Question 1

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

Accepted Answer

A) seller's producer surplus. 
B) seller's cost of production. 
C) seller's profit. 
D) average willingness to pay of buyers of the product. 
A) seller's producer surplus. 
B) seller's cost of production. 
C) seller's profit. 
D) average willingness to pay of buyers of the product.

Question 2

Figure 7-7  
-Refer to Figure 7-7. If the price of the good is $14, then producer surplus is

Accepted Answer

A) $17. 
B) $22. 
C) $25. 
D) $28. 
A) $17. 
B) $22. 
C) $25. 
D) $28.

Question 3

Figure 7-15  
-Refer to Figure 7-15. At the equilibrium price, producer surplus is

Accepted Answer

A) $80. 
B) $100. 
C) $120. 
D) $135. 
A) $80. 
B) $100. 
C) $120. 
D) $135.

Question 4

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. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Accepted Answer

A) Quilana 
B) Wilbur 
C) Ming-la 
D) All three buyers experience the same loss of consumer surplus. 
A) Quilana 
B) Wilbur 
C) Ming-la 
D) All three buyers experience the same loss of consumer surplus.

Question 5

Figure 7-20  
-Refer to Figure 7-20. At equilibrium, producer surplus is

Accepted Answer

A) $36. 
B) $72. 
C) $108. 
D) $144. 
A) $36. 
B) $72. 
C) $108. 
D) $144.

Question 6

Consumer surplus can be measured as the area between the demand curve and the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 7

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to

Accepted Answer

A) $4. 
B) $16. 
C) $20. 
D) $36. 
A) $4. 
B) $16. 
C) $20. 
D) $36.

Question 8

Which of the following equations is not valid?

Accepted Answer

A) Consumer surplus = Value to buyers - Amount paid by buyers 
B) Producer surplus = Amount received by sellers - Cost to sellers 
C) Total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers 
D) Total surplus = Value to sellers - Cost to sellers 
A) Consumer surplus = Value to buyers - Amount paid by buyers 
B) Producer surplus = Amount received by sellers - Cost to sellers 
C) Total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers 
D) Total surplus = Value to sellers - Cost to sellers

Question 9

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

Accepted Answer

A) $700 
B) $2,300 
C) $3,000 
D) $3,700 
A) $700 
B) $2,300 
C) $3,000 
D) $3,700

Question 10

Figure 7-16  
-Refer to Figure 7-16. For quantities less than M, the value to the marginal buyer is

Accepted Answer

A) greater than the cost to the marginal seller, so increasing the quantity increases total surplus. 
B) less than the cost to the marginal seller, so increasing the quantity increases total surplus. 
C) greater than the cost to the marginal seller, so decreasing the quantity increases total surplus. 
D) less than the cost to the marginal seller, so decreasing the quantity increases total surplus. 
A) greater than the cost to the marginal seller, so increasing the quantity increases total surplus. 
B) less than the cost to the marginal seller, so increasing the quantity increases total surplus. 
C) greater than the cost to the marginal seller, so decreasing the quantity increases total surplus. 
D) less than the cost to the marginal seller, so decreasing the quantity increases total surplus.

Question 11

Figure 7-21  
-Refer to Figure 7-21. If the government mandated a price increase from P1 to a higher price, then

Accepted Answer

A) total surplus would decrease. 
B) consumer surplus would increase. 
C) total surplus would increase, since producer surplus would increase. 
D) total surplus would remain unchanged. 
A) total surplus would decrease. 
B) consumer surplus would increase. 
C) total surplus would increase, since producer surplus would increase. 
D) total surplus would remain unchanged.

Question 12

Free markets allocate (a) the supply of goods to the buyers who value them most highly and (b) the demand for goods to the sellers who can produce them at least cost.

Accepted Answer

A) True 
 B)False

Question 13

All else equal, what happens to consumer surplus if the price of a good decreases?

Accepted Answer

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

Question 14

Producer surplus is the cost of production minus the amount a seller is paid.

Accepted Answer

A) True 
 B)False

Question 15

Ronnie operates a lawn-care service. On each day, the cost of mowing the first lawn is $10, the cost of mowing the second lawn is $12, and the cost of mowing the third lawn is $15. His producer surplus on the first three lawns of the day is $53. If Ronnie charges all customers the same price for lawn mowing, that price is

Accepted Answer

A) $25. 
B) $30. 
C) $36. 
D) $45. 
A) $25. 
B) $30. 
C) $36. 
D) $45.

Question 16

Abraham drinks Mountain Dew. He can buy as many cans of Mountain Dew as he wishes at a price of $0.55 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Abraham is rational in deciding how many cans to buy. His consumer surplus is

Accepted Answer

A) $0.50. 
B) $0.60. 
C) $0.70. 
D) $1.00. 
A) $0.50. 
B) $0.60. 
C) $0.70. 
D) $1.00.

Question 17

The distinction between efficiency and equality can be described as follows:

Accepted Answer

A) Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains from trade among buyers and sellers. 
B) Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers. 
C) Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost. 
D) Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society. 
A) Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains from trade among buyers and sellers. 
B) Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers. 
C) Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost. 
D) Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.

Question 18

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. Who is a marginal seller when the price is $1,200?

Accepted Answer

A) Bobby 
B) Bobby and Abby 
C) Carlos, Dianne, and Evalina 
D) Carlos, Dianne, Evalina, and Bobby 
A) Bobby 
B) Bobby and Abby 
C) Carlos, Dianne, and Evalina 
D) Carlos, Dianne, Evalina, and Bobby

Question 19

Figure 7-8  
-Refer to Figure 7-8. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

Accepted Answer

A) BCG 
B) ACH 
C) DGH 
D) AHGB 
A) BCG 
B) ACH 
C) DGH 
D) AHGB

Question 20

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is $$P = 15 + ( 1 / 3 ) Q ^ { S }$$ . If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

Accepted Answer

A) True 
 B)False

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

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

Figure 7-7 -Refer to Figure 7-7. If the price of the good is $14, then producer surplus is

Figure 7-15 -Refer to Figure 7-15. At the equilibrium price, producer surplus is

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. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Figure 7-20 -Refer to Figure 7-20. At equilibrium, producer surplus is

Consumer surplus can be measured as the area between the demand curve and the equilibrium price.

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to

Which of the following equations is not valid?

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

Figure 7-16 -Refer to Figure 7-16. For quantities less than M, the value to the marginal buyer is

Figure 7-21 -Refer to Figure 7-21. If the government mandated a price increase from P1 to a higher price, then

Free markets allocate (a) the supply of goods to the buyers who value them most highly and (b) the demand for goods to the sellers who can produce them at least cost.

All else equal, what happens to consumer surplus if the price of a good decreases?

Producer surplus is the cost of production minus the amount a seller is paid.

The distinction between efficiency and equality can be described as follows:

Table 7-7 The following table represents the costs of five possible sellers. Seller Cost Abby \ 1,500 Babby \ 1,200 Carlos \ 1,000 Dianne \ 750 Evalina \ 500 -Refer to Table 7-7. Who is a marginal seller when the price is $1,200?

Figure 7-8 -Refer to Figure 7-8. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is P=15+(1/3)QSP = 15 + ( 1 / 3 ) Q ^ { S }P=15+(1/3)QS . If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

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 $P = 15 + ( 1 / 3 ) Q ^ { S }$ . If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.