Question 1

Consumer surplus is

Accepted Answer

A) a concept that helps us make normative statements about the desirability of market outcomes. 
B) represented on a graph by the area below the demand curve and above the price. 
C) a good measure of economic welfare if buyers' preferences are the primary concern. 
D) All of the above are correct. 
A) a concept that helps us make normative statements about the desirability of market outcomes. 
B) represented on a graph by the area below the demand curve and above the price. 
C) a good measure of economic welfare if buyers' preferences are the primary concern. 
D) All of the above are correct.

Question 2

Economists say that a market where goods are not consumed by those valuing the goods most highly is

Accepted Answer

A) laissez-faire.. 
B) unequal. 
C) inefficient. 
D) rational. 
A) laissez-faire.. 
B) unequal. 
C) inefficient. 
D) rational.

Question 3

All else equal, an increase in supply will cause an increase in consumer surplus.

Accepted Answer

A) True 
 B)False

Question 4

On a graph, the area below a demand curve and above the price measures

Accepted Answer

A) producer surplus. 
B) consumer surplus. 
C) deadweight loss. 
D) willingness to pay. 
A) producer surplus. 
B) consumer surplus. 
C) deadweight loss. 
D) willingness to pay.

Question 5

Figure 7-9  
-Refer to Figure 7-9. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers?

Accepted Answer

A) $625 
B) $2,500 
C) $3,125 
D) $5,625 
A) $625 
B) $2,500 
C) $3,125 
D) $5,625

Question 6

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
 $$\begin{array} { | c | c | } 
\hline \text { Buyer } & \text { Willingritis to Pay } \
\hline \text { Carlos } & \$ 15 \
\hline \text { Quilena } & \$ 25 \
\hline \text { Wilbur } & \$ 35 \
\hline \text { Ming-la } & \$ 45 \
\hline
\end{array}$$
-Refer to Table 7-3. If the market price for the good is $20, who will purchase the good?

Accepted Answer

A) Ming-la only 
B) Carlos and Quilana only 
C) Quilana and Wilbur only 
D) Quilana, Wilbur, and Ming-la only 
A) Ming-la only 
B) Carlos and Quilana only 
C) Quilana and Wilbur only 
D) Quilana, Wilbur, and Ming-la only

Question 7

Figure 7-1  
-Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to

Accepted Answer

A) $50. 
B) $100. 
C) $150. 
D) $200. 
A) $50. 
B) $100. 
C) $150. 
D) $200.

Question 8

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is $$P = 10 + ( 1 / 4 ) Q ^ { S }$$ . If 80 units of the good are produced and sold, then producer surplus amounts to $1,200.

Accepted Answer

A) True 
 B)False

Question 9

If the government removes a binding price ceiling in a market, then the producer surplus in that market will increase.

Accepted Answer

A) True 
 B)False

Question 10

Figure 7-19  
-Refer to Figure 7-19. The equilibrium price is

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P4. 
A) P1. 
B) P2. 
C) P3. 
D) P4.

Question 11

Sarah buys a new MP3 player for $135. She receives consumer surplus of $25 on her purchase if her willingness to pay is

Accepted Answer

A) $25. 
B) $110. 
C) $135. 
D) $160. 
A) $25. 
B) $110. 
C) $135. 
D) $160.

Question 12

Figure 7-2  
-Refer to Figure 7-2. When the price is P2, consumer surplus is

Accepted Answer

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

Question 13

Another way to think of the marginal seller is the seller who

Accepted Answer

A) will accept the lowest price of any seller in the market. 
B) requires the highest price of any potential seller in the market. 
C) would leave the market first if the price were any lower. 
D) would leave the market last if the price falls. 
A) will accept the lowest price of any seller in the market. 
B) requires the highest price of any potential seller in the market. 
C) would leave the market first if the price were any lower. 
D) would leave the market last if the price falls.

Question 14

Figure 7-20  
-Refer to Figure 7-20. If 10 units of the good are produced and sold, then

Accepted Answer

A) the marginal cost to sellers exceeds the marginal value to buyers. 
B) producer surplus is maximized. 
C) total surplus is minimized. 
D) the marginal value to buyers exceeds the marginal cost to sellers. 
A) the marginal cost to sellers exceeds the marginal value to buyers. 
B) producer surplus is maximized. 
C) total surplus is minimized. 
D) the marginal value to buyers exceeds the marginal cost to sellers.

Question 15

Table 7-8
The only four producers in a market have the following costs:
 $$\begin{array} { | c | c | } 
\hline \text { Sallar } & \text { Cast } \
\hline \text { Evar } & \$ 50 \
\hline \text { Selana } & \$ 100 \
\hline \text { Angie } & \$ 150 \
\hline \text { Kris } & \$ 200 \
\hline
\end{array}$$
-Refer to Table 7-8. If Evan, Selena, Angie, and Kris sell the good, and the resulting producer surplus is $700, then the price must have been

Accepted Answer

A) $200. 
B) $300. 
C) $500. 
D) $700. 
A) $200. 
B) $300. 
C) $500. 
D) $700.

Question 16

Total surplus in a market is equal to

Accepted Answer

A) value to buyers - amount paid by buyers. 
B) amount received by sellers - costs of sellers. 
C) value to buyers - costs of sellers. 
D) amount received by sellers - amount paid by buyers. 
A) value to buyers - amount paid by buyers. 
B) amount received by sellers - costs of sellers. 
C) value to buyers - costs of sellers. 
D) amount received by sellers - amount paid by buyers.

Question 17

Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is pleased since she paid $8,000 for the car but would have been willing to pay $11,000 for the car. Susie's consumer surplus is $2,000.

Accepted Answer

A) True 
 B)False

Question 18

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is likely to occur?

Accepted Answer

A) The price of kidneys would rise to balance supply and demand. 
B) The gains from trade would make both buyers and sellers better off. 
C) Thousands of lives would be saved. 
D) All of the above are correct. 
A) The price of kidneys would rise to balance supply and demand. 
B) The gains from trade would make both buyers and sellers better off. 
C) Thousands of lives would be saved. 
D) All of the above are correct.

Question 19

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?

Accepted Answer

A) Firm A produces a monitor that Cassie buys. David does not purchase a monitor. 
B) Firm A produces a monitor that David buys. 
C) Firm B produces a monitor that Cassie buys. David does not purchase a monitor. 
D) Firm B produces a monitor that David buys. 
A) Firm A produces a monitor that Cassie buys. David does not purchase a monitor. 
B) Firm A produces a monitor that David buys. 
C) Firm B produces a monitor that Cassie buys. David does not purchase a monitor. 
D) Firm B produces a monitor that David buys.

Question 20

Figure 7-22  
-Refer to Figure 7-22. At the quantity Q3,

Accepted Answer

A) the market is in equilibrium. 
B) consumer surplus is maximized. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) the marginal value to buyers is less than the marginal cost to sellers. 
A) the market is in equilibrium. 
B) consumer surplus is maximized. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) the marginal value to buyers is less than the marginal cost to sellers.

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

Consumer surplus is

Economists say that a market where goods are not consumed by those valuing the goods most highly is

All else equal, an increase in supply will cause an increase in consumer surplus.

On a graph, the area below a demand curve and above the price measures

Figure 7-9 -Refer to Figure 7-9. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers?

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: Buyer Willingritis to Pay Carlos \ 15 Quilena \ 25 Wilbur \ 35 Ming-la \ 45 -Refer to Table 7-3. If the market price for the good is $20, who will purchase the good?

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is P=10+(1/4)QSP = 10 + ( 1 / 4 ) Q ^ { S }P=10+(1/4)QS . If 80 units of the good are produced and sold, then producer surplus amounts to $1,200.

If the government removes a binding price ceiling in a market, then the producer surplus in that market will increase.

Figure 7-19 -Refer to Figure 7-19. The equilibrium price is

Sarah buys a new MP3 player for $135. She receives consumer surplus of $25 on her purchase if her willingness to pay is

Figure 7-2 -Refer to Figure 7-2. When the price is P2, consumer surplus is

Another way to think of the marginal seller is the seller who

Figure 7-20 -Refer to Figure 7-20. If 10 units of the good are produced and sold, then

Table 7-8 The only four producers in a market have the following costs: Sallar Cast Evar \ 50 Selana \ 100 Angie \ 150 Kris \ 200 -Refer to Table 7-8. If Evan, Selena, Angie, and Kris sell the good, and the resulting producer surplus is $700, then the price must have been

Total surplus in a market is equal to

Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is pleased since she paid $8,000 for the car but would have been willing to pay $11,000 for the car. Susie's consumer surplus is $2,000.

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is likely to occur?

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?

Figure 7-22 -Refer to Figure 7-22. At the quantity Q3,

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

Let P represent price; let Q^Srepresent quantity supplied; and assume the equation of the supply curve is $P = 10 + ( 1 / 4 ) Q ^ { S }$ . If 80 units of the good are produced and sold, then producer surplus amounts to $1,200.