Question 1

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes

Accepted Answer

A) increases, and the consumer surplus in the market for red wine increases. 
B) increases, and the consumer surplus in the market for red wine decreases. 
C) decreases, and the consumer surplus in the market for red wine increases. 
D) decreases, and the consumer surplus in the market for red wine decreases. 
A) increases, and the consumer surplus in the market for red wine increases. 
B) increases, and the consumer surplus in the market for red wine decreases. 
C) decreases, and the consumer surplus in the market for red wine increases. 
D) decreases, and the consumer surplus in the market for red wine decreases.

Question 2

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. If Firm B produces a monitor that David buys, then the market outcome illustrates which of the following principles? (i)
Free markets allocate the supply of goods to the buyers who value them most highly, as measured by their willingness to pay.(ii)
Free markets allocate the demand for goods to the sellers who can produce them at the least cost.

Accepted Answer

A) (i) only 
B) (ii) only 
C) both (i) and (ii) 
D) neither (i) nor (ii) 
A) (i) only 
B) (ii) only 
C) both (i) and (ii) 
D) neither (i) nor (ii)

Question 3

Table 7-11
 $$\begin{array} { | c | c | c } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Supplied }
\end{array} \
\hline \$ 12.00 & 0 & 36 \
\hline \$ 10.00 & 3 & 30 \
\hline \$ 8.00 & 6 & 24 \
\hline \$ 6.00 & 9 & 18 \
\hline \$ 4.00 & 12 & 12 \
\hline \$ 2.00 & 15 & 6 \
\hline \$ 0.00 & 18 & 0 \
\hline
\end{array}$$
-Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Accepted Answer

A) $44. 
B) $56. 
C) $72. 
D) $96. 
A) $44. 
B) $56. 
C) $72. 
D) $96.

Question 4

Table 7-11
 $$\begin{array} { | c | c | c } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Supplied }
\end{array} \
\hline \$ 12.00 & 0 & 36 \
\hline \$ 10.00 & 3 & 30 \
\hline \$ 8.00 & 6 & 24 \
\hline \$ 6.00 & 9 & 18 \
\hline \$ 4.00 & 12 & 12 \
\hline \$ 2.00 & 15 & 6 \
\hline \$ 0.00 & 18 & 0 \
\hline
\end{array}$$
-Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, producer surplus will be

Accepted Answer

A) $16. 
B) $18. 
C) $24. 
D) $26. 
A) $16. 
B) $18. 
C) $24. 
D) $26.

Question 5

Jeff decides that he would pay as much as $2,000 for a new laptop computer. He buys the computer and realizes a consumer surplus of $300. How much did Jeff pay for his computer?

Accepted Answer

A) $300. 
B) $1,700. 
C) $2,000. 
D) $2,300. 
A) $300. 
B) $1,700. 
C) $2,000. 
D) $2,300.

Question 6

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

Accepted Answer

A) the imposition of a binding price ceiling in the market 
B) buyers expect the price of the good to be lower next month 
C) the price of a substitute increases 
D) income increases and buyers consider the good to be inferior 
A) the imposition of a binding price ceiling in the market 
B) buyers expect the price of the good to be lower next month 
C) the price of a substitute increases 
D) income increases and buyers consider the good to be inferior

Question 7

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 4 if the price is

Accepted Answer

A) $770. 
B) $970. 
C) $1,170. 
D) $1,370. 
A) $770. 
B) $970. 
C) $1,170. 
D) $1,370.

Question 8

Producer surplus directly measures

Accepted Answer

A) the well-being of society as a whole. 
B) the well-being of buyers and sellers. 
C) the well-being of sellers. 
D) sellers' willingness to sell. 
A) the well-being of society as a whole. 
B) the well-being of buyers and sellers. 
C) the well-being of sellers. 
D) sellers' willingness to sell.

Question 9

Figure 7-14  
-Refer to Figure 7-14. Suppose the willingness to pay of the marginal buyer of the 3rd unit is $225. Then total surplus is maximized if

Accepted Answer

A) 1 unit of the good is produced and sold. 
B) 2 units of the good are produced and sold. 
C) 3 units of the good are produced and sold. 
D) 4 units of the good are produced and sold. 
A) 1 unit of the good is produced and sold. 
B) 2 units of the good are produced and sold. 
C) 3 units of the good are produced and sold. 
D) 4 units of the good are produced and sold.

Question 10

Figure 7-3  
-Refer to Figure 7-3. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

Accepted Answer

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

Question 11

Table 7-9
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. $$\begin{array} { | c | c | } 
\hline \text { Sallar } & \text { Cast } \
\hline \text { Marcia } & \$ 200 \
\hline \text { Jan } & \$ 250 \
\hline \text { Cindy } & \$ 350 \
\hline \text { Grea } & \$ 400 \
\hline \text { Peter } & \$ 700 \
\hline \text { Babby } & \$ 800 \
\hline
\end{array}$$
-Refer to Table 7-9. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market?

Accepted Answer

A) $0 
B) $300 
C) $400 
D) $700 
A) $0 
B) $300 
C) $400 
D) $700

Question 12

We can say that the allocation of resources is efficient if

Accepted Answer

A) producer surplus is maximized. 
B) consumer surplus is maximized. 
C) total surplus is maximized. 
D) sellers' costs are minimized. 
A) producer surplus is maximized. 
B) consumer surplus is maximized. 
C) total surplus is maximized. 
D) sellers' costs are minimized.

Question 13

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Accepted Answer

A) True 
 B)False

Question 14

Figure 7-19  
-Refer to Figure 7-19. The efficient price-quantity combination is

Accepted Answer

A) P1 and Q1. 
B) P2 and Q2. 
C) P3 and Q1. 
D) P4 and 0. 
A) P1 and Q1. 
B) P2 and Q2. 
C) P3 and Q1. 
D) P4 and 0.

Question 15

Figure 7-4  
-Refer to Figure 7-4. If the price of the good is $6, then consumer surplus is

Accepted Answer

A) $16. 
B) $24. 
C) $30. 
D) $36. 
A) $16. 
B) $24. 
C) $30. 
D) $36.

Question 16

Figure 7-1  
-Refer to Figure 7-1. If the price of the good is $200, then

Accepted Answer

A) consumer surplus is $150. 
B) consumer surplus is $650. 
C) producer surplus is $650. 
D) producer surplus is $750. 
A) consumer surplus is $150. 
B) consumer surplus is $650. 
C) producer surplus is $650. 
D) producer surplus is $750.

Question 17

Total surplus is represented by the area below the

Accepted Answer

A) demand curve and above the price. 
B) price and up to the point of equilibrium. 
C) demand curve and above the supply curve, up to the equilibrium quantity. 
D) demand curve and above the horizontal axis, up to the equilibrium quantity. 
A) demand curve and above the price. 
B) price and up to the point of equilibrium. 
C) demand curve and above the supply curve, up to the equilibrium quantity. 
D) demand curve and above the horizontal axis, up to the equilibrium quantity.

Question 18

Which of the following is correct?

Accepted Answer

A) Consumer surplus refers to a situation in which there are more buyers than sellers in a market. 
B) Producer surplus refers to a situation in which there are more sellers than buyers in a market. 
C) Total surplus is measured as the area below the demand curve and above the supply curve, up to the equilibrium quantity. 
D) All of the above are correct. 
A) Consumer surplus refers to a situation in which there are more buyers than sellers in a market. 
B) Producer surplus refers to a situation in which there are more sellers than buyers in a market. 
C) Total surplus is measured as the area below the demand curve and above the supply curve, up to the equilibrium quantity. 
D) All of the above are correct.

Question 19

Figure 7-17  
-Refer to Figure 7-17. Which area represents producer 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 20

Table 7-11
 $$\begin{array} { | c | c | c } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Supplied }
\end{array} \
\hline \$ 12.00 & 0 & 36 \
\hline \$ 10.00 & 3 & 30 \
\hline \$ 8.00 & 6 & 24 \
\hline \$ 6.00 & 9 & 18 \
\hline \$ 4.00 & 12 & 12 \
\hline \$ 2.00 & 15 & 6 \
\hline \$ 0.00 & 18 & 0 \
\hline
\end{array}$$
-Refer to Table 7-11. The equilibrium price is

Accepted Answer

A) $10.00. 
B) $8.00. 
C) $6.00. 
D) $4.00. 
A) $10.00. 
B) $8.00. 
C) $6.00. 
D) $4.00.

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes

Table 7-11 Price Quantity Demanded Quantity Supplied \ 12.00 0 36 \ 10.00 3 30 \ 8.00 6 24 \ 6.00 9 18 \ 4.00 12 12 \ 2.00 15 6 \ 0.00 18 0 -Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Jeff decides that he would pay as much as $2,000 for a new laptop computer. He buys the computer and realizes a consumer surplus of $300. How much did Jeff pay for his computer?

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

Producer surplus directly measures

Figure 7-14 -Refer to Figure 7-14. Suppose the willingness to pay of the marginal buyer of the 3^rd unit is $225. Then total surplus is maximized if

Figure 7-3 -Refer to Figure 7-3. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

We can say that the allocation of resources is efficient if

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Figure 7-19 -Refer to Figure 7-19. The efficient price-quantity combination is

Figure 7-4 -Refer to Figure 7-4. If the price of the good is $6, then consumer surplus is

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $200, then

Total surplus is represented by the area below the

Which of the following is correct?

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

Table 7-11 Price Quantity Demanded Quantity Supplied \ 12.00 0 36 \ 10.00 3 30 \ 8.00 6 24 \ 6.00 9 18 \ 4.00 12 12 \ 2.00 15 6 \ 0.00 18 0 -Refer to Table 7-11. The equilibrium price is

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

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes

Table 7-11 Price Quantity Demanded Quantity Supplied \ 12.00 0 36 \ 10.00 3 30 \ 8.00 6 24 \ 6.00 9 18 \ 4.00 12 12 \ 2.00 15 6 \ 0.00 18 0 -Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Jeff decides that he would pay as much as $2,000 for a new laptop computer. He buys the computer and realizes a consumer surplus of $300. How much did Jeff pay for his computer?

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

Producer surplus directly measures

Figure 7-14 -Refer to Figure 7-14. Suppose the willingness to pay of the marginal buyer of the 3rd unit is $225. Then total surplus is maximized if

Figure 7-3 -Refer to Figure 7-3. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

We can say that the allocation of resources is efficient if

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Figure 7-19 -Refer to Figure 7-19. The efficient price-quantity combination is

Figure 7-4 -Refer to Figure 7-4. If the price of the good is $6, then consumer surplus is

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $200, then

Total surplus is represented by the area below the

Which of the following is correct?

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

Table 7-11 Price Quantity Demanded Quantity Supplied \ 12.00 0 36 \ 10.00 3 30 \ 8.00 6 24 \ 6.00 9 18 \ 4.00 12 12 \ 2.00 15 6 \ 0.00 18 0 -Refer to Table 7-11. The equilibrium price is

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

Figure 7-14 -Refer to Figure 7-14. Suppose the willingness to pay of the marginal buyer of the 3^rd unit is $225. Then total surplus is maximized if