Question 1

Laissez-faire is a French expression which literally means

Accepted Answer

A) to make do. 
B) to get involved. 
C) whatever works. 
D) allow them to do. 
A) to make do. 
B) to get involved. 
C) whatever works. 
D) allow them to do.

Question 2

If the demand for light bulbs increases, producer surplus in the market for light bulbs

Accepted Answer

A) increases. 
B) decreases. 
C) remains the same. 
D) may increase, decrease, or remain the same. 
A) increases. 
B) decreases. 
C) remains the same. 
D) may increase, decrease, or remain the same.

Question 3

The marginal seller is the seller who

Accepted Answer

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

Question 4

Figure 7-2  
-Refer to Figure 7-2. Area C represents the

Accepted Answer

A) decrease in consumer surplus that results from a downward-sloping demand curve. 
B) consumer surplus to new consumers who enter the market when the price falls from P2 to P1. 
C) increase in producer surplus when quantity sold increases from Q2 to Q1. 
D) decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2. 
A) decrease in consumer surplus that results from a downward-sloping demand curve. 
B) consumer surplus to new consumers who enter the market when the price falls from P2 to P1. 
C) increase in producer surplus when quantity sold increases from Q2 to Q1. 
D) decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2.

Question 5

Table 7-7
The following table represents the costs of five possible sellers. $$\begin{array} { | l | l | } 
\hline \text { Seller } & \text { Cost } \
\hline \text { Abby } & \$ 1,500 \
\hline \text { Babby } & \$ 1,200 \
\hline \text { Carlos } & \$ 1,000 \
\hline \text { Dianne } & \$ 750 \
\hline \text { Evalina } & \$ 500 \
\hline
\end{array}$$
-Refer to Table 7-7. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 3 if the price is

Accepted Answer

A) $670. 
B) $770. 
C) $970. 
D) $1,170. 
A) $670. 
B) $770. 
C) $970. 
D) $1,170.

Question 6

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. If the market price of an orange is $1.20, then consumer surplus amounts to

Accepted Answer

A) $0.70. 
B) $1.10. 
C) $1.40. 
D) $5.00. 
A) $0.70. 
B) $1.10. 
C) $1.40. 
D) $5.00.

Question 7

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit. We know that

Accepted Answer

A) the equilibrium price of good x is somewhere between $35 and $40. 
B) the equilibrium quantity of good x exceeds 500 units. 
C) 500 units is not an efficient quantity of good x. 
D) All of the above are correct. 
A) the equilibrium price of good x is somewhere between $35 and $40. 
B) the equilibrium quantity of good x exceeds 500 units. 
C) 500 units is not an efficient quantity of good x. 
D) All of the above are correct.

Question 8

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. If the market price of an orange increases from $0.60 to $1.05, then consumer surplus

Accepted Answer

A) increases by $2.90. 
B) decreases by $2.25. 
C) decreases by $2.70. 
D) decreases by $3.85. 
A) increases by $2.90. 
B) decreases by $2.25. 
C) decreases by $2.70. 
D) decreases by $3.85.

Question 9

Figure 7-3  
-Refer to Figure 7-3. Which area represents consumer surplus at a price of P2?

Accepted Answer

A) ABD 
B) ACG 
C) BCDF 
D) DFG 
A) ABD 
B) ACG 
C) BCDF 
D) DFG

Question 10

An increase in price increases consumer surplus.

Accepted Answer

A) True 
 B)False

Question 11

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $45.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following will cause an increase in consumer surplus?

Accepted Answer

A) an increase in the production cost of the good 
B) a technological improvement in the production of the good 
C) a decrease in the number of sellers of the good 
D) the imposition of a binding price floor in the market 
A) an increase in the production cost of the good 
B) a technological improvement in the production of the good 
C) a decrease in the number of sellers of the good 
D) the imposition of a binding price floor in the market

Question 13

Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. $$\begin{array} { | c | c | } 
\hline \text { Buyer } & \text { Willingnes to Pay } \
\hline \text { Jenrifer } & \$ 10 \
\hline \text { Bryce } & \$ 15 \
\hline \text { Dan } & \$ 20 \
\hline \text { David } & \$ 25 \
\hline \text { Ker } & \$ 50 \
\hline \text { Lisa } & \$ 60 \
\hline
\end{array}$$
-Refer to Table 7-4. If tickets sell for $20 each, then what is the total consumer surplus in the market?

Accepted Answer

A) $5 
B) $30 
C) $40 
D) $75 
A) $5 
B) $30 
C) $40 
D) $75

Question 14

Figure 7-12  
-Refer to Figure 7-12. When the price rises from P1 to P2, what area represents the increase in producer surplus?

Accepted Answer

A) A 
B) A+B 
C) A+B+C 
D) G 
A) A 
B) A+B 
C) A+B+C 
D) G

Question 15

Total surplus

Accepted Answer

A) can be used to measure a market's efficiency. 
B) is the sum of consumer and producer surplus. 
C) is the to value to buyers minus the cost to sellers. 
D) All of the above are correct. 
A) can be used to measure a market's efficiency. 
B) is the sum of consumer and producer surplus. 
C) is the to value to buyers minus the cost to sellers. 
D) All of the above are correct.

Question 16

Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then

Accepted Answer

A) the marginal buyer's willingness to pay for the 100th unit of the good is $25. 
B) the sum of the five buyers' willingness to pay for the 100th unit of the good is $25. 
C) the average of the five buyers' willingness to pay for the 100th unit of the good is $25. 
D) all of the five buyers are willing to pay at least $25 for the 100th unit of the good. 
A) the marginal buyer's willingness to pay for the 100th unit of the good is $25. 
B) the sum of the five buyers' willingness to pay for the 100th unit of the good is $25. 
C) the average of the five buyers' willingness to pay for the 100th unit of the good is $25. 
D) all of the five buyers are willing to pay at least $25 for the 100th unit of the good.

Question 17

Figure 7-12  
-Refer to Figure 7-12. When the price falls from P2 to P1, which of the following would not be true?

Accepted Answer

A) The sellers who still sell the good are worse off because they now receive less. 
B) Some sellers leave the market because they are not willing to sell the good at the lower price. 
C) The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price. 
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) Some sellers leave the market because they are not willing to sell the good at the lower price. 
C) The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price. 
D) Producer surplus would fall by area A + B.

Question 18

Motor oil and gasoline are complements. If the price of motor oil decreases, consumer surplus in the gasoline 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 19

The Surgeon General announces that eating apples promotes healthy teeth. As a result, the equilibrium price of apples

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 20

The decisions of buyers and sellers that affect people who are not participants in the market create

Accepted Answer

A) market power. 
B) externalities. 
C) profiteering. 
D) market equilibrium. 
A) market power. 
B) externalities. 
C) profiteering. 
D) market equilibrium.

Laissez-faire is a French expression which literally means

If the demand for light bulbs increases, producer surplus in the market for light bulbs

The marginal seller is the seller who

Figure 7-2 -Refer to Figure 7-2. Area C represents the

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500^th unit, and the cost to the marginal seller is $35 for the 500^th unit. We know that

Figure 7-3 -Refer to Figure 7-3. Which area represents consumer surplus at a price of P2?

An increase in price increases consumer surplus.

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $45.

Which of the following will cause an increase in consumer surplus?

Figure 7-12 -Refer to Figure 7-12. When the price rises from P1 to P2, what area represents the increase in producer surplus?

Total surplus

Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then

Figure 7-12 -Refer to Figure 7-12. When the price falls from P2 to P1, which of the following would not be true?

Motor oil and gasoline are complements. If the price of motor oil decreases, consumer surplus in the gasoline market

The Surgeon General announces that eating apples promotes healthy teeth. As a result, the equilibrium price of apples

The decisions of buyers and sellers that affect people who are not participants in the market create

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

Filters

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

Laissez-faire is a French expression which literally means

If the demand for light bulbs increases, producer surplus in the market for light bulbs

The marginal seller is the seller who

Figure 7-2 -Refer to Figure 7-2. Area C represents the

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit. We know that

Figure 7-3 -Refer to Figure 7-3. Which area represents consumer surplus at a price of P2?

An increase in price increases consumer surplus.

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $45.

Which of the following will cause an increase in consumer surplus?

Figure 7-12 -Refer to Figure 7-12. When the price rises from P1 to P2, what area represents the increase in producer surplus?

Total surplus

Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then

Figure 7-12 -Refer to Figure 7-12. When the price falls from P2 to P1, which of the following would not be true?

Motor oil and gasoline are complements. If the price of motor oil decreases, consumer surplus in the gasoline market

The Surgeon General announces that eating apples promotes healthy teeth. As a result, the equilibrium price of apples

The decisions of buyers and sellers that affect people who are not participants in the market create

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

Filters

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500^th unit, and the cost to the marginal seller is $35 for the 500^th unit. We know that