Question 1

In a competitive market,sales go to those producers who are willing to supply the product at the lowest price.

Accepted Answer

A) True 
 B)False

Question 2

Other things equal,if the price of a good falls,the consumer surplus

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 3

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.Taking this into account,when there is equilibrium,producer surplus is

Accepted Answer

A) $16. 
B) $24. 
C) $32. 
D) $48. 
A) $16. 
B) $24. 
C) $32. 
D) $48.

Question 4

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

Accepted Answer

A) maximizes costs of the seller. 
B) maximizes tax revenue for the government. 
C) maximizes the combined welfare of buyers and sellers. 
D) minimizes the expenditure of buyers. 
A) maximizes costs of the seller. 
B) maximizes tax revenue for the government. 
C) maximizes the combined welfare of buyers and sellers. 
D) minimizes the expenditure of buyers.

Question 5

Welfare economics is the study of

Accepted Answer

A) the well-being of less fortunate people. 
B) welfare programs in the United States. 
C) the effect of income redistribution on work effort. 
D) how the allocation of resources affects economic well-being. 
A) the well-being of less fortunate people. 
B) welfare programs in the United States. 
C) the effect of income redistribution on work effort. 
D) how the allocation of resources affects economic well-being.

Question 6

Market power refers to the

Accepted Answer

A) side effects that may occur in a market. 
B) government regulations imposed on the sellers in a market. 
C) ability of market participants to influence price. 
D) forces of supply and demand in determining equilibrium price. 
A) side effects that may occur in a market. 
B) government regulations imposed on the sellers in a market. 
C) ability of market participants to influence price. 
D) forces of supply and demand in determining equilibrium price.

Question 7

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 is $1.20,consumer surplus amounts to

Accepted Answer

A) $0.70. 
B) $1.10. 
C) $1.40. 
D) $5.00. 
A) $0.70. 
B) $1.10. 
C) $1.40. 
D) $5.00.

Question 8

Table 7-1
  
-Refer to Table 7-1.If the table represents the willingness to pay of four buyers and the price of the product is $18,then their total consumer surplus is

Accepted Answer

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

Question 9

The following table represents the costs of five possible sellers.
Table 7-4
  
-Refer to Table 7-4.If the price is $1,000,

Accepted Answer

A) Denise is an eager supplier. 
B) Catherine is an eager supplier. 
C) Dale's producer surplus is $500. 
D) All of the above are correct. 
A) Denise is an eager supplier. 
B) Catherine is an eager supplier. 
C) Dale's producer surplus is $500. 
D) All of the above are correct.

Question 10

If the cost of producing sofas decreases,then consumer surplus in the sofa market will

Accepted Answer

A) increase. 
B) decrease. 
C) remain constant. 
D) increase for some buyers and decrease for other buyers. 
A) increase. 
B) decrease. 
C) remain constant. 
D) increase for some buyers and decrease for other buyers.

Question 11

For any given quantity,the price on a demand curve represents the marginal buyer's willingness to pay.

Accepted Answer

A) True 
 B)False

Question 12

Externalities are

Accepted Answer

A) side effects passed on to a party other than the buyers and sellers in the market. 
B) side effects of government intervention in markets. 
C) external forces that cause the price of a good to be higher than it otherwise would be. 
D) external forces that help establish equilibrium price. 
A) side effects passed on to a party other than the buyers and sellers in the market. 
B) side effects of government intervention in markets. 
C) external forces that cause the price of a good to be higher than it otherwise would be. 
D) external forces that help establish equilibrium price.

Question 13

The following table represents the costs of five possible sellers.
Table 7-4
  
-Refer to Table 7-4.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) $1,500. 
A) $3,700. 
B) $2,700. 
C) $2,250. 
D) $1,500.

Question 14

Brock is willing to pay $400 for a new suit,but he is able to buy the suit for $350.His consumer surplus is

Accepted Answer

A) $50. 
B) $150. 
C) $350. 
D) $400. 
A) $50. 
B) $150. 
C) $350. 
D) $400.

Question 15

If the price of oak lumber increases,what happens to consumer surplus in the market for oak cabinets?

Accepted Answer

A) It increases. 
B) It decreases. 
C) It will not change consumer surplus; only producer surplus changes. 
D) It depends on what event led to the increase in the price of oak lumber. 
A) It increases. 
B) It decreases. 
C) It will not change consumer surplus; only producer surplus changes. 
D) It depends on what event led to the increase in the price of oak lumber.

Question 16

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

Accepted Answer

A) the combined profits of all producers when the price is P₂. 
B) the increase in producer surplus to all producers as the result of an increase in the price from P₁ to P₂. 
C) producer surplus to new producers entering the market as the result of an increase in the price from P₁ to P₂. 
D) that portion of the increase in producer surplus that is offset by a loss in consumer surplus when the price increases from P₁ to P₂. 
A) the combined profits of all producers when the price is P₂. 
B) the increase in producer surplus to all producers as the result of an increase in the price from P₁ to P₂. 
C) producer surplus to new producers entering the market as the result of an increase in the price from P₁ to P₂. 
D) that portion of the increase in producer surplus that is offset by a loss in consumer surplus when the price increases from P₁ to P₂.

Question 17

Figure 7-4
  
-Refer to Figure 7-4.When the price rises from P₁ to P₂,which area represents the increase in producer surplus to existing producers?

Accepted Answer

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

Question 18

Total surplus is equal to

Accepted Answer

A) value to buyers minus profit to sellers. 
B) value to buyers minus cost to sellers. 
C) consumer surplus minus producer surplus. 
D) (consumer surplus plus producer surplus) times equilibrium quantity. 
A) value to buyers minus profit to sellers. 
B) value to buyers minus cost to sellers. 
C) consumer surplus minus producer surplus. 
D) (consumer surplus plus producer surplus) times equilibrium quantity.

Question 19

Economists generally believe that,although there may be advantages to society from ticket-scalping,the costs to society of this activity outweigh the benefits.

Accepted Answer

A) True 
 B)False

Question 20

If the United States legally allowed for the existence of a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.

Accepted Answer

A) True 
 B)False

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

In a competitive market,sales go to those producers who are willing to supply the product at the lowest price.

Other things equal,if the price of a good falls,the consumer surplus

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.Taking this into account,when there is equilibrium,producer surplus is

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

Welfare economics is the study of

Market power refers to the

Table 7-1 -Refer to Table 7-1.If the table represents the willingness to pay of four buyers and the price of the product is $18,then their total consumer surplus is

The following table represents the costs of five possible sellers. Table 7-4 -Refer to Table 7-4.If the price is $1,000,

If the cost of producing sofas decreases,then consumer surplus in the sofa market will

For any given quantity,the price on a demand curve represents the marginal buyer's willingness to pay.

Externalities are

The following table represents the costs of five possible sellers. Table 7-4 -Refer to Table 7-4.If the market price is $1,100,the combined total cost of all participating sellers is

Brock is willing to pay $400 for a new suit,but he is able to buy the suit for $350.His consumer surplus is

If the price of oak lumber increases,what happens to consumer surplus in the market for oak cabinets?

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

Figure 7-4 -Refer to Figure 7-4.When the price rises from P₁ to P₂,which area represents the increase in producer surplus to existing producers?

Total surplus is equal to

Economists generally believe that,although there may be advantages to society from ticket-scalping,the costs to society of this activity outweigh the benefits.

If the United States legally allowed for the existence of a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.

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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