Question 1

Figure 7-17
  
-Refer to Figure 7-17.When the price is P1,area A represents

Accepted Answer

A)  total benefit. 
B)  producer surplus. 
C)  consumer surplus. 
D)  None of the above is correct. 
A)  total benefit. 
B)  producer surplus. 
C)  consumer surplus. 
D)  None of the above is correct.

Question 2

Figure 7-2
  
-Refer to Figure 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 3

Producer surplus is the amount a seller is paid minus the cost of production.

Accepted Answer

A) True 
 B)False

Question 4

All else equal,an increase in demand will always increase consumer surplus.

Accepted Answer

A) True 
 B)False

Question 5

Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field.
  
-Refer to Table 7-4.If you have a ticket that you sell to the group in an auction,who will buy the ticket?

Accepted Answer

A)  Dan 
B)  David 
C)  Ken 
D)  Lisa 
A)  Dan 
B)  David 
C)  Ken 
D)  Lisa

Question 6

Unless markets are perfectly competitive,they may fail to maximize the total benefits to buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 7

Figure 7-17
  
-Refer to Figure 7-17.When the price is P1,area C represents

Accepted Answer

A)  total benefit. 
B)  producer surplus. 
C)  consumer surplus. 
D)  None of the above is correct. 
A)  total benefit. 
B)  producer surplus. 
C)  consumer surplus. 
D)  None of the above is correct.

Question 8

Which of the following is not equal to total surplus?

Accepted Answer

A)  consumer surplus - producer surplus 
B)  buyers' willingnesses to pay - sellers' costs 
C)  value to buyers - amount paid by buyers + amount received by sellers - cost to sellers 
D)  value to buyers - cost to sellers 
A)  consumer surplus - producer surplus 
B)  buyers' willingnesses to pay - sellers' costs 
C)  value to buyers - amount paid by buyers + amount received by sellers - cost to sellers 
D)  value to buyers - cost to sellers

Question 9

Which of the following is not true when the price of a good or service falls?

Accepted Answer

A)  Buyers who were already buying the good or service are better off. 
B)  Some new buyers, who are now willing to buy, enter the market. 
C)  The total consumer surplus in the market increases. 
D)  The total value of purchases before and after the price change is the same. 
A)  Buyers who were already buying the good or service are better off. 
B)  Some new buyers, who are now willing to buy, enter the market. 
C)  The total consumer surplus in the market increases. 
D)  The total value of purchases before and after the price change is the same.

Question 10

When markets fail,public policy can

Accepted Answer

A)  do nothing to improve the situation. 
B)  potentially remedy the problem and increase economic efficiency. 
C)  always remedy the problem and increase economic efficiency. 
D)  in theory, remedy the problem, but in practice, public policy has proven to be ineffective. 
A)  do nothing to improve the situation. 
B)  potentially remedy the problem and increase economic efficiency. 
C)  always remedy the problem and increase economic efficiency. 
D)  in theory, remedy the problem, but in practice, public policy has proven to be ineffective.

Question 11

Which of the following is correct?

Accepted Answer

A)  Consumer surplus refers to a situation in which there are more buyers than sellers in a market. 
B)  Producer surplus refers to a situation in which there are more sellers than buyers in a market. 
C)  Total surplus is measured as the area below the demand curve and above the supply curve, up to the equilibrium quantity. 
D)  All of the above are correct. 
A)  Consumer surplus refers to a situation in which there are more buyers than sellers in a market. 
B)  Producer surplus refers to a situation in which there are more sellers than buyers in a market. 
C)  Total surplus is measured as the area below the demand curve and above the supply curve, up to the equilibrium quantity. 
D)  All of the above are correct.

Question 12

Which of the Ten Principles of Economics does welfare economics explain more fully?

Accepted Answer

A)  The cost of something is what you give up to get it. 
B)  Rational people think at the margin. 
C)  Markets are usually a good way to organize economic activity. 
D)  People respond to incentives. 
A)  The cost of something is what you give up to get it. 
B)  Rational people think at the margin. 
C)  Markets are usually a good way to organize economic activity. 
D)  People respond to incentives.

Question 13

Given the following two equations:
   
Show how equation (1)can be used to derive equation (2).

Accepted Answer

Start with the equation: Total Surplus =

Question 14

Figure 7-18
  
-Refer to Figure 7-18.At the equilibrium price,total surplus is

Accepted Answer

A)  $480. 
B)  $640. 
C)  $1,120. 
D)  $1,280. 
A)  $480. 
B)  $640. 
C)  $1,120. 
D)  $1,280.

Question 15

Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field.
  
-Refer to Table 7-4.If tickets sell for $20 each,then what is the total consumer surplus in the market?

Accepted Answer

A)  $5 
B)  $30 
C)  $40 
D)  $75 
A)  $5 
B)  $30 
C)  $40 
D)  $75

Question 16

Suppose Brent,Callie,and Danielle each purchase a particular type of electric pencil sharpener at a price of $20.Brent's willingness to pay was $22,Callie's willingness to pay was $25,and Danielle's willingness to pay was $30.Which of the following statements is correct?

Accepted Answer

A)  Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been a buyer. 
B)  Brent's consumer surplus is the smallest of the three individual consumer surpluses. 
C)  For the three individuals together, consumer surplus amounts to $60. 
D)  The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener. 
A)  Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been a buyer. 
B)  Brent's consumer surplus is the smallest of the three individual consumer surpluses. 
C)  For the three individuals together, consumer surplus amounts to $60. 
D)  The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener.

Question 17

Ivana produces cookies.Her production cost is $6 per dozen.She sells the cookies for $8 per dozen.Her producer surplus per dozen cookies is

Accepted Answer

A)  $2. 
B)  $6. 
C)  $8. 
D)  $14. 
A)  $2. 
B)  $6. 
C)  $8. 
D)  $14.

Question 18

Figure 7-14
  
-Refer to Figure 7-14.Total surplus amounts to $800 if consumer surplus amounts to

Accepted Answer

A)  $450 and if the price of the good is $250. 
B)  $450 and if the price of the good is $300. 
C)  $350 and if the price of the good is $300. 
D)  $250 and if the price of the good is $325. 
A)  $450 and if the price of the good is $250. 
B)  $450 and if the price of the good is $300. 
C)  $350 and if the price of the good is $300. 
D)  $250 and if the price of the good is $325.

Question 19

Figure 7-20
  
-Refer to Figure 7-20.If 6 units of the good are produced and sold,then

Accepted Answer

A)  consumer surplus is maximized. 
B)  producer surplus is maximized. 
C)  the sum of consumer surplus and producer surplus is maximized. 
D)  the marginal value to buyers exceeds the marginal cost to sellers. 
A)  consumer surplus is maximized. 
B)  producer surplus is maximized. 
C)  the sum of consumer surplus and producer surplus is maximized. 
D)  the marginal value to buyers exceeds the marginal cost to sellers.

Question 20

Figure 7-14
  
-Refer to Figure 7-14.Suppose the willingness to pay of the marginal buyer of the 3ʳᵈ unit is $225.Then total surplus is maximized if

Accepted Answer

A)  1 unit of the good is produced and sold. 
B)  2 units of the good are produced and sold. 
C)  3 units of the good are produced and sold. 
D)  4 units of the good are produced and sold. 
A)  1 unit of the good is produced and sold. 
B)  2 units of the good are produced and sold. 
C)  3 units of the good are produced and sold. 
D)  4 units of the good are produced and sold.

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

Figure 7-17 -Refer to Figure 7-17.When the price is P1,area A represents

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

Producer surplus is the amount a seller is paid minus the cost of production.

All else equal,an increase in demand will always increase consumer surplus.

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4.If you have a ticket that you sell to the group in an auction,who will buy the ticket?

Unless markets are perfectly competitive,they may fail to maximize the total benefits to buyers and sellers.

Figure 7-17 -Refer to Figure 7-17.When the price is P1,area C represents

Which of the following is not equal to total surplus?

Which of the following is not true when the price of a good or service falls?

When markets fail,public policy can

Which of the following is correct?

Which of the Ten Principles of Economics does welfare economics explain more fully?

Given the following two equations: Show how equation (1)can be used to derive equation (2).

Figure 7-18 -Refer to Figure 7-18.At the equilibrium price,total surplus is

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4.If tickets sell for $20 each,then what is the total consumer surplus in the market?

Suppose Brent,Callie,and Danielle each purchase a particular type of electric pencil sharpener at a price of $20.Brent's willingness to pay was $22,Callie's willingness to pay was $25,and Danielle's willingness to pay was $30.Which of the following statements is correct?

Ivana produces cookies.Her production cost is $6 per dozen.She sells the cookies for $8 per dozen.Her producer surplus per dozen cookies is

Figure 7-14 -Refer to Figure 7-14.Total surplus amounts to $800 if consumer surplus amounts to

Figure 7-20 -Refer to Figure 7-20.If 6 units of the good are produced and sold,then

Figure 7-14 -Refer to Figure 7-14.Suppose the willingness to pay of the marginal buyer of the 3ʳᵈ unit is $225.Then total surplus is maximized if

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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