Question 1

A technological advance in the production of computers will

Accepted Answer

A) increase consumer surplus in the market for computers and decrease producer surplus in the market for computer software. 
B) increase consumer surplus in the market for computers and increase producer surplus in the market for computer software. 
C) decrease consumer surplus in the market for computers and increase producer surplus in the market for computer software. 
D) decrease consumer surplus in the market for computers and decrease producer surplus in the market for computer software. 
A) increase consumer surplus in the market for computers and decrease producer surplus in the market for computer software. 
B) increase consumer surplus in the market for computers and increase producer surplus in the market for computer software. 
C) decrease consumer surplus in the market for computers and increase producer surplus in the market for computer software. 
D) decrease consumer surplus in the market for computers and decrease producer surplus in the market for computer software.

Question 2

At present,the maximum legal price for a human kidney is $0.The price of $0 maximizes

Accepted Answer

A) consumer surplus, but not producer surplus. 
B) producer surplus, but not consumer surplus. 
C) both consumer and producer surplus. 
D) neither consumer nor producer surplus. 
A) consumer surplus, but not producer surplus. 
B) producer surplus, but not consumer surplus. 
C) both consumer and producer surplus. 
D) neither consumer nor producer surplus.

Question 3

Figure 7-8
  
-Refer to Figure 7-8.Sellers whose costs are greater than price are represented by segment

Accepted Answer

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

Question 4

Figure 7-1
  
-Refer to Figure 7-1.When the price is P₂,consumer surplus is

Accepted Answer

A) a. 
B) B. 
C) A + B. 
D) A + B + C. 
A) a. 
B) B. 
C) A + B. 
D) A + B + C.

Question 5

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 $0.40,

Accepted Answer

A) 6 oranges are demanded per day and total consumer surplus amounts to $4.45. 
B) 6 oranges are demanded per day and total consumer surplus amounts to $5.10. 
C) 7 oranges are demanded per day and total consumer surplus amounts to $5.35. 
D) 7 oranges are demanded per day and total consumer surplus amounts to $5.50. 
A) 6 oranges are demanded per day and total consumer surplus amounts to $4.45. 
B) 6 oranges are demanded per day and total consumer surplus amounts to $5.10. 
C) 7 oranges are demanded per day and total consumer surplus amounts to $5.35. 
D) 7 oranges are demanded per day and total consumer surplus amounts to $5.50.

Question 6

Total surplus in a market is consumer surplus minus producer surplus.

Accepted Answer

A) True 
 B)False

Question 7

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 amounts to

Accepted Answer

A) $32. 
B) $48. 
C) $72. 
D) $144. 
A) $32. 
B) $48. 
C) $72. 
D) $144.

Question 8

Figure 7-6
  
-Refer to Figure 7-6.When the price is P₂,producer surplus is

Accepted Answer

A) a. 
B) A + C. 
C) A + B + C. 
D) D + E. 
A) a. 
B) A + C. 
C) A + B + C. 
D) D + E.

Question 9

When markets fail,public policy

Accepted Answer

A) can do nothing to improve the situation. 
B) can potentially remedy the problem and increase economic efficiency. 
C) can always remedy the problem and increase economic efficiency. 
D) can, in theory, remedy the problem, but in practice, public policy has proven to be ineffective. 
A) can do nothing to improve the situation. 
B) can potentially remedy the problem and increase economic efficiency. 
C) can always remedy the problem and increase economic efficiency. 
D) can, in theory, remedy the problem, but in practice, public policy has proven to be ineffective.

Question 10

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Accepted Answer

A) True 
 B)False

Question 11

Suppose Larry,Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

Accepted Answer

A) a resistance price. 
B) willingness to pay. 
C) consumer surplus. 
D) producer surplus. 
A) a resistance price. 
B) willingness to pay. 
C) consumer surplus. 
D) producer surplus.

Question 12

In which of the following circumstances would a buyer be indifferent about buying a good?

Accepted Answer

A) The amount of consumer surplus the buyer would experience as a result of buying the good is zero. 
B) The price of the good is equal to the buyer's willingness to pay for the good. 
C) The price of the good is equal to the value the buyer places on the good. 
D) All of the above are correct. 
A) The amount of consumer surplus the buyer would experience as a result of buying the good is zero. 
B) The price of the good is equal to the buyer's willingness to pay for the good. 
C) The price of the good is equal to the value the buyer places on the good. 
D) All of the above are correct.

Question 13

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

Accepted Answer

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

Question 14

Efficiency is related to the size of the economic pie,whereas equity is related to how the pie gets sliced and distributed.

Accepted Answer

A) True 
 B)False

Question 15

Unless markets are perfectly competitive,they mail fail to maximize the total benefits to buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 16

Consumer surplus is

Accepted Answer

A) the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
B) the amount a buyer is willing to pay for a good minus the cost of producing the good. 
C) the amount by which the quantity supplied of a good exceeds the quantity demanded of the good. 
D) a buyer's willingness to pay for a good plus the price of the good. 
A) the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
B) the amount a buyer is willing to pay for a good minus the cost of producing the good. 
C) the amount by which the quantity supplied of a good exceeds the quantity demanded of the good. 
D) a buyer's willingness to pay for a good plus the price of the good.

Question 17

Figure 7-2
  
-Refer to Figure 7-2.Which area represents consumer surplus at a price of P₂?

Accepted Answer

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

Question 18

Figure 7-6
  
-Refer to Figure 7-6.When the price is P₁,producer surplus is

Accepted Answer

A) a. 
B) C. 
C) A + B. 
D) C + D. 
A) a. 
B) C. 
C) A + B. 
D) C + D.

Question 19

Ivana produces cookies.Her production cost is $6 per dozen.She sells the cookies for $8 per dozen.Her producer surplus per dozen cookies is

Accepted Answer

A) $2. 
B) $6. 
C) $8. 
D) $14. 
A) $2. 
B) $6. 
C) $8. 
D) $14.

Question 20

Suppose Katie,Kendra,and Kristen each purchase a particular type of cell phone at a price of $80.Katie's willingness to pay was $100,Kendras's willingness to pay was $95,and Kristen's willingness to pay was $80.Which of the following statements is correct?

Accepted Answer

A) For the three individuals together, consumer surplus amounts to $35. 
B) Having bought the cell phone, Kristen is better off than she would have been had she not bought it. 
C) Had the price of the cell phone been $95 rather than $80, Katie and Kendra definitely would have been buyers and Kristen definitely would not have been a buyer. 
D) The fact that all three individuals paid $80 for the same type of cell phone indicates that each one placed the same value on that cell phone. 
A) For the three individuals together, consumer surplus amounts to $35. 
B) Having bought the cell phone, Kristen is better off than she would have been had she not bought it. 
C) Had the price of the cell phone been $95 rather than $80, Katie and Kendra definitely would have been buyers and Kristen definitely would not have been a buyer. 
D) The fact that all three individuals paid $80 for the same type of cell phone indicates that each one placed the same value on that cell phone.

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

A technological advance in the production of computers will

At present,the maximum legal price for a human kidney is $0.The price of $0 maximizes

Figure 7-8 -Refer to Figure 7-8.Sellers whose costs are greater than price are represented by segment

Figure 7-1 -Refer to Figure 7-1.When the price is P₂,consumer surplus is

Total surplus in a market is consumer surplus minus producer surplus.

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 amounts to

Figure 7-6 -Refer to Figure 7-6.When the price is P₂,producer surplus is

When markets fail,public policy

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Suppose Larry,Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

In which of the following circumstances would a buyer be indifferent about buying a good?

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

Efficiency is related to the size of the economic pie,whereas equity is related to how the pie gets sliced and distributed.

Unless markets are perfectly competitive,they mail fail to maximize the total benefits to buyers and sellers.

Consumer surplus is

Figure 7-2 -Refer to Figure 7-2.Which area represents consumer surplus at a price of P₂?

Figure 7-6 -Refer to Figure 7-6.When the price is P₁,producer surplus is

Ivana produces cookies.Her production cost is $6 per dozen.She sells the cookies for $8 per dozen.Her producer surplus per dozen cookies is

Suppose Katie,Kendra,and Kristen each purchase a particular type of cell phone at a price of $80.Katie's willingness to pay was $100,Kendras's willingness to pay was $95,and Kristen's willingness to pay was $80.Which of the following statements is correct?

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

Filters