Question 1

Figure 7-8
  
-Refer to Figure 7-8.Sellers whose costs are less than price are represented by which line segment?

Accepted Answer

A) AC. 
B) CE. 
C) BC. 
D) CD. 
A) AC. 
B) CE. 
C) BC. 
D) CD.

Question 2

Market failure is the inability of

Accepted Answer

A) buyers to interact harmoniously with sellers in the market. 
B) a market to establish an equilibrium price. 
C) buyers to place a value on the good or service. 
D) some unregulated markets to allocate resources efficiently. 
A) buyers to interact harmoniously with sellers in the market. 
B) a market to establish an equilibrium price. 
C) buyers to place a value on the good or service. 
D) some unregulated markets to allocate resources efficiently.

Question 3

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 4

Table 7-3
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.
  
-Refer to Table 7-3.If the market price of an orange increases from $0.60 to $1.05,total consumer surplus

Accepted Answer

A) increases by $2.90. 
B) decreases by $2.25. 
C) decreases by $2.70. 
D) decreases by $3.85. 
A) increases by $2.90. 
B) decreases by $2.25. 
C) decreases by $2.70. 
D) decreases by $3.85.

Question 5

Producer surplus is

Accepted Answer

A) represented on a graph by the area below the demand curve and above the supply curve. 
B) the amount a seller is paid minus the cost of production. 
C) also referred to as excess supply. 
D) All of the above are correct. 
A) represented on a graph by the area below the demand curve and above the supply curve. 
B) the amount a seller is paid minus the cost of production. 
C) also referred to as excess supply. 
D) All of the above are correct.

Question 6

Inefficiency exists in an economy when a good is

Accepted Answer

A) being produced with less than all available resources. 
B) not distributed fairly among buyers. 
C) not being produced by the lowest-cost producers. 
D) being consumed by buyers who value it most highly. 
A) being produced with less than all available resources. 
B) not distributed fairly among buyers. 
C) not being produced by the lowest-cost producers. 
D) being consumed by buyers who value it most highly.

Question 7

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good,then for that consumer,consumer surplus amounts to

Accepted Answer

A) $4. 
B) $16. 
C) $20. 
D) $36. 
A) $4. 
B) $16. 
C) $20. 
D) $36.

Question 8

Figure 7-9
  
-Refer to Figure 7-9.The efficient price is

Accepted Answer

A) $22 and the efficient quantity is 40. 
B) $22 and the efficient quantity is 110. 
C) $16 and the efficient quantity is 80. 
D) $8 and the efficient quantity is 40. 
A) $22 and the efficient quantity is 40. 
B) $22 and the efficient quantity is 110. 
C) $16 and the efficient quantity is 80. 
D) $8 and the efficient quantity is 40.

Question 9

This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
Table 7-2
  
-Refer to Table 7-2.Which of the following is not true?

Accepted Answer

A) At a price of $9.00, no buyer is willing to purchase Vanilla Coke. 
B) At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not buying one. 
C) At a price of $4.00, total consumer surplus in the market will be $9.00. 
D) All of the above are correct. 
A) At a price of $9.00, no buyer is willing to purchase Vanilla Coke. 
B) At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not buying one. 
C) At a price of $4.00, total consumer surplus in the market will be $9.00. 
D) All of the above are correct.

Question 10

Figure 7-6
  
-Refer to Figure 7-6.Area A represents

Accepted Answer

A) producer surplus to new producers entering the market as the result of an increase in price from P₁ to P₂. 
B) the increase in consumer surplus that results from an upward-sloping supply curve. 
C) the increase in total surplus when sellers are willing and able to increase supply from Q₁ to Q₂. 
D) the increase in producer surplus to those producers already in the market when the price increases from P₁ to P₂. 
A) producer surplus to new producers entering the market as the result of an increase in price from P₁ to P₂. 
B) the increase in consumer surplus that results from an upward-sloping supply curve. 
C) the increase in total surplus when sellers are willing and able to increase supply from Q₁ to Q₂. 
D) the increase in producer surplus to those producers already in the market when the price increases from P₁ to P₂.

Question 11

Figure 7-9
  
-Refer to Figure 7-9.At the equilibrium price,producer 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 12

Figure 7-1
  
-Refer to Figure 7-1.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 13

When a buyer's willingness to pay for a good is equal to the price of the good,

Accepted Answer

A) the buyer's consumer surplus for that good is maximized. 
B) the buyer will buy as much of the good as the buyer's budget allows. 
C) the price of the good exceeds the value that the buyer places on the good. 
D) the buyer is indifferent between buying the good and not buying it. 
A) the buyer's consumer surplus for that good is maximized. 
B) the buyer will buy as much of the good as the buyer's budget allows. 
C) the price of the good exceeds the value that the buyer places on the good. 
D) the buyer is indifferent between buying the good and not buying it.

Question 14

This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
Table 7-2
  
-Refer to Table 7-2.If the market price is $5.50,the consumer surplus in the market will be

Accepted Answer

A) $3.00. 
B) $4.50. 
C) $15.50. 
D) $21.00. 
A) $3.00. 
B) $4.50. 
C) $15.50. 
D) $21.00.

Question 15

Figure 7-7
  
-Refer to Figure 7-7.Which area represents producer surplus when the price is P₁?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 16

The marginal seller is the seller

Accepted Answer

A) for whom the marginal cost of producing one more unit of output is the lowest among all sellers, and the marginal buyer is the buyer for whom the marginal benefit of one more unit of the good is the highest among all buyers. 
B) who supplies the smallest quantity of the good among all sellers, and the marginal buyer is the buyer who demands the smallest quantity of the good among all buyers. 
C) who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher. 
D) who has the largest producer surplus, and the marginal buyer is the buyer who has the largest consumer surplus. 
A) for whom the marginal cost of producing one more unit of output is the lowest among all sellers, and the marginal buyer is the buyer for whom the marginal benefit of one more unit of the good is the highest among all buyers. 
B) who supplies the smallest quantity of the good among all sellers, and the marginal buyer is the buyer who demands the smallest quantity of the good among all buyers. 
C) who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher. 
D) who has the largest producer surplus, and the marginal buyer is the buyer who has the largest consumer surplus.

Question 17

Suppose consumer income increases.If grass seed is a normal good,the equilibrium price of grass seed will

Accepted Answer

A) decrease, and producer surplus in the industry will decrease. 
B) increase, and producer surplus in the industry will increase. 
C) decrease, and producer surplus in the industry will increase. 
D) increase, and producer surplus in the industry will decrease. 
A) decrease, and producer surplus in the industry will decrease. 
B) increase, and producer surplus in the industry will increase. 
C) decrease, and producer surplus in the industry will increase. 
D) increase, and producer surplus in the industry will decrease.

Question 18

Figure 7-10
  
-Refer to Figure 7-10.At the market-clearing equilibrium,total surplus is represented by the area

Accepted Answer

A) A + B + C. 
B) A + B + D + F. 
C) A + B + C + D + E + F. 
D) A + B + C + D + E + F + G + H. 
A) A + B + C. 
B) A + B + D + F. 
C) A + B + C + D + E + F. 
D) A + B + C + D + E + F + G + H.

Question 19

Marjorie is willing to pay $68 for a pair of shoes for a formal dance.She finds a pair at her favorite outlet shoe store for $48.Marjorie's consumer surplus is

Accepted Answer

A) $10. 
B) $20. 
C) $48. 
D) $68. 
A) $10. 
B) $20. 
C) $48. 
D) $68.

Question 20

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.If four units of the good are produced and sold,then

Accepted Answer

A) the cost to sellers exceeds the value to buyers. 
B) producer surplus is maximized. 
C) total surplus is minimized. 
D) the allocation of resources is inefficient. 
A) the cost to sellers exceeds the value to buyers. 
B) producer surplus is maximized. 
C) total surplus is minimized. 
D) the allocation of resources is inefficient.

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

Figure 7-8 -Refer to Figure 7-8.Sellers whose costs are less than price are represented by which line segment?

Market failure is the inability of

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.

Producer surplus is

Inefficiency exists in an economy when a good is

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good,then for that consumer,consumer surplus amounts to

Figure 7-9 -Refer to Figure 7-9.The efficient price is

This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. Table 7-2 -Refer to Table 7-2.Which of the following is not true?

Figure 7-6 -Refer to Figure 7-6.Area A represents

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

Figure 7-1 -Refer to Figure 7-1.When the price rises from P₁ to P₂,consumer surplus

When a buyer's willingness to pay for a good is equal to the price of the good,

This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. Table 7-2 -Refer to Table 7-2.If the market price is $5.50,the consumer surplus in the market will be

Figure 7-7 -Refer to Figure 7-7.Which area represents producer surplus when the price is P₁?

The marginal seller is the seller

Suppose consumer income increases.If grass seed is a normal good,the equilibrium price of grass seed will

Figure 7-10 -Refer to Figure 7-10.At the market-clearing equilibrium,total surplus is represented by the area

Marjorie is willing to pay $68 for a pair of shoes for a formal dance.She finds a pair at her favorite outlet shoe store for $48.Marjorie's consumer surplus is

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.If four units of the good are produced and sold,then

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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