Question 1

Table 7-1
  
-Refer to Table 7-1.If the price of the product is $18,then the total consumer surplus is

Accepted Answer

A)  $38. 
B)  $42. 
C)  $46. 
D)  $72. 
A)  $38. 
B)  $42. 
C)  $46. 
D)  $72.

Question 2

If the United States changed its laws to allow for the legal sale of a kidney,which of the following is likely to occur?

Accepted Answer

A)  The price of kidneys would rise to balance supply and demand. 
B)  The gains from trade would make both buyers and sellers better off. 
C)  Thousands of lives would be saved. 
D)  All of the above are correct. 
A)  The price of kidneys would rise to balance supply and demand. 
B)  The gains from trade would make both buyers and sellers better off. 
C)  Thousands of lives would be saved. 
D)  All of the above are correct.

Question 3

Table 7-7
The following table represents the costs of five possible sellers.
  
-Refer to Table 7-7.If the market price is $1,100,the combined total cost of all participating sellers is

Accepted Answer

A)  $3,700. 
B)  $2,700. 
C)  $2,250. 
D)  $1,250. 
A)  $3,700. 
B)  $2,700. 
C)  $2,250. 
D)  $1,250.

Question 4

Figure 7-9
  
-Refer to Figure 7-9.If the supply curve is S,the demand curve is D,and the equilibrium price is $100,what is the producer surplus?

Accepted Answer

A)  $625 
B)  $1,250 
C)  $2,500 
D)  $5,000 
A)  $625 
B)  $1,250 
C)  $2,500 
D)  $5,000

Question 5

Figure 7-12
  
-Refer to Figure 7-12.When the price rises from P1 to P2,which area represents the increase in producer surplus to existing producers?

Accepted Answer

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

Question 6

If the government imposes a binding price floor in a market,then the consumer surplus in that market will decrease.

Accepted Answer

A) True 
 B)False

Question 7

Figure 7-9
  
-Refer to Figure 7-9.If the supply curve is S',the demand curve is D,and the equilibrium price is $150,what is the producer surplus?

Accepted Answer

A)  $625 
B)  $1,250 
C)  $2,500 
D)  $5,000 
A)  $625 
B)  $1,250 
C)  $2,500 
D)  $5,000

Question 8

Table 7-6
  
-Refer to Table 7-6.You have an extra ticket to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament.The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game.You hold an auction to sell the ticket.Michael bids $410 for the ticket,and you sell him the ticket.What is his consumer surplus?

Accepted Answer

A)  $410 
B)  $90 
C)  $10 
D)  $0 
A)  $410 
B)  $90 
C)  $10 
D)  $0

Question 9

Another way to think of the marginal seller is the seller who

Accepted Answer

A)  will accept the lowest price of any seller in the market. 
B)  requires the highest price of any potential seller in the market. 
C)  would leave the market first if the price were any lower. 
D)  would leave the market last if the price falls. 
A)  will accept the lowest price of any seller in the market. 
B)  requires the highest price of any potential seller in the market. 
C)  would leave the market first if the price were any lower. 
D)  would leave the market last if the price falls.

Question 10

When demand increases so that market price increases,producer surplus increases because (1)producer surplus received by existing sellers increases,and (2)new sellers enter the market.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Figure 7-16
  
-Refer to Figure 7-16.For quantities less than M,the value to the marginal buyer is

Accepted Answer

A)  greater than the cost to the marginal seller, so increasing the quantity increases total surplus. 
B)  less than the cost to the marginal seller, so increasing the quantity increases total surplus. 
C)  greater than the cost to the marginal seller, so decreasing the quantity increases total surplus. 
D)  less than the cost to the marginal seller, so decreasing the quantity increases total surplus. 
A)  greater than the cost to the marginal seller, so increasing the quantity increases total surplus. 
B)  less than the cost to the marginal seller, so increasing the quantity increases total surplus. 
C)  greater than the cost to the marginal seller, so decreasing the quantity increases total surplus. 
D)  less than the cost to the marginal seller, so decreasing the quantity increases total surplus.

Question 13

Economists say that a market where goods are not consumed by those valuing the goods most highly is

Accepted Answer

A)  laissez-faire.. 
B)  unequal. 
C)  inefficient. 
D)  rational. 
A)  laissez-faire.. 
B)  unequal. 
C)  inefficient. 
D)  rational.

Question 14

Chuck would be willing to pay $20 to attend a dog show,but he buys a ticket for $15.Chuck values the dog show at

Accepted Answer

A)  $5. 
B)  $15. 
C)  $20. 
D)  $35. 
A)  $5. 
B)  $15. 
C)  $20. 
D)  $35.

Question 15

Table 7-7
The following table represents the costs of five possible sellers.
  
-Refer to Table 7-7.Who is a marginal seller when the price is $1,200?

Accepted Answer

A)  Bobby 
B)  Bobby and Abby 
C)  Carlos, Dianne, and Evalina 
D)  Carlos, Dianne, Evalina, and Bobby 
A)  Bobby 
B)  Bobby and Abby 
C)  Carlos, Dianne, and Evalina 
D)  Carlos, Dianne, Evalina, and Bobby

Question 16

Even though participants in the economy are motivated by self-interest,the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.

Accepted Answer

A) True 
 B)False

Question 17

Coffee and tea are substitutes.Bad weather that sharply reduces the coffee bean harvest would

Accepted Answer

A)  increase consumer surplus in the market for coffee and decrease producer surplus in the market for tea. 
B)  increase consumer surplus in the market for coffee and increase producer surplus in the market for tea. 
C)  decrease consumer surplus in the market for coffee and increase producer surplus in the market for tea. 
D)  decrease consumer surplus in the market for coffee and decrease producer surplus in the market for tea. 
A)  increase consumer surplus in the market for coffee and decrease producer surplus in the market for tea. 
B)  increase consumer surplus in the market for coffee and increase producer surplus in the market for tea. 
C)  decrease consumer surplus in the market for coffee and increase producer surplus in the market for tea. 
D)  decrease consumer surplus in the market for coffee and decrease producer surplus in the market for tea.

Question 18

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.Which of the following market outcomes is efficient?

Accepted Answer

A)  Firm A produces a monitor that Cassie buys. David does not purchase a monitor. 
B)  Firm A produces a monitor that David buys. 
C)  Firm B produces a monitor that Cassie buys. David does not purchase a monitor. 
D)  Firm B produces a monitor that David buys. 
A)  Firm A produces a monitor that Cassie buys. David does not purchase a monitor. 
B)  Firm A produces a monitor that David buys. 
C)  Firm B produces a monitor that Cassie buys. David does not purchase a monitor. 
D)  Firm B produces a monitor that David buys.

Question 19

Consumer surplus

Accepted Answer

A)  is closely related to the supply curve for a product. 
B)  is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward-sloping line. 
C)  is measured using the demand curve for a product. 
D)  does not reflect economic well-being in most markets. 
A)  is closely related to the supply curve for a product. 
B)  is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward-sloping line. 
C)  is measured using the demand curve for a product. 
D)  does not reflect economic well-being in most markets.

Question 20

Figure 7-3
  
-Refer to Figure 7-3.Which area represents consumer surplus at a price of P1?

Accepted Answer

A)  ABD 
B)  ACG 
C)  BCDF 
D)  DFG 
A)  ABD 
B)  ACG 
C)  BCDF 
D)  DFG

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

Table 7-1 -Refer to Table 7-1.If the price of the product is $18,then the total consumer surplus is

If the United States changed its laws to allow for the legal sale of a kidney,which of the following is likely to occur?

Table 7-7 The following table represents the costs of five possible sellers. -Refer to Table 7-7.If the market price is $1,100,the combined total cost of all participating sellers is

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S,the demand curve is D,and the equilibrium price is $100,what is the producer surplus?

Figure 7-12 -Refer to Figure 7-12.When the price rises from P1 to P2,which area represents the increase in producer surplus to existing producers?

If the government imposes a binding price floor in a market,then the consumer surplus in that market will decrease.

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S',the demand curve is D,and the equilibrium price is $150,what is the producer surplus?

Another way to think of the marginal seller is the seller who

When demand increases so that market price increases,producer surplus increases because (1)producer surplus received by existing sellers increases,and (2)new sellers enter the market.

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

Figure 7-16 -Refer to Figure 7-16.For quantities less than M,the value to the marginal buyer is

Economists say that a market where goods are not consumed by those valuing the goods most highly is

Chuck would be willing to pay $20 to attend a dog show,but he buys a ticket for $15.Chuck values the dog show at

Table 7-7 The following table represents the costs of five possible sellers. -Refer to Table 7-7.Who is a marginal seller when the price is $1,200?

Even though participants in the economy are motivated by self-interest,the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.

Coffee and tea are substitutes.Bad weather that sharply reduces the coffee bean harvest would

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.Which of the following market outcomes is efficient?

Consumer surplus

Figure 7-3 -Refer to Figure 7-3.Which area represents consumer surplus at a price of P1?

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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