Question 1

Donald produces nails at a cost of $350 per ton.If he sells the nails for $500 per ton,his producer surplus is

Accepted Answer

A)  $150. 
B)  $350. 
C)  $500. 
D)  $850. 
A)  $150. 
B)  $350. 
C)  $500. 
D)  $850.

Question 2

Figure 7-15
  
-Refer to Figure 7-15.If the government imposes a price floor of $60 in this market,then total surplus will be

Accepted Answer

A)  $110.50. 
B)  $125.00. 
C)  $187.50. 
D)  $225.25.. 
A)  $110.50. 
B)  $125.00. 
C)  $187.50. 
D)  $225.25..

Question 3

Economists normally assume people's preferences should be

Accepted Answer

A)  respected. 
B)  adjusted. 
C)  overruled. 
D)  ignored. 
A)  respected. 
B)  adjusted. 
C)  overruled. 
D)  ignored.

Question 4

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

Accepted Answer

A)  $150. 
B)  $200. 
C)  $350. 
D)  $550. 
A)  $150. 
B)  $200. 
C)  $350. 
D)  $550.

Question 5

Answer each of the following questions about demand and consumer surplus.
a.What is consumer surplus,and how is it measured?
b.What is the relationship between the demand curve and the willingness to pay?
c.Other things equal,what happens to consumer surplus if the price of a good falls? Why? Illustrate using a demand curve.
d.In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand curve,what else must be considered to determine consumer surplus?

Accepted Answer

a.Consumer surplus measures the benefit

Question 6

Figure 7-12
  
-Refer to Figure 7-12.When the price falls from P2 to P1,which of the following would not be true?

Accepted Answer

A)  The sellers who still sell the good are worse off because they now receive less. 
B)  Some sellers leave the market because they are not willing to sell the good at the lower price. 
C)  The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price. 
D)  Producer surplus would fall by area A + B. 
A)  The sellers who still sell the good are worse off because they now receive less. 
B)  Some sellers leave the market because they are not willing to sell the good at the lower price. 
C)  The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price. 
D)  Producer surplus would fall by area A + B.

Question 7

Producer surplus directly measures

Accepted Answer

A)  the well-being of society as a whole. 
B)  the well-being of buyers and sellers. 
C)  the well-being of sellers. 
D)  sellers' willingness to sell. 
A)  the well-being of society as a whole. 
B)  the well-being of buyers and sellers. 
C)  the well-being of sellers. 
D)  sellers' willingness to sell.

Question 8

Pat bought a new car for $15,500 but was willing to pay $24,000.The consumer surplus is

Accepted Answer

A)  $8,500. 
B)  $15,500. 
C)  $24,000. 
D)  $39,500. 
A)  $8,500. 
B)  $15,500. 
C)  $24,000. 
D)  $39,500.

Question 9

Connie can clean windows in large office buildings at a cost of $1 per window.The market price for window-cleaning services is $3 per window.If Connie cleans 100 windows,her producer surplus is $100.

Accepted Answer

A) True 
 B)False

Question 10

Josh is willing to pay $40 for a haircut,but he is able to pay $25 at the local salon.His consumer surplus is

Accepted Answer

A)  $0 because the cost exceeds his maximum willingness to pay. 
B)  $15. 
C)  $25. 
D)  $65. 
A)  $0 because the cost exceeds his maximum willingness to pay. 
B)  $15. 
C)  $25. 
D)  $65.

Question 11

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

Accepted Answer

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

Question 12

Each seller of a product is willing to sell as long as the price he or she can receive is greater than the opportunity cost of producing the product.

Accepted Answer

A) True 
 B)False

Question 13

Figure 7-16
  
-Refer to Figure 7-16.For quantities greater 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 14

If a consumer places a value of $15 on a particular good and if the price of the good is $17,then the

Accepted Answer

A)  consumer has consumer surplus of $2 if he or she buys the good. 
B)  consumer does not purchase the good. 
C)  market is not a competitive market. 
D)  price of the good will fall due to market forces. 
A)  consumer has consumer surplus of $2 if he or she buys the good. 
B)  consumer does not purchase the good. 
C)  market is not a competitive market. 
D)  price of the good will fall due to market forces.

Question 15

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
  
-Refer to Table 7-3.Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Accepted Answer

A)  Quilana 
B)  Wilbur 
C)  Ming-la 
D)  All three buyers experience the same loss of consumer surplus. 
A)  Quilana 
B)  Wilbur 
C)  Ming-la 
D)  All three buyers experience the same loss of consumer surplus.

Question 16

Table 7-11
  
-Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.At equilibrium,total surplus is

Accepted Answer

A)  $44. 
B)  $56. 
C)  $72. 
D)  $96. 
A)  $44. 
B)  $56. 
C)  $72. 
D)  $96.

Question 17

Figure 7-22
  
-Refer to Figure 7-22.At the quantity Q2,the marginal value to buyers

Accepted Answer

A)  and the marginal cost to sellers are both P2. 
B)  is P2, and the marginal cost to sellers is P3. 
C)  and the marginal cost to sellers are both P3. 
D)  is P3, and the marginal cost to sellers is P2. 
A)  and the marginal cost to sellers are both P2. 
B)  is P2, and the marginal cost to sellers is P3. 
C)  and the marginal cost to sellers are both P3. 
D)  is P3, and the marginal cost to sellers is P2.

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.If Firm A produces a monitor that Cassie buys but David does not,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)

Question 19

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field.Assume the ticket has no resale value.Willie Nelson is performing on the same night,and his concert is your next-best alternative activity.Tickets to see Willie Nelson cost $40.On any given day,you would be willing to pay up to $50 to see and hear Willie Nelson perform.Assume there are no other costs of seeing either event.Based on this information,at a minimum,how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?

Accepted Answer

A)  $0 
B)  $10 
C)  $40 
D)  $50 
A)  $0 
B)  $10 
C)  $40 
D)  $50

Question 20

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

Accepted Answer

A) True 
 B)False

Donald produces nails at a cost of $350 per ton.If he sells the nails for $500 per ton,his producer surplus is

Figure 7-15 -Refer to Figure 7-15.If the government imposes a price floor of $60 in this market,then total surplus will be

Economists normally assume people's preferences should be

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

Figure 7-12 -Refer to Figure 7-12.When the price falls from P2 to P1,which of the following would not be true?

Producer surplus directly measures

Pat bought a new car for $15,500 but was willing to pay $24,000.The consumer surplus is

Connie can clean windows in large office buildings at a cost of $1 per window.The market price for window-cleaning services is $3 per window.If Connie cleans 100 windows,her producer surplus is $100.

Josh is willing to pay $40 for a haircut,but he is able to pay $25 at the local salon.His consumer surplus is

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

Each seller of a product is willing to sell as long as the price he or she can receive is greater than the opportunity cost of producing the product.

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

If a consumer places a value of $15 on a particular good and if the price of the good is $17,then the

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3.Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.At equilibrium,total surplus is

Figure 7-22 -Refer to Figure 7-22.At the quantity Q2,the marginal value to buyers

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

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.

Donald produces nails at a cost of $350 per ton.If he sells the nails for $500 per ton,his producer surplus is

Figure 7-15 -Refer to Figure 7-15.If the government imposes a price floor of $60 in this market,then total surplus will be

Economists normally assume people's preferences should be

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

Figure 7-12 -Refer to Figure 7-12.When the price falls from P2 to P1,which of the following would not be true?

Producer surplus directly measures

Pat bought a new car for $15,500 but was willing to pay $24,000.The consumer surplus is

Connie can clean windows in large office buildings at a cost of $1 per window.The market price for window-cleaning services is $3 per window.If Connie cleans 100 windows,her producer surplus is $100.

Josh is willing to pay $40 for a haircut,but he is able to pay $25 at the local salon.His consumer surplus is

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

Each seller of a product is willing to sell as long as the price he or she can receive is greater than the opportunity cost of producing the product.

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

If a consumer places a value of $15 on a particular good and if the price of the good is $17,then the

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3.Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.At equilibrium,total surplus is

Figure 7-22 -Refer to Figure 7-22.At the quantity Q2,the marginal value to buyers

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

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