Question 1

What does willingness to pay measure

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 seller actually receives for a good minus the minimum amount the seller is willing to accept 
C) the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept 
D) the maximum amount that a buyer will pay for a 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 seller actually receives for a good minus the minimum amount the seller is willing to accept 
C) the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept 
D) the maximum amount that a buyer will pay for a good

Question 2

How do economists tend to view ticket scalping

Accepted Answer

A) as a way for a few to profit while producing nothing of value 
B) as an inequitable interference in the orderly process of ticket distribution 
C) as a way of increasing the efficiency of ticket distribution 
D) as an unproductive activity which should be made illegal everywhere 
A) as a way for a few to profit while producing nothing of value 
B) as an inequitable interference in the orderly process of ticket distribution 
C) as a way of increasing the efficiency of ticket distribution 
D) as an unproductive activity which should be made illegal everywhere

Question 3

Which area is total surplus in a market

Accepted Answer

A) the total area under the demand curve and above the price 
B) the total area above the supply curve and up to the equilibrium price 
C) the total area under price and up to the point of equilibrium 
D) the total area between the demand and supply curves up to the point of equilibrium 
A) the total area under the demand curve and above the price 
B) the total area above the supply curve and up to the equilibrium price 
C) the total area under price and up to the point of equilibrium 
D) the total area between the demand and supply curves up to the point of equilibrium

Question 4

Suppose that Dylan has a change in his tastes such that he values avocados more than before.If the market price is the same as before,then what would happen to Dylan

Accepted Answer

A) Dylan's consumer surplus would increase since his willingness to pay decreases. 
B) Dylan's consumer surplus would increase since his willingness to pay increases. 
C) Dylan's consumer surplus would decrease since his willingness to pay decreases. 
D) Dylan's consumer surplus would decrease since his willingness to pay increases. 
A) Dylan's consumer surplus would increase since his willingness to pay decreases. 
B) Dylan's consumer surplus would increase since his willingness to pay increases. 
C) Dylan's consumer surplus would decrease since his willingness to pay decreases. 
D) Dylan's consumer surplus would decrease since his willingness to pay increases.

Question 5

If Paula is willing to pay $80 for Prince's last album,and the market-equilibrium price is $70,what is consumer surplus for Paula

Accepted Answer

A) $0 
B) $10 
C) $70 
D) $80 
A) $0 
B) $10 
C) $70 
D) $80

Question 6

What does a demand curve measure

Accepted Answer

A) a buyer's willingness to pay 
B) the actual price a buyer must pay to get the product 
C) the difference between a buyer's willingness to pay and the actual price of the product 
D) the least a buyer will pay for the product 
A) a buyer's willingness to pay 
B) the actual price a buyer must pay to get the product 
C) the difference between a buyer's willingness to pay and the actual price of the product 
D) the least a buyer will pay for the product

Question 7

If a market is allowed to move freely to its equilibrium price and quantity,what will be the result of an increase in demand on producer surplus and consumer surplus

Accepted Answer

A) increased producer surplus and reduced consumer surplus 
B) reduced producer surplus and reduced consumer surplus 
C) increased producer surplus and increased change in consumer surplus 
D) reduced producer surplus and uncertain change in consumer surplus 
A) increased producer surplus and reduced consumer surplus 
B) reduced producer surplus and reduced consumer surplus 
C) increased producer surplus and increased change in consumer surplus 
D) reduced producer surplus and uncertain change in consumer surplus

Question 8

What is producer surplus

Accepted Answer

A) the area under the supply curve to the left of the amount sold 
B) the amount a seller is paid less the cost of production 
C) the amount represented by the area under the supply curve 
D) the area under the supply curve to the right of the amount sold 
A) the area under the supply curve to the left of the amount sold 
B) the amount a seller is paid less the cost of production 
C) the amount represented by the area under the supply curve 
D) the area under the supply curve to the right of the amount sold

Question 9

The "invisible hand" is what concept in economics

Accepted Answer

A) a concept used to describe the welfare system in Canada 
B) a concept used by Adam Smith to describe the virtues of free markets 
C) a concept used by John Maynard Keynes to describe the role of government in guiding the allocation of resources in the economy 
D) a concept used by some economists to describe what the role of government should be in an economy: present but invisible 
A) a concept used to describe the welfare system in Canada 
B) a concept used by Adam Smith to describe the virtues of free markets 
C) a concept used by John Maynard Keynes to describe the role of government in guiding the allocation of resources in the economy 
D) a concept used by some economists to describe what the role of government should be in an economy: present but invisible

Question 10

Figure 7-4
  
-Refer to Figure 7-4.What will NOT occur when the price falls from P₂ to P₁

Accepted Answer

A) The sellers who still sell the good are worse off because they now receive less. 
B) The total quantity sold in the market increases. 
C) The total cost of what is now sold by sellers is actually higher. 
D) Producer surplus would fall by area A + B. 
A) The sellers who still sell the good are worse off because they now receive less. 
B) The total quantity sold in the market increases. 
C) The total cost of what is now sold by sellers is actually higher. 
D) Producer surplus would fall by area A + B.

Question 11

A buyer is willing to buy a product at a price greater than or equal to his willingness to pay,but would refuse to buy a product at a price less than his willingness to pay.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) It decreases. 
B) It falls to zero if price falls to zero. 
C) It increases. 
D) It falls to a minimum if price falls to zero. 
A) It decreases. 
B) It falls to zero if price falls to zero. 
C) It increases. 
D) It falls to a minimum if price falls to zero.

Question 13

When markets fail,public policy can potentially remedy the problem and increase economic efficiency.

Accepted Answer

A) True 
 B)False

Question 14

Figure 7-3
  
-Refer to Figure 7-3.Which area represents producer surplus at a price of P₁

Accepted Answer

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

Question 15

What is total surplus in a market

Accepted Answer

A) the total costs to sellers of providing the goods less the total value to buyers of the goods 
B) the total value to buyers of the goods less the total costs to sellers of providing those goods 
C) less than consumer surplus plus producer surplus 
D) greater than consumer surplus plus producer surplus 
A) the total costs to sellers of providing the goods less the total value to buyers of the goods 
B) the total value to buyers of the goods less the total costs to sellers of providing those goods 
C) less than consumer surplus plus producer surplus 
D) greater than consumer surplus plus producer surplus

Question 16

Why is the best price the particular price that results in quantity supplied being equal to quantity demanded

Accepted Answer

A) It maximizes sellers' costs. 
B) It maximizes profit for buyers. 
C) It maximizes the total welfare of buyers and sellers. 
D) It minimizes the expenditure of buyers. 
A) It maximizes sellers' costs. 
B) It maximizes profit for buyers. 
C) It maximizes the total welfare of buyers and sellers. 
D) It minimizes the expenditure of buyers.

Question 17

Suppose Lauren,Leslie,and Lyndsay 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 Lyndsay's willingness to pay was $30.Rank their consumer surplus from high to low.

Accepted Answer

A) Lauren, Lyndsay, and Leslie 
B) Leslie, Lyndsay, and Lauren 
C) Lyndsay, Leslie, and Lauren 
D) Lauren, Leslie, and Lyndsay 
A) Lauren, Lyndsay, and Leslie 
B) Leslie, Lyndsay, and Lauren 
C) Lyndsay, Leslie, and Lauren 
D) Lauren, Leslie, and Lyndsay

Question 18

What is consumer surplus

Accepted Answer

A) the quantity of a good consumers get free 
B) the amount a consumer has to pay less the amount the consumer was willing to pay 
C) the amount a consumer is willing to pay less the amount the consumer actually pays 
D) the total value of a good to a consumer 
A) the quantity of a good consumers get free 
B) the amount a consumer has to pay less the amount the consumer was willing to pay 
C) the amount a consumer is willing to pay less the amount the consumer actually pays 
D) the total value of a good to a consumer

Question 19

When does inefficiency exist in any economy

Accepted Answer

A) when a good is not being consumed by buyers who value it most highly 
B) when a good is not distributed fairly among buyers 
C) when a good is not being produced by the highest-cost producer 
D) when a good is being consumed by buyers who value it most highly 
A) when a good is not being consumed by buyers who value it most highly 
B) when a good is not distributed fairly among buyers 
C) when a good is not being produced by the highest-cost producer 
D) when a good is being consumed by buyers who value it most highly

Question 20

What does producer surplus measure

Accepted Answer

A) the well-being of society as a whole 
B) the well-being of sellers 
C) the well-being of buyers and sellers 
D) the well-being of buyers 
A) the well-being of society as a whole 
B) the well-being of sellers 
C) the well-being of buyers and sellers 
D) the well-being of buyers

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

What does willingness to pay measure

How do economists tend to view ticket scalping

Which area is total surplus in a market

Suppose that Dylan has a change in his tastes such that he values avocados more than before.If the market price is the same as before,then what would happen to Dylan

If Paula is willing to pay $80 for Prince's last album,and the market-equilibrium price is $70,what is consumer surplus for Paula

What does a demand curve measure

If a market is allowed to move freely to its equilibrium price and quantity,what will be the result of an increase in demand on producer surplus and consumer surplus

What is producer surplus

The "invisible hand" is what concept in economics

Figure 7-4 -Refer to Figure 7-4.What will NOT occur when the price falls from P₂ to P₁

A buyer is willing to buy a product at a price greater than or equal to his willingness to pay,but would refuse to buy a product at a price less than his willingness to pay.

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

When markets fail,public policy can potentially remedy the problem and increase economic efficiency.

Figure 7-3 -Refer to Figure 7-3.Which area represents producer surplus at a price of P₁

What is total surplus in a market

Why is the best price the particular price that results in quantity supplied being equal to quantity demanded

Suppose Lauren,Leslie,and Lyndsay 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 Lyndsay's willingness to pay was $30.Rank their consumer surplus from high to low.

What is consumer surplus

When does inefficiency exist in any economy

What does producer surplus measure

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

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

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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