Question 1

The marginal seller is the seller who

Accepted Answer

A) cannot compete with the other sellers in the market. 
B) would leave the market first if the price were any lower. 
C) can produce at the lowest cost. 
D) has the largest producer surplus. 
A) cannot compete with the other sellers in the market. 
B) would leave the market first if the price were any lower. 
C) can produce at the lowest cost. 
D) has the largest producer surplus.

Question 2

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 new buyers entering the market?

Accepted Answer

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

Question 3

The following table represents the costs of five possible sellers.
Table 7-4
  
-Refer to Table 7-4.If the price is $775,who would be willing to supply the product?

Accepted Answer

A) Dale and Jill 
B) Dale, Jill and Denise 
C) Denise, Catherine and Jackson 
D) Catherine and Jackson 
A) Dale and Jill 
B) Dale, Jill and Denise 
C) Denise, Catherine and Jackson 
D) Catherine and Jackson

Question 4

Many economists believe that restrictions against ticket scalping result in each of the following except

Accepted Answer

A) a smaller audience for cultural and sporting events. 
B) shorter lines at cultural and sporting events. 
C) less tax revenue for the state. 
D) an increase in ticket prices. 
A) a smaller audience for cultural and sporting events. 
B) shorter lines at cultural and sporting events. 
C) less tax revenue for the state. 
D) an increase in ticket prices.

Question 5

Market Supply and Demand for Pepperoni Pizza
Table 7-5
  
-Refer to Table 7-5.As the table suggests,the demand curve is a straight line and so is the supply curve.Take this into account and suppose the price is $8,with only 4 pizzas being bought and sold.Consumer surplus amounts to

Accepted Answer

A) $8. 
B) $12. 
C) $16. 
D) $18. 
A) $8. 
B) $12. 
C) $16. 
D) $18.

Question 6

Figure 7-4
  
-Refer to Figure 7-4.Which area represents the increase in producer surplus when the price rises from P₁ to P₂?

Accepted Answer

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

Question 7

A demand curve reflects each of the following except the

Accepted Answer

A) willingness to pay of all buyers in the market. 
B) value each buyer in the market places on the good. 
C) highest price buyers are willing to pay for each quantity. 
D) ability of buyers to obtain the quantity they desire. 
A) willingness to pay of all buyers in the market. 
B) value each buyer in the market places on the good. 
C) highest price buyers are willing to pay for each quantity. 
D) ability of buyers to obtain the quantity they desire.

Question 8

Janine would be willing to pay $50 to see Les Misérables,but she buys a ticket for only $30.Janine values the performance at

Accepted Answer

A) $20. 
B) $30. 
C) $50. 
D) $80. 
A) $20. 
B) $30. 
C) $50. 
D) $80.

Question 9

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

Accepted Answer

A) maximizes total revenue for firms and maximizes the quantity supplied of the product. 
B) maximizes the combined welfare of buyers and sellers. 
C) minimizes costs and maximizes profits of sellers. 
D) minimizes the level of welfare payments to those who no longer live below the poverty line. 
A) maximizes total revenue for firms and maximizes the quantity supplied of the product. 
B) maximizes the combined welfare of buyers and sellers. 
C) minimizes costs and maximizes profits of sellers. 
D) minimizes the level of welfare payments to those who no longer live below the poverty line.

Question 10

We can say that the allocation of resources is efficient if

Accepted Answer

A) producer surplus is maximized. 
B) consumer surplus is maximized. 
C) total surplus is maximized. 
D) sellers' costs are minimized. 
A) producer surplus is maximized. 
B) consumer surplus is maximized. 
C) total surplus is maximized. 
D) sellers' costs are minimized.

Question 11

Welfare economics is the study of

Accepted Answer

A) how the allocation of resources affects economic well-being. 
B) how technology is best put to use in the production of goods and services. 
C) government welfare programs for needy people. 
D) taxes and subsidies. 
A) how the allocation of resources affects economic well-being. 
B) how technology is best put to use in the production of goods and services. 
C) government welfare programs for needy people. 
D) taxes and subsidies.

Question 12

Which of the following statements is not correct about a market in equilibrium?

Accepted Answer

A) The price determines which buyers and which sellers participate in the market. 
B) Those buyers who value the good more than the price choose to buy the good. 
C) Those sellers whose costs are less than the price choose to produce and sell the good. 
D) Consumer surplus will be equal to producer surplus. 
A) The price determines which buyers and which sellers participate in the market. 
B) Those buyers who value the good more than the price choose to buy the good. 
C) Those sellers whose costs are less than the price choose to produce and sell the good. 
D) Consumer surplus will be equal to producer surplus.

Question 13

Suppose the demand for nachos increases.What will happen to producer surplus in the market for nachos?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It remains unchanged. 
D) It may increase, decrease, or remain unchanged. 
A) It increases. 
B) It decreases. 
C) It remains unchanged. 
D) It may increase, decrease, or remain unchanged.

Question 14

Orange juice and apple juice are substitutes.Bad weather that sharply reduces the orange harvest would

Accepted Answer

A) increase consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice. 
B) increase consumer surplus in the market for orange juice and increase producer surplus in the market for apple juice. 
C) decrease consumer surplus in the market for orange juice and increase producer surplus in the market for apple juice. 
D) decrease consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice. 
A) increase consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice. 
B) increase consumer surplus in the market for orange juice and increase producer surplus in the market for apple juice. 
C) decrease consumer surplus in the market for orange juice and increase producer surplus in the market for apple juice. 
D) decrease consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice.

Question 15

Consumer surplus is the

Accepted Answer

A) amount of a good consumers get without paying anything for it. 
B) amount a consumer pays minus the amount the consumer is willing to pay. 
C) amount a consumer is willing to pay minus the amount the consumer actually pays. 
D) value of a good to a consumer. 
A) amount of a good consumers get without paying anything for it. 
B) amount a consumer pays minus the amount the consumer is willing to pay. 
C) amount a consumer is willing to pay minus the amount the consumer actually pays. 
D) value of a good to a consumer.

Question 16

On a graph,consumer surplus is the area

Accepted Answer

A) between the demand and supply curves. 
B) below the demand curve and above price. 
C) below the price and above the supply curve. 
D) below the demand curve and to the right of equilibrium price. 
A) between the demand and supply curves. 
B) below the demand curve and above price. 
C) below the price and above the supply curve. 
D) below the demand curve and to the right of equilibrium price.

Question 17

Figure 7-2
  
-Refer to Figure 7-2.Which area represents consumer surplus at a price of P₁?

Accepted Answer

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

Question 18

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Accepted Answer

A) True 
 B)False

Question 19

Cornflakes and milk are complementary goods.A decrease in the price of corn will

Accepted Answer

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

Question 20

Chad is willing to pay $5.00 to get his first cup of morning latté.He buys a cup from a vendor selling latté for $3.75 per cup.Chad's consumer surplus is

Accepted Answer

A) $8.75. 
B) $5.00. 
C) $3.75. 
D) $1.25. 
A) $8.75. 
B) $5.00. 
C) $3.75. 
D) $1.25.

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

The marginal seller is the seller who

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 new buyers entering the market?

The following table represents the costs of five possible sellers. Table 7-4 -Refer to Table 7-4.If the price is $775,who would be willing to supply the product?

Many economists believe that restrictions against ticket scalping result in each of the following except

Market Supply and Demand for Pepperoni Pizza Table 7-5 -Refer to Table 7-5.As the table suggests,the demand curve is a straight line and so is the supply curve.Take this into account and suppose the price is $8,with only 4 pizzas being bought and sold.Consumer surplus amounts to

Figure 7-4 -Refer to Figure 7-4.Which area represents the increase in producer surplus when the price rises from P₁ to P₂?

A demand curve reflects each of the following except the

Janine would be willing to pay $50 to see Les Misérables,but she buys a ticket for only $30.Janine values the performance at

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

We can say that the allocation of resources is efficient if

Welfare economics is the study of

Which of the following statements is not correct about a market in equilibrium?

Suppose the demand for nachos increases.What will happen to producer surplus in the market for nachos?

Orange juice and apple juice are substitutes.Bad weather that sharply reduces the orange harvest would

Consumer surplus is the

On a graph,consumer surplus is the area

Figure 7-2 -Refer to Figure 7-2.Which area represents consumer surplus at a price of P₁?

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Cornflakes and milk are complementary goods.A decrease in the price of corn will

Chad is willing to pay $5.00 to get his first cup of morning latté.He buys a cup from a vendor selling latté for $3.75 per cup.Chad's consumer surplus is

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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