Question 1

Figure 7-4
  
-Refer to Figure 7-4.Which area represents producer surplus when the price is P₂?

Accepted Answer

A) BCE 
B) ACF 
C) ABED 
D) AFEB 
A) BCE 
B) ACF 
C) ABED 
D) AFEB

Question 2

Dallas buys strawberries,and he would be willing to pay more than he now pays.Suppose that Dallas has a change in his tastes such that he values strawberries more than before.If the market price is the same as before,then

Accepted Answer

A) Dallas's consumer surplus would be unaffected. 
B) Dallas's consumer surplus would increase. 
C) Dallas's consumer surplus would decrease. 
D) Dallas would be wise to buy fewer strawberries than before. 
A) Dallas's consumer surplus would be unaffected. 
B) Dallas's consumer surplus would increase. 
C) Dallas's consumer surplus would decrease. 
D) Dallas would be wise to buy fewer strawberries than before.

Question 3

Consumer surplus measures the benefit to buyers of participating in a market.

Accepted Answer

A) True 
 B)False

Question 4

Figure 7-5. On the graph below, Q represents the quantity of the good and P represents the good's price.
  
-Refer to Figure 7-5.If the price of the good is $8.50,then producer surplus is

Accepted Answer

A) $6.50. 
B) $8.00. 
C) $9.50. 
D) $11.00. 
A) $6.50. 
B) $8.00. 
C) $9.50. 
D) $11.00.

Question 5

Denise values a stainless steel dishwasher for her new house at $500.The actual price of the dishwasher is $650.Denise

Accepted Answer

A) buys the dishwasher and on her purchase she experiences a consumer surplus of $150. 
B) buys the dishwasher and on her purchase she experiences a consumer surplus of $-150. 
C) does not buy the dishwasher and on her purchase she experiences a consumer surplus of $150 on her non-purchase. 
D) does not buy the dishwasher and on her purchase she experiences a consumer surplus of $0 on her non-purchase. 
A) buys the dishwasher and on her purchase she experiences a consumer surplus of $150. 
B) buys the dishwasher and on her purchase she experiences a consumer surplus of $-150. 
C) does not buy the dishwasher and on her purchase she experiences a consumer surplus of $150 on her non-purchase. 
D) does not buy the dishwasher and on her purchase she experiences a consumer surplus of $0 on her non-purchase.

Question 6

Laissez-faire is a French expression which literally means

Accepted Answer

A) to make do. 
B) to get involved. 
C) whatever works. 
D) allow them to do. 
A) to make do. 
B) to get involved. 
C) whatever works. 
D) allow them to do.

Question 7

Suppose there is an early freeze in California that reduces the size of the lemon crop.What happens to consumer surplus in the market for lemons?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It is not affected by this change in market forces. 
D) We would have to know whether the demand for lemons is elastic or inelastic to make this determination. 
A) It increases. 
B) It decreases. 
C) It is not affected by this change in market forces. 
D) We would have to know whether the demand for lemons is elastic or inelastic to make this determination.

Question 8

Figure 7-11. On the graph below, Q represents the quantity of the good and P represents the good's price.
  
-Refer to Figure 7-11.At the equilibrium,producer surplus is measured by the area

Accepted Answer

A) ACG. 
B) AFG. 
C) DBG. 
D) CFG. 
A) ACG. 
B) AFG. 
C) DBG. 
D) CFG.

Question 9

Consumer surplus is equal to the

Accepted Answer

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

Question 10

Suppose televisions are a normal good and buyers of televisions experience a decrease in income.As a result,consumer surplus in the television market

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 11

Figure 7-10
  
-Refer to Figure 7-10.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 12

Figure 7-9
  
-Refer to Figure 7-9.If 110 units of the good are being bought and sold,then

Accepted Answer

A) the cost to sellers is equal to the value to buyers. 
B) the value to buyers is greater than the cost to sellers. 
C) the cost to sellers is greater than the value to buyers. 
D) producer surplus is greater than consumer surplus. 
A) the cost to sellers is equal to the value to buyers. 
B) the value to buyers is greater than the cost to sellers. 
C) the cost to sellers is greater than the value to buyers. 
D) producer surplus is greater than consumer surplus.

Question 13

The decisions of buyers and sellers that affect people who are not participants in the market create

Accepted Answer

A) market power. 
B) externalities. 
C) profiteering. 
D) market equilibrium. 
A) market power. 
B) externalities. 
C) profiteering. 
D) market equilibrium.

Question 14

Figure 7-11. On the graph below, Q represents the quantity of the good and P represents the good's price.
  
-Refer to Figure 7-11.At the equilibrium,consumer surplus is measured by the area

Accepted Answer

A) ACG. 
B) AFG. 
C) DBG. 
D) CFG. 
A) ACG. 
B) AFG. 
C) DBG. 
D) CFG.

Question 15

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 16

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 17

Consumer surplus in a market can be represented by the

Accepted Answer

A) area below the demand curve and above the price. 
B) distance from the demand curve to the horizontal axis. 
C) distance from the demand curve to the vertical axis. 
D) area below the demand curve and above the horizontal axis. 
A) area below the demand curve and above the price. 
B) distance from the demand curve to the horizontal axis. 
C) distance from the demand curve to the vertical axis. 
D) area below the demand curve and above the horizontal axis.

Question 18

Figure 7-9
  
-Refer to Figure 7-9.At the equilibrium price,consumer 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 19

When 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 20

Figure 7-2
  
-Refer to Figure 7-2.When the price falls from P₁ to P₂,which area represents the increase in consumer surplus to existing buyers?

Accepted Answer

A) ABD 
B) ACF 
C) BCED 
D) DEF 
A) ABD 
B) ACF 
C) BCED 
D) DEF

Exam 7: Consumers, producers, and the Efficiency of Markets

Figure 7-4 -Refer to Figure 7-4.Which area represents producer surplus when the price is P₂?

Dallas buys strawberries,and he would be willing to pay more than he now pays.Suppose that Dallas has a change in his tastes such that he values strawberries more than before.If the market price is the same as before,then

Consumer surplus measures the benefit to buyers of participating in a market.

Figure 7-5. On the graph below, Q represents the quantity of the good and P represents the good's price. -Refer to Figure 7-5.If the price of the good is $8.50,then producer surplus is

Denise values a stainless steel dishwasher for her new house at $500.The actual price of the dishwasher is $650.Denise

Laissez-faire is a French expression which literally means

Suppose there is an early freeze in California that reduces the size of the lemon crop.What happens to consumer surplus in the market for lemons?

Figure 7-11. On the graph below, Q represents the quantity of the good and P represents the good's price. -Refer to Figure 7-11.At the equilibrium,producer surplus is measured by the area

Consumer surplus is equal to the

Suppose televisions are a normal good and buyers of televisions experience a decrease in income.As a result,consumer surplus in the television market

Figure 7-10 -Refer to Figure 7-10.The efficient price-quantity combination is

Figure 7-9 -Refer to Figure 7-9.If 110 units of the good are being bought and sold,then

The decisions of buyers and sellers that affect people who are not participants in the market create

Figure 7-11. On the graph below, Q represents the quantity of the good and P represents the good's price. -Refer to Figure 7-11.At the equilibrium,consumer surplus is measured by the area

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

Producer surplus equals

Consumer surplus in a market can be represented by the

Figure 7-9 -Refer to Figure 7-9.At the equilibrium price,consumer surplus is

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

Figure 7-2 -Refer to Figure 7-2.When the price falls from P₁ to P₂,which area represents the increase in consumer surplus to existing buyers?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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