Question 1

Which of the following is not true when the price of a good or service falls?

Accepted Answer

A) Buyers who were already buying the good or service are better off. 
B) Some new buyers, who are now willing to buy, enter the market. 
C) The total consumer surplus in the market increases. 
D) The total value of purchases before and after the price change is the same. 
A) Buyers who were already buying the good or service are better off. 
B) Some new buyers, who are now willing to buy, enter the market. 
C) The total consumer surplus in the market increases. 
D) The total value of purchases before and after the price change is the same.

Question 2

Figure 7-12  
-Refer to Figure 7-12. When the price rises from P1 to P2, which area represents the increase in producer surplus due to new producers entering the market?

Accepted Answer

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

Question 3

All else equal, an increase in demand will always increase consumer surplus.

Accepted Answer

A) True 
 B)False

Question 4

Figure 7-17  
-Refer to Figure 7-17. Which area represents consumer surplus when the price is P1?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 5

Figure 7-2  
-Refer to Figure 7-2. When the price rises from P1 to P2, consumer surplus

Accepted Answer

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

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. Which of the following statements is correct?

Accepted Answer

A) Neither Bob's consumer surplus nor Charisse's consumer surplus can exceed Allison's consumer surplus, for any price of an orange. 
B) All three individuals will buy at least one orange only if the price of an orange is less than $0.25. 
C) If the price of an orange is $0.60, then consumer surplus is $4.90. 
D) All of the above are correct. 
A) Neither Bob's consumer surplus nor Charisse's consumer surplus can exceed Allison's consumer surplus, for any price of an orange. 
B) All three individuals will buy at least one orange only if the price of an orange is less than $0.25. 
C) If the price of an orange is $0.60, then consumer surplus is $4.90. 
D) All of the above are correct.

Question 7

Figure 7-19  
-Refer to Figure 7-19. At equilibrium, producer surplus is represented by the area

Accepted Answer

A) F. 
B) F+G. 
C) D+H+F. 
D) D+H+F+G+I. 
A) F. 
B) F+G. 
C) D+H+F. 
D) D+H+F+G+I.

Question 8

When policymakers are considering a particular action, they can use consumer surplus as a(n)

Accepted Answer

A) objective measure of the benefits to buyers as determined by policymakers. 
B) measure of the benefits to buyers as the buyers perceive them. 
C) potentially flawed measure of the benefits to buyers if the buyers are not rational. 
D) Both b) and c) are correct. 
A) objective measure of the benefits to buyers as determined by policymakers. 
B) measure of the benefits to buyers as the buyers perceive them. 
C) potentially flawed measure of the benefits to buyers if the buyers are not rational. 
D) Both b) and c) are correct.

Question 9

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Accepted Answer

A) Dallas's consumer surplus would be unaffected. 
B) Dallas's consumer surplus would increase. 
C) Dallas's consumer surplus would decrease. 
D) Dallas would be wise to buy fewer strawberries than before. 
A) Dallas's consumer surplus would be unaffected. 
B) Dallas's consumer surplus would increase. 
C) Dallas's consumer surplus would decrease. 
D) Dallas would be wise to buy fewer strawberries than before.

Question 10

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

Accepted Answer

A) 31 cents. 
B) 38 cents. 
C) 45 cents. 
D) 55 cents. 
A) 31 cents. 
B) 38 cents. 
C) 45 cents. 
D) 55 cents.

Question 11

Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20. Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30. Which of the following statements is correct?

Accepted Answer

A) Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been a buyer. 
B) Brent's consumer surplus is the smallest of the three individual consumer surpluses. 
C) For the three individuals together, consumer surplus amounts to $60. 
D) The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener. 
A) Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been a buyer. 
B) Brent's consumer surplus is the smallest of the three individual consumer surpluses. 
C) For the three individuals together, consumer surplus amounts to $60. 
D) The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener.

Question 12

Economists tend to see ticket scalping as

Accepted Answer

A) a way for a few to profit without producing anything of value. 
B) an inequitable interference in the orderly process of ticket distribution. 
C) a way of increasing the efficiency of ticket distribution. 
D) an unproductive activity which should be made illegal everywhere. 
A) a way for a few to profit without producing anything of value. 
B) an inequitable interference in the orderly process of ticket distribution. 
C) a way of increasing the efficiency of ticket distribution. 
D) an unproductive activity which should be made illegal everywhere.

Question 13

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 are selling 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. Which of the following graphs represents the market demand curve?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 14

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

Accepted Answer

A) $50. 
B) $100. 
C) $175. 
D) $350. 
A) $50. 
B) $100. 
C) $175. 
D) $350.

Question 15

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 two 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 hold an auction to sell the two tickets. Who makes the winning bids, and what do they offer to pay for the tickets?

Accepted Answer

A) Michael and Earvin; more than $350 but less than or equal to $400 
B) Michael and Earvin; more than $400 but less than or equal to $500 
C) Earvin and Larry; more than $300 but less than or equal to $350 
D) Larry and Charles; less than $300 
A) Michael and Earvin; more than $350 but less than or equal to $400 
B) Michael and Earvin; more than $400 but less than or equal to $500 
C) Earvin and Larry; more than $300 but less than or equal to $350 
D) Larry and Charles; less than $300

Question 16

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?

Accepted Answer

A) $0 
B) $10 
C) $40 
D) $50 
A) $0 
B) $10 
C) $40 
D) $50

Question 17

Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market.

Accepted Answer

A) True 
 B)False

Question 18

Figure 7-12  
-Refer to Figure 7-12. When the price is P1, producer surplus is

Accepted Answer

A) A. 
B) C. 
C) A+B. 
D) C+D. 
A) A. 
B) C. 
C) A+B. 
D) C+D.

Question 19

Figure 7-18  
-Refer to Figure 7-18. The efficient price is

Accepted Answer

A) $22, and the efficient quantity is 40. 
B) $22, and the efficient quantity is 110. 
C) $16, and the efficient quantity is 80. 
D) $8, and the efficient quantity is 40. 
A) $22, and the efficient quantity is 40. 
B) $22, and the efficient quantity is 110. 
C) $16, and the efficient quantity is 80. 
D) $8, and the efficient quantity is 40.

Question 20

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6,

Accepted Answer

A) the resulting increase in consumer surplus would be larger than any possible loss of producer surplus. 
B) the resulting increase in consumer surplus would be smaller than any possible loss of producer surplus. 
C) any possible increase in producer surplus would be larger than the loss of consumer surplus. 
D) any possible increase in producer surplus would be smaller than the loss of consumer surplus. 
A) the resulting increase in consumer surplus would be larger than any possible loss of producer surplus. 
B) the resulting increase in consumer surplus would be smaller than any possible loss of producer surplus. 
C) any possible increase in producer surplus would be larger than the loss of consumer surplus. 
D) any possible increase in producer surplus would be smaller than the loss of consumer surplus.

Which of the following is not true when the price of a good or service falls?

Figure 7-12 -Refer to Figure 7-12. When the price rises from P1 to P2, which area represents the increase in producer surplus due to new producers entering the market?

All else equal, an increase in demand will always increase consumer surplus.

Figure 7-17 -Refer to Figure 7-17. Which area represents consumer surplus when the price is P1?

Figure 7-2 -Refer to Figure 7-2. When the price rises from P1 to P2, consumer surplus

Figure 7-19 -Refer to Figure 7-19. At equilibrium, producer surplus is represented by the area

When policymakers are considering a particular action, they can use consumer surplus as a(n)

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20. Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30. Which of the following statements is correct?

Economists tend to see ticket scalping as

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

Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market.

Figure 7-12 -Refer to Figure 7-12. When the price is P1, producer surplus is

Figure 7-18 -Refer to Figure 7-18. The efficient price is

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6,

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

Which of the following is not true when the price of a good or service falls?

Figure 7-12 -Refer to Figure 7-12. When the price rises from P1 to P2, which area represents the increase in producer surplus due to new producers entering the market?

All else equal, an increase in demand will always increase consumer surplus.

Figure 7-17 -Refer to Figure 7-17. Which area represents consumer surplus when the price is P1?

Figure 7-2 -Refer to Figure 7-2. When the price rises from P1 to P2, consumer surplus

Figure 7-19 -Refer to Figure 7-19. At equilibrium, producer surplus is represented by the area

When policymakers are considering a particular action, they can use consumer surplus as a(n)

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20. Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30. Which of the following statements is correct?

Economists tend to see ticket scalping as

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

Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market.

Figure 7-12 -Refer to Figure 7-12. When the price is P1, producer surplus is

Figure 7-18 -Refer to Figure 7-18. The efficient price is

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6,

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