Question 1

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

Accepted Answer

A) $150. 
B) $200. 
C) $350. 
D) $550. 
A) $150. 
B) $200. 
C) $350. 
D) $550.

Question 2

If the government allowed a free market for transplant organs (such as kidneys)to exist,

Accepted Answer

A) the shortage of organs would be eliminated and there would be no surplus of organs. 
B) the shortage of organs would be eliminated, but a surplus of organs would develop. 
C) the shortage of organs would persist. 
D) the overall well-being of society would remain unchanged. 
A) the shortage of organs would be eliminated and there would be no surplus of organs. 
B) the shortage of organs would be eliminated, but a surplus of organs would develop. 
C) the shortage of organs would persist. 
D) the overall well-being of society would remain unchanged.

Question 3

Total surplus in a market is equal to

Accepted Answer

A) Consumer surplus + Producer surplus. 
B) Value to buyers - Amount paid by buyers. 
C) Amount received by sellers - Costs of sellers. 
D) Producer surplus - Consumer surplus. 
A) Consumer surplus + Producer surplus. 
B) Value to buyers - Amount paid by buyers. 
C) Amount received by sellers - Costs of sellers. 
D) Producer surplus - Consumer surplus.

Question 4

The Surgeon General announces that eating chocolate increases tooth decay.As a result,the equilibrium price of chocolate

Accepted Answer

A) increases, and producer surplus increases. 
B) increases, and producer surplus decreases. 
C) decreases, and producer surplus increases. 
D) decreases, and producer surplus decreases. 
A) increases, and producer surplus increases. 
B) increases, and producer surplus decreases. 
C) decreases, and producer surplus increases. 
D) decreases, and producer surplus decreases.

Question 5

Given the following equations two equations:
   
Show how equation (1)can be used to derive equation (2).

Accepted Answer

Start with the equation: Total Surplus =

Question 6

Figure 7-8
  
-Refer to Figure 7-8.If the government mandated a price increase from Pₑ to a higher price,then

Accepted Answer

A) total surplus would decrease. 
B) consumer surplus would increase. 
C) total surplus would increase, since producer surplus would increase. 
D) total surplus would remain unchanged. 
A) total surplus would decrease. 
B) consumer surplus would increase. 
C) total surplus would increase, since producer surplus would increase. 
D) total surplus would remain unchanged.

Question 7

Total surplus

Accepted Answer

A) can be used to measure society's well-being. 
B) is the sum of consumer and producer surplus. 
C) amounts to value to buyers minus cost to sellers. 
D) All of the above are correct. 
A) can be used to measure society's well-being. 
B) is the sum of consumer and producer surplus. 
C) amounts to value to buyers minus cost to sellers. 
D) All of the above are correct.

Question 8

Market Supply and Demand for Pepperoni Pizza
Table 7-5
  
-Refer to Table 7-5.At a price of $4.00,total surplus is

Accepted Answer

A) more than it would be at the equilibrium price. 
B) less than it would be at the equilibrium price. 
C) the same as it would be at the equilibrium price. 
D) There is insufficient information to make this determination. 
A) more than it would be at the equilibrium price. 
B) less than it would be at the equilibrium price. 
C) the same as it would be at the equilibrium price. 
D) There is insufficient information to make this determination.

Question 9

Producer surplus is

Accepted Answer

A) measured using the demand curve for a good. 
B) always a negative number for sellers in a competitive market. 
C) the amount a seller is paid minus the cost of production. 
D) the opportunity cost of production minus the cost of producing goods that go unsold. 
A) measured using the demand curve for a good. 
B) always a negative number for sellers in a competitive market. 
C) the amount a seller is paid minus the cost of production. 
D) the opportunity cost of production minus the cost of producing goods that go unsold.

Question 10

A simultaneous increase in both the demand for radios and the supply of radios would imply that

Accepted Answer

A) both the value of radios to consumers and the cost of producing radios has increased. 
B) both the value of radios to consumers and the cost of producing radios has decreased. 
C) the value of radios to consumers has decreased and the cost of producing radios has increased. 
D) the value of radios to consumers has increased and the cost of producing radios has decreased. 
A) both the value of radios to consumers and the cost of producing radios has increased. 
B) both the value of radios to consumers and the cost of producing radios has decreased. 
C) the value of radios to consumers has decreased and the cost of producing radios has increased. 
D) the value of radios to consumers has increased and the cost of producing radios has decreased.

Question 11

Which of the following equations is not valid?

Accepted Answer

A) Consumer surplus = Value to buyers - Amount paid by buyers 
B) Producer surplus = Amount received by sellers - Cost to sellers 
C) Total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers 
D) Total surplus = Value to sellers - Cost to sellers 
A) Consumer surplus = Value to buyers - Amount paid by buyers 
B) Producer surplus = Amount received by sellers - Cost to sellers 
C) Total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers 
D) Total surplus = Value to sellers - Cost to sellers

Question 12

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Accepted Answer

A) $15. 
B) $30. 
C) $45. 
D) $90. 
A) $15. 
B) $30. 
C) $45. 
D) $90.

Question 13

Figure 7-6
  
-Refer to Figure 7-6.When the price falls from P₂ to P₁,producer surplus

Accepted Answer

A) decreases by an amount equal to C. 
B) decreases by an amount equal to A + B. 
C) decreases by an amount equal to A + C. 
D) increases by an amount equal to A + B. 
A) decreases by an amount equal to C. 
B) decreases by an amount equal to A + B. 
C) decreases by an amount equal to A + C. 
D) increases by an amount equal to A + B.

Question 14

Figure 7-10
  
-Refer to Figure 7-10.The equilibrium (market-clearing)price is

Accepted Answer

A) P₁. 
B) P₂. 
C) P₃. 
D) P₄. 
A) P₁. 
B) P₂. 
C) P₃. 
D) P₄.

Question 15

Figure 7-8
  
-Refer to Figure 7-8.Buyers who value this good 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 16

Answer the following questions based on the graph that represents J.R.'s demand for ribs per week of ribs at Judy's rib shack.
a.At the equilibrium price, how many ribs would J.R.be willing to purchase?
b.How much is J.R.willing to pay for 20 ribs?
c.What is the magnitude of J.R.'s consumer surplus be at the equilibrium price?
d.At the equilibrium price, how many ribs would Judy be willing to sell?
e.How high must the price of ribs be for Judy to supply 20 ribs to the market?
f.At the equilibrium price, what is the magnitude of total surplus in the market?
g.If the price of ribs rose to $10, what would happen to J.R.'s consumer surplus?
h.If the price of ribs fell to $5, what would happen to Judy's producer surplus?
i.Explain why the graph that is shown verifies the fact that the market equilibrium (quantity) maximizes the sum of producer and consumer surplus.

Accepted Answer

a. 40
b. $10.00
c. $80.00.
d. 40
e. $5
f

Question 17

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,consumer surplus is

Accepted Answer

A) $4. 
B) $8. 
C) $12. 
D) $16. 
A) $4. 
B) $8. 
C) $12. 
D) $16.

Question 18

Normative analysis refers to what

Accepted Answer

A) is. 
B) was. 
C) will be. 
D) ought to be. 
A) is. 
B) was. 
C) will be. 
D) ought to be.

Question 19

Efficiency is attained when

Accepted Answer

A) total surplus is maximized. 
B) producer surplus is maximized. 
C) all resources are being used. 
D) consumer surplus is maximized and producer surplus is minimized. 
A) total surplus is maximized. 
B) producer surplus is maximized. 
C) all resources are being used. 
D) consumer surplus is maximized and producer surplus is minimized.

Question 20

Efficiency in a market is achieved when

Accepted Answer

A) a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. 
B) the sum of producer surplus and consumer surplus is maximized. 
C) all firms are producing the good at the same low cost per unit. 
D) no buyer is willing to pay more than the equilibrium price for any unit of the good. 
A) a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. 
B) the sum of producer surplus and consumer surplus is maximized. 
C) all firms are producing the good at the same low cost per unit. 
D) no buyer is willing to pay more than the equilibrium price for any unit of the good.

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

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

If the government allowed a free market for transplant organs (such as kidneys)to exist,

Total surplus in a market is equal to

The Surgeon General announces that eating chocolate increases tooth decay.As a result,the equilibrium price of chocolate

Given the following equations two equations: Show how equation (1)can be used to derive equation (2).

Figure 7-8 -Refer to Figure 7-8.If the government mandated a price increase from Pₑ to a higher price,then

Total surplus

Market Supply and Demand for Pepperoni Pizza Table 7-5 -Refer to Table 7-5.At a price of $4.00,total surplus is

Producer surplus is

A simultaneous increase in both the demand for radios and the supply of radios would imply that

Which of the following equations is not valid?

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Figure 7-6 -Refer to Figure 7-6.When the price falls from P₂ to P₁,producer surplus

Figure 7-10 -Refer to Figure 7-10.The equilibrium (market-clearing)price is

Figure 7-8 -Refer to Figure 7-8.Buyers who value this good less than price are represented by which line segment?

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,consumer surplus is

Normative analysis refers to what

Efficiency is attained when

Efficiency in a market is achieved when

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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