Question 1

-On a graph,the area below a demand curve and above the price measures

Accepted Answer

A)  producer surplus. 
B)  consumer surplus. 
C)  deadweight loss. 
D)  willingness to pay. 
A)  producer surplus. 
B)  consumer surplus. 
C)  deadweight loss. 
D)  willingness to pay.

Question 2

At the equilibrium price of a good,the good will be purchased by those buyers who

Accepted Answer

A)  value the good more than price. 
B)  value the good less than price. 
C)  have the money to buy the good. 
D)  consider the good a necessity. 
A)  value the good more than price. 
B)  value the good less than price. 
C)  have the money to buy the good. 
D)  consider the good a necessity.

Question 3

Ray buys a new tractor for $118,000.He receives consumer surplus of $13,000 on his purchase.Ray's willingness to pay is

Accepted Answer

A)  $13,000. 
B)  $105,000. 
C)  $118,000. 
D)  $131,000. 
A)  $13,000. 
B)  $105,000. 
C)  $118,000. 
D)  $131,000.

Question 4

Figure 7-20
  
-Refer to Figure 7-20.If 10 units of the good are produced and sold,then

Accepted Answer

A)  the marginal cost to sellers exceeds the marginal value to buyers. 
B)  producer surplus is maximized. 
C)  total surplus is minimized. 
D)  the marginal value to buyers exceeds the marginal cost to sellers. 
A)  the marginal cost to sellers exceeds the marginal value to buyers. 
B)  producer surplus is maximized. 
C)  total surplus is minimized. 
D)  the marginal value to buyers exceeds the marginal cost to sellers.

Question 5

All else equal,a decrease in demand will cause an increase in producer surplus.

Accepted Answer

A) True 
 B)False

Question 6

Ronnie operates a lawn-care service.On each day,the cost of mowing the first lawn is $10,the cost of mowing the second lawn is $12,and the cost of mowing the third lawn is $15.His producer surplus on the first three lawns of the day is $53.If Ronnie charges all customers the same price for lawn mowing,that price is

Accepted Answer

A)  $25. 
B)  $30. 
C)  $36. 
D)  $45. 
A)  $25. 
B)  $30. 
C)  $36. 
D)  $45.

Question 7

Producer surplus equals

Accepted Answer

A)  Value to buyers - Amount paid by buyers. 
B)  Amount received by sellers - Costs of sellers. 
C)  Value to buyers - Costs of sellers. 
D)  Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers. 
A)  Value to buyers - Amount paid by buyers. 
B)  Amount received by sellers - Costs of sellers. 
C)  Value to buyers - Costs of sellers. 
D)  Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers.

Question 8

Welfare economics is the study of

Accepted Answer

A)  taxes and subsidies. 
B)  how technology is best put to use in the production of goods and services. 
C)  government welfare programs for needy people. 
D)  how the allocation of resources affects economic well-being. 
A)  taxes and subsidies. 
B)  how technology is best put to use in the production of goods and services. 
C)  government welfare programs for needy people. 
D)  how the allocation of resources affects economic well-being.

Question 9

Table 7-11
  
-Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If 6 units are bought and sold,then total surplus is

Accepted Answer

A)  $18 lower than it would be if the equilibrium number of units were bought and sold. 
B)  $22 lower than it would be if the equilibrium number of units were bought and sold. 
C)  $26 lower than it would be if the equilibrium number of units were bought and sold. 
D)  $6 higher than it would be if the equilibrium number of units were bought and sold. 
A)  $18 lower than it would be if the equilibrium number of units were bought and sold. 
B)  $22 lower than it would be if the equilibrium number of units were bought and sold. 
C)  $26 lower than it would be if the equilibrium number of units were bought and sold. 
D)  $6 higher than it would be if the equilibrium number of units were bought and sold.

Question 10

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 3 if the price is

Accepted Answer

A)  $670. 
B)  $770. 
C)  $970. 
D)  $1,170. 
A)  $670. 
B)  $770. 
C)  $970. 
D)  $1,170.

Question 11

In order to conclude that markets are efficient,we assume that they are perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 12

Michael values a stainless steel refrigerator for his new house at $3,500,but he succeeds in buying one for $3,000.Michael's consumer surplus is

Accepted Answer

A)  $500. 
B)  $3,000. 
C)  $3,500. 
D)  $6,500. 
A)  $500. 
B)  $3,000. 
C)  $3,500. 
D)  $6,500.

Question 13

Answer the following questions based on the graph that represents J.R.'s demand for ribs per week at Judy's Rib Shack.
a.At the equilibrium price,how many ribs would J.R.be willing to purchase?
b.How much is J.R.willing to pay for 20 ribs?
c.What is the magnitude of J.R.'s consumer surplus at the equilibrium price?
d.At the equilibrium price,how many ribs would Judy be willing to sell?
e.How high must the price of ribs be for Judy to supply 20 ribs to the market?
f.At the equilibrium price,what is the magnitude of total surplus in the market?
g.If the price of ribs rose to $10,what would happen to J.R.'s consumer surplus?
h.If the price of ribs fell to $5,what would happen to Judy's producer surplus?
i.Explain why the graph that is shown verifies the fact that the market equilibrium (quantity)maximizes the sum of producer and consumer surplus.

Accepted Answer

a.40
b.$10.00
c.$80.00.d.40
e.$5
f.$200

Question 14

Ticket scalping can increase total surplus in the market for tickets to sporting events.

Accepted Answer

A) True 
 B)False

Question 15

Producer surplus is the

Accepted Answer

A)  area under the supply curve to the left of the amount sold. 
B)  amount a seller is paid minus the cost of production. 
C)  area between the supply and demand curves, above the equilibrium price. 
D)  cost to sellers of participating in a market. 
A)  area under the supply curve to the left of the amount sold. 
B)  amount a seller is paid minus the cost of production. 
C)  area between the supply and demand curves, above the equilibrium price. 
D)  cost to sellers of participating in a market.

Question 16

Total surplus in a market is equal to

Accepted Answer

A)  consumer surplus + producer surplus. 
B)  value to buyers - amount paid by buyers. 
C)  amount received by sellers - costs of sellers. 
D)  producer surplus - consumer surplus. 
A)  consumer surplus + producer surplus. 
B)  value to buyers - amount paid by buyers. 
C)  amount received by sellers - costs of sellers. 
D)  producer surplus - consumer surplus.

Question 17

Which of the following equations is not valid?

Accepted Answer

A)  Consumer surplus = Value to buyers - Amount paid by buyers 
B)  Producer surplus = Amount received by sellers - Cost to sellers 
C)  Total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers 
D)  Total surplus = Value to sellers - Cost to sellers 
A)  Consumer surplus = Value to buyers - Amount paid by buyers 
B)  Producer surplus = Amount received by sellers - Cost to sellers 
C)  Total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers 
D)  Total surplus = Value to sellers - Cost to sellers

Question 18

Figure 7-19
  
-Refer to Figure 7-19.At equilibrium,consumer surplus is 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 19

The current policy on kidney donation effectively sets a price ceiling of zero.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that Firms A and B each produce high-resolution computer monitors,but Firm A can do so at a lower cost.Cassie and David each want to purchase a high-resolution computer monitor,but David is willing to pay more than Cassie.If Firm B produces a monitor that David buys,then the market outcome illustrates which of the following principles?
(i)Free markets allocate the supply of goods to the buyers who value them most highly,as measured by their willingness to pay.
(ii)Free markets allocate the demand for goods to the sellers who can produce them at the least cost.

Accepted Answer

A)  (i) only 
B)  (ii) only 
C)  both (i) and (ii) 
D)  neither (i) nor (ii) 
A)  (i) only 
B)  (ii) only 
C)  both (i) and (ii) 
D)  neither (i) nor (ii)

-On a graph,the area below a demand curve and above the price measures

At the equilibrium price of a good,the good will be purchased by those buyers who

Ray buys a new tractor for $118,000.He receives consumer surplus of $13,000 on his purchase.Ray's willingness to pay is

Figure 7-20 -Refer to Figure 7-20.If 10 units of the good are produced and sold,then

All else equal,a decrease in demand will cause an increase in producer surplus.

Producer surplus equals

Welfare economics is the study of

Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If 6 units are bought and sold,then total surplus is

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 3 if the price is

In order to conclude that markets are efficient,we assume that they are perfectly competitive.

Michael values a stainless steel refrigerator for his new house at $3,500,but he succeeds in buying one for $3,000.Michael's consumer surplus is

Ticket scalping can increase total surplus in the market for tickets to sporting events.

Producer surplus is the

Total surplus in a market is equal to

Which of the following equations is not valid?

Figure 7-19 -Refer to Figure 7-19.At equilibrium,consumer surplus is represented by the area

The current policy on kidney donation effectively sets a price ceiling of zero.

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

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

-On a graph,the area below a demand curve and above the price measures

At the equilibrium price of a good,the good will be purchased by those buyers who

Ray buys a new tractor for $118,000.He receives consumer surplus of $13,000 on his purchase.Ray's willingness to pay is

Figure 7-20 -Refer to Figure 7-20.If 10 units of the good are produced and sold,then

All else equal,a decrease in demand will cause an increase in producer surplus.

Producer surplus equals

Welfare economics is the study of

Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If 6 units are bought and sold,then total surplus is

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 3 if the price is

In order to conclude that markets are efficient,we assume that they are perfectly competitive.

Michael values a stainless steel refrigerator for his new house at $3,500,but he succeeds in buying one for $3,000.Michael's consumer surplus is

Ticket scalping can increase total surplus in the market for tickets to sporting events.

Producer surplus is the

Total surplus in a market is equal to

Which of the following equations is not valid?

Figure 7-19 -Refer to Figure 7-19.At equilibrium,consumer surplus is represented by the area

The current policy on kidney donation effectively sets a price ceiling of zero.

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