Question 1

Who is the marginal seller

Accepted Answer

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

Question 2

Figure 7-7
  
-Refer to Figure 7-7.Which segment represents buyers who value this good more than the current price

Accepted Answer

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

Question 3

Orange juice and apple juice are substitutes.Suppose bad weather sharply reduced the orange harvest.What would the impact be

Accepted Answer

A) increase consumer surplus in the market for orange juice but 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 but 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 but 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 but 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 4

Figure 7-7
  
-Refer to Figure 7-7.If price were higher than Pe,what would result

Accepted Answer

A) Total surplus would fall. 
B) Consumer surplus would increase. 
C) Total surplus would rise, since producer surplus would increase. 
D) Consumer surplus would be greater than producer surplus. 
A) Total surplus would fall. 
B) Consumer surplus would increase. 
C) Total surplus would rise, since producer surplus would increase. 
D) Consumer surplus would be greater than producer surplus.

Question 5

Figure 7-1
  
-Refer to Figure 7-1.Which does NOT occur when the price rises from P₁ to P₂

Accepted Answer

A) The buyers who still buy the good are worse off because they now pay more. 
B) Some buyers leave the market because they are not willing to buy the good at the higher price. 
C) The total value of what is now purchased by buyers is actually higher. 
D) Consumer surplus in the market falls. 
A) The buyers who still buy the good are worse off because they now pay more. 
B) Some buyers leave the market because they are not willing to buy the good at the higher price. 
C) The total value of what is now purchased by buyers is actually higher. 
D) Consumer surplus in the market falls.

Question 6

With respect to welfare economics,why is the equilibrium price of a product considered to be the best price

Accepted Answer

A) It maximizes total revenue to firms and total utility to buyers. 
B) It maximizes the total welfare of buyers and sellers. 
C) It minimizes costs and maximizes profits of sellers. 
D) It minimizes the level of welfare payments to those living close to the poverty line. 
A) It maximizes total revenue to firms and total utility to buyers. 
B) It maximizes the total welfare of buyers and sellers. 
C) It minimizes costs and maximizes profits of sellers. 
D) It minimizes the level of welfare payments to those living close to the poverty line.

Question 7

What is welfare economics

Accepted Answer

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

Question 8

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

Question 9

Market demand is given as QD = 150 - 0.5P.Market supply is given as QS = 2P.In a perfectly competitive equilibrium,what will be the value of consumer surplus

Accepted Answer

A) $8700 
B) $10,200 
C) $14,400 
D) $28,800 
A) $8700 
B) $10,200 
C) $14,400 
D) $28,800

Question 10

Consider the following equation: P = 50 - 0.5Q (Demand) and P = 2Q (Supply).Answer the following questions.
a.What is the market equilibrium price and quantity
b.What is the consumer surplus and producer surplus at the market equilibrium
c.Suppose that government sets a price ceiling of $30.What is the quantity supplied in the market now
d.What is the consumer surplus and producer surplus based on the new price
e.What is the loss of economic surplus due to the price ceiling

Accepted Answer

a.  Price is $40 and quantity is 20 unit

Question 11

Market demand is given as QD = 60 - 3P.Market supply is given as QS = 3P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Accepted Answer

A) $10 
B) $40 
C) $150 
D) $200 
A) $10 
B) $40 
C) $150 
D) $200

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

What does the area below a demand curve and above the price measure

Accepted Answer

A) producer surplus 
B) total surplus 
C) consumer surplus 
D) willingness to pay 
A) producer surplus 
B) total surplus 
C) consumer surplus 
D) willingness to pay

Question 14

Table 7-4
  
-Refer to Table 7-4.At a price of $6,how large would total surplus be

Accepted Answer

A) more than it would be at the equilibrium price 
B) less than it would be at the equilibrium price 
C) more than it could be when price is $9 
D) less than it could be when price is $3 
A) more than it would be at the equilibrium price 
B) less than it would be at the equilibrium price 
C) more than it could be when price is $9 
D) less than it could be when price is $3

Question 15

Market demand is given as QD = 210 - 3P.Market supply is given as QS = 2P + 50.In a perfectly competitive equilibrium,what will be the value of consumer surplus

Accepted Answer

A) $1400 
B) $2166 
C) $3267 
D) $6538 
A) $1400 
B) $2166 
C) $3267 
D) $6538

Question 16

Figure 7-3
  
-Refer to Figure 7-3.When the price rises from P₁ to P₂,which area represents the increase in producer surplus to existing producers

Accepted Answer

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

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

In order for market outcomes to maximize the total benefits to buyers and sellers,the markets must be perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 19

At Nick's Bakery,the cost to make Nick's homemade chocolate cake is $4 per cake.He sells four and receives a total of $24 worth of producer surplus.What is Nick selling his cakes for

Accepted Answer

A) $2 each 
B) $7 each 
C) $8 each 
D) $10 each 
A) $2 each 
B) $7 each 
C) $8 each 
D) $10 each

Question 20

The area above the demand curve and below the price measures the consumer surplus in a market.

Accepted Answer

A) True 
 B)False

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

Who is the marginal seller

Figure 7-7 -Refer to Figure 7-7.Which segment represents buyers who value this good more than the current price

Orange juice and apple juice are substitutes.Suppose bad weather sharply reduced the orange harvest.What would the impact be

Figure 7-7 -Refer to Figure 7-7.If price were higher than Pe,what would result

Figure 7-1 -Refer to Figure 7-1.Which does NOT occur when the price rises from P₁ to P₂

With respect to welfare economics,why is the equilibrium price of a product considered to be the best price

What is welfare economics

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

Market demand is given as QD = 150 - 0.5P.Market supply is given as QS = 2P.In a perfectly competitive equilibrium,what will be the value of consumer surplus

Market demand is given as QD = 60 - 3P.Market supply is given as QS = 3P.In a perfectly competitive equilibrium,what will be the value of producer surplus

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

What does the area below a demand curve and above the price measure

Table 7-4 -Refer to Table 7-4.At a price of $6,how large would total surplus be

Market demand is given as QD = 210 - 3P.Market supply is given as QS = 2P + 50.In a perfectly competitive equilibrium,what will be the value of consumer surplus

Figure 7-3 -Refer to Figure 7-3.When the price rises from P₁ to P₂,which area represents the increase in producer surplus to existing producers

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

In order for market outcomes to maximize the total benefits to buyers and sellers,the markets must be perfectly competitive.

At Nick's Bakery,the cost to make Nick's homemade chocolate cake is $4 per cake.He sells four and receives a total of $24 worth of producer surplus.What is Nick selling his cakes for

The area above the demand curve and below the price measures the consumer surplus in a market.

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

Filters

Market demand is given as Q_D= 150 - 0.5P.Market supply is given as Q_S= 2P.In a perfectly competitive equilibrium,what will be the value of consumer surplus

Market demand is given as Q_D= 60 - 3P.Market supply is given as Q_S= 3P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Market demand is given as Q_D= 210 - 3P.Market supply is given as Q_S= 2P + 50.In a perfectly competitive equilibrium,what will be the value of consumer surplus