C. 
C)  D+H+F. 
D)  A+B+C+D+H+F. 
A)  A. 
B)  A+B+C. 
C)  D+H+F. 
D)  A+B+C+D+H+F.

Question 20

An increase in price increases consumer surplus.

Accepted Answer

A) True 
 B)False

The study of how the allocation of resources affects economic well-being is called

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

Table 7-7 The following table represents the costs of five possible sellers. -Refer to Table 7-7.Suppose each of the five sellers can supply at most one unit of the good.The market quantity supplied is exactly 4 if the price is

At present,the maximum legal price for a human kidney is $0.The price of $0 maximizes

The marginal seller is the seller

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

Inefficiency exists in an economy when a good is

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Efficiency in a market is achieved when

Janine would be willing to pay $50 to see Les Misérables,but she buys a ticket for only $30.Janine values the performance at

Figure 7-19 -Refer to Figure 7-19.The efficient price-quantity combination is

Free markets allocate (a)the supply of goods to the buyers who value them most highly and (b)the demand for goods to the sellers who can produce them at least cost.

Table 7-8 The only four producers in a market have the following costs: -Refer to Table 7-8.If the sellers bid against each other for the right to sell the good to a consumer,then the producer surplus will be

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2.If the market price is $5.50,the consumer surplus in the market will be

Which of the following will cause an increase in consumer surplus?

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Figure 7-19 -Refer to Figure 7-19.If the price were P3,consumer surplus would be represented by the area

An increase in price increases consumer surplus.

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.

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.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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

The study of how the allocation of resources affects economic well-being is called

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

Table 7-7 The following table represents the costs of five possible sellers. -Refer to Table 7-7.Suppose each of the five sellers can supply at most one unit of the good.The market quantity supplied is exactly 4 if the price is

At present,the maximum legal price for a human kidney is $0.The price of $0 maximizes

The marginal seller is the seller

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

Inefficiency exists in an economy when a good is

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Efficiency in a market is achieved when

Janine would be willing to pay $50 to see Les Misérables,but she buys a ticket for only $30.Janine values the performance at

Figure 7-19 -Refer to Figure 7-19.The efficient price-quantity combination is

Free markets allocate (a)the supply of goods to the buyers who value them most highly and (b)the demand for goods to the sellers who can produce them at least cost.

Table 7-8 The only four producers in a market have the following costs: -Refer to Table 7-8.If the sellers bid against each other for the right to sell the good to a consumer,then the producer surplus will be

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2.If the market price is $5.50,the consumer surplus in the market will be

Which of the following will cause an increase in consumer surplus?

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Figure 7-19 -Refer to Figure 7-19.If the price were P3,consumer surplus would be represented by the area

An increase in price increases consumer surplus.

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.

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.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters