Question 1

Figure 7-5  
-Refer to Figure 7-5. If the government imposes a price floor of $120 in this market, then consumer surplus will decrease by

Accepted Answer

A) $75. 
B) $125. 
C) $225. 
D) $300. 
A) $75. 
B) $125. 
C) $225. 
D) $300.

Question 2

Figure 7-4  
-Refer to Figure 7-4. If the price of the good is $12, then consumer surplus is

Accepted Answer

A) $9. 
B) $11. 
C) $13. 
D) $16. 
A) $9. 
B) $11. 
C) $13. 
D) $16.

Question 3

Figure 7-10  
-Refer to Figure 7-10. If the equilibrium price is $50, what is the producer surplus?

Accepted Answer

A) $625 
B) $3,750 
C) $5,625 
D) $10,000 
A) $625 
B) $3,750 
C) $5,625 
D) $10,000

Question 4

Figure 7-17  
-Refer to Figure 7-17. When the price is P1, area B represents

Accepted Answer

A) total surplus. 
B) producer surplus. 
C) consumer surplus. 
D) profits. 
A) total surplus. 
B) producer surplus. 
C) consumer surplus. 
D) profits.

Question 5

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Accepted Answer

A) True 
 B)False

Question 6

Total surplus is

Accepted Answer

A) the total cost to sellers of providing the good minus the total value of the good to buyers. 
B) the total value of the good to buyers minus the cost to sellers of providing the good. 
C) the difference between consumer surplus and sellers' cost. 
D) always smaller than producer surplus. 
A) the total cost to sellers of providing the good minus the total value of the good to buyers. 
B) the total value of the good to buyers minus the cost to sellers of providing the good. 
C) the difference between consumer surplus and sellers' cost. 
D) always smaller than producer surplus.

Question 7

A supply curve can be used to measure producer surplus because it reflects

Accepted Answer

A) the actions of sellers. 
B) quantity supplied. 
C) sellers' costs. 
D) the amount that will be purchased by consumers in the market. 
A) the actions of sellers. 
B) quantity supplied. 
C) sellers' costs. 
D) the amount that will be purchased by consumers in the market.

Question 8

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Accepted Answer

A) Consumer surplus decreases. 
B) Consumer surplus remains unchanged. 
C) Consumer surplus increases. 
D) Consumer surplus may increase, decrease, or remain unchanged. 
A) Consumer surplus decreases. 
B) Consumer surplus remains unchanged. 
C) Consumer surplus increases. 
D) Consumer surplus may increase, decrease, or remain unchanged.

Question 9

Table 7-5
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. $$\begin{array} { | l | c | c | c | } 
\hline & \text { First Orangp } & \text { Second Orange } & \text { Third Orange } \
\hline \text { Alliton } & \$ 2.00 & \$ 1.50 & \$ 0.75 \
\hline \text { Bob } & \$ 1.50 & \$ 1.00 & \$ 0.80 \
\hline \text { Chariste } & \$ 0.75 & \$ 0.25 & \$ 0 \
\hline
\end{array}$$
-Refer to Table 7-5. Who experiences the largest gain in consumer surplus when the price of an orange decreases from $1.05 to $0.75?

Accepted Answer

A) Allison 
B) Bob 
C) Charisse 
D) Allison and Bob experience the same gain in consumer surplus, and Charisse's gain is zero. 
A) Allison 
B) Bob 
C) Charisse 
D) Allison and Bob experience the same gain in consumer surplus, and Charisse's gain is zero.

Question 10

Table 7-6
 $$\begin{array} { | l | c } 
\hline \text { Buygr } & \text { Willingrins to Pay } \
\hline \text { Michad } & \$ 500 \
\hline \text { Farvin } & \$ 400 \
\hline \text { Larry } & \$ 350 \
\hline \text { Charles } & \$ 300 \
\hline
\end{array}$$
-Refer to Table 7-6. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You offer to sell the tickets for $325. How many tickets do you sell, and what is the total consumer surplus in the market?

Accepted Answer

A) one ticket; $175 
B) two tickets; $225 
C) three tickets; $225 
D) three tickets; $275 
A) one ticket; $175 
B) two tickets; $225 
C) three tickets; $225 
D) three tickets; $275

Question 11

Chad is willing to pay $5.00 to get his first cup of morning latté. He buys a cup from a vendor selling latté for $3.75 per cup. Chad's consumer surplus is

Accepted Answer

A) $8.75. 
B) $5.00. 
C) $3.75. 
D) $1.25. 
A) $8.75. 
B) $5.00. 
C) $3.75. 
D) $1.25.

Question 12

A seller's opportunity cost measures the

Accepted Answer

A) value of everything she must give up to produce a good. 
B) amount she is paid for a good minus her cost of providing it. 
C) consumer surplus. 
D) out of pocket expenses to produce a good but not the value of her time. 
A) value of everything she must give up to produce a good. 
B) amount she is paid for a good minus her cost of providing it. 
C) consumer surplus. 
D) out of pocket expenses to produce a good but not the value of her time.

Question 13

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

Accepted Answer

A) consumer has consumer surplus of $5 if he buys the good. 
B) consumer does not purchase the good. 
C) price of the good will rise due to market forces. 
D) market is out of equilibrium. 
A) consumer has consumer surplus of $5 if he buys the good. 
B) consumer does not purchase the good. 
C) price of the good will rise due to market forces. 
D) market is out of equilibrium.

Question 14

Figure 7-18  
-Refer to Figure 7-18. At the equilibrium price, consumer surplus is

Accepted Answer

A) $480. 
B) $640. 
C) $1,120. 
D) $1,280. 
A) $480. 
B) $640. 
C) $1,120. 
D) $1,280.

Question 15

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market

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 16

Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $425. Billie Jo's willingness to pay for the dishwasher is

Accepted Answer

A) $150. 
B) $425. 
C) $500. 
D) $850. 
A) $150. 
B) $425. 
C) $500. 
D) $850.

Question 17

Figure 7-11  
-Refer to Figure 7-11. If the government imposes a price ceiling of $70 in this market, then producer surplus will decrease by

Accepted Answer

A) $50. 
B) $125. 
C) $150. 
D) $200. 
A) $50. 
B) $125. 
C) $150. 
D) $200.

Question 18

Inefficiency exists in an economy when a good is

Accepted Answer

A) being produced with less than all available resources. 
B) not distributed fairly among buyers. 
C) not being produced by the lowest-cost producers. 
D) being consumed by buyers who value it most highly. 
A) being produced with less than all available resources. 
B) not distributed fairly among buyers. 
C) not being produced by the lowest-cost producers. 
D) being consumed by buyers who value it most highly.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

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

Figure 7-5 -Refer to Figure 7-5. If the government imposes a price floor of $120 in this market, then consumer surplus will decrease by

Figure 7-4 -Refer to Figure 7-4. If the price of the good is $12, then consumer surplus is

Figure 7-10 -Refer to Figure 7-10. If the equilibrium price is $50, what is the producer surplus?

Figure 7-17 -Refer to Figure 7-17. When the price is P1, area B represents

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Total surplus is

A supply curve can be used to measure producer surplus because it reflects

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Chad is willing to pay $5.00 to get his first cup of morning latté. He buys a cup from a vendor selling latté for $3.75 per cup. Chad's consumer surplus is

A seller's opportunity cost measures the

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

Figure 7-18 -Refer to Figure 7-18. At the equilibrium price, consumer surplus is

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market

Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $425. Billie Jo's willingness to pay for the dishwasher is

Figure 7-11 -Refer to Figure 7-11. If the government imposes a price ceiling of $70 in this market, then producer surplus will decrease by

Inefficiency exists in an economy when a good is

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

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

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

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 Macroeconomic Models

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

Six Debates Over Macroeconomic Policy

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