Question 1

Graph 7-3
  
-According to Graph 7-3, when the price is P2, producer surplus is:

Accepted Answer

A)  A 
B)  A + C 
C)  A + B + C 
D)  D + E 
A)  A 
B)  A + C 
C)  A + B + C 
D)  D + E

Question 2

An efficient allocation of resources would be characterised by:

Accepted Answer

A)  a good being produced by the sellers with lowest cost 
B)  there is a shortage at the current market price 
C)  a good is not being bought by the buyers the highest value 
D)  all of the above are correct 
A)  a good being produced by the sellers with lowest cost 
B)  there is a shortage at the current market price 
C)  a good is not being bought by the buyers the highest value 
D)  all of the above are correct

Question 3

Producer surplus measures all of the following EXCEPT the:

Accepted Answer

A)  total value of a good to sellers 
B)  amount sellers receive above the minimum they would accept 
C)  benefit to sellers of participating in a market 
D)  amount sellers are paid less the amount they were willing to accept 
A)  total value of a good to sellers 
B)  amount sellers receive above the minimum they would accept 
C)  benefit to sellers of participating in a market 
D)  amount sellers are paid less the amount they were willing to accept

Question 4

How does consumer surplus differ from the market price?

Accepted Answer

Consumer surplus is the measure of the b

Question 5

Costa and Soula sell lemonade on the corner for $0.10 per glass. Their producer surplus is $0.06 per glass. Their willingness to sell is:

Accepted Answer

A)  $0.16 
B)  $0.10 
C)  $0.06 
D)  $0.04 
A)  $0.16 
B)  $0.10 
C)  $0.06 
D)  $0.04

Question 6

Normative analysis refers to what:

Accepted Answer

A)  is 
B)  should be 
C)  maximises efficiency 
D)  is politically correct 
A)  is 
B)  should be 
C)  maximises efficiency 
D)  is politically correct

Question 7

Table 7-5
  
-Refer to Table 7-5. Given the information about Fred and Frieda's willingness to pay for pizza, calculate the consumer surplus for Fred and for Frieda if the price of pizza is:
a. $13.
b. $10.
c. $8.
d. $6.
e. $4.

Accepted Answer

a. Fred: $0, Frieda: $0
b. Fre

Question 8

Megan loves donuts. The table shown reflects the value Megan places on each donut she eats:
   a. Use this information to construct Megan's demand curve for donuts.
b. If the price of doughnuts is $0.20, how many donuts will Megan buy?
c. Show Megan's consumer surplus on your graph. How much consumer surplus would she have at a price of $0.20?
d. If the price of doughnuts rose to $0.40, how many donuts would she purchase now? What would happen to Megan's consumer surplus? Show this change on your graph.

Accepted Answer

a. See the graph.
b. At a price of $0.20

Question 9

Graph 7-4
  
-In Graph 7-4, the efficient price-quantity combination is:

Accepted Answer

A)  P1 - Q1 
B)  P2 - Q2 
C)  P3 - Q1 
D)  none of the combinations are efficient 
A)  P1 - Q1 
B)  P2 - Q2 
C)  P3 - Q1 
D)  none of the combinations are efficient

Question 10

A consumer's willingness to pay is:

Accepted Answer

A)  always equal to the market price 
B)  the maximum amount he or she is prepared to pay for a good 
C)  the average amount he or she is prepared to pay for a good 
D)  always more than the market price 
A)  always equal to the market price 
B)  the maximum amount he or she is prepared to pay for a good 
C)  the average amount he or she is prepared to pay for a good 
D)  always more than the market price

Question 11

Legalising ticket scalping would make everyone worse off.

Accepted Answer

A) True 
 B)False

Question 12

An allocation of resources that maximises total surplus is said to be equitable.

Accepted Answer

A) True 
 B)False

Question 13

If some buyers and sellers are prevented from trading, the efficient allocation will not occur.

Accepted Answer

A) True 
 B)False

Question 14

If Brock is willing to pay $500 for a new suit but is able to buy the suit for $350, his consumer surplus is:

Accepted Answer

A)  $150 
B)  $350 
C)  $500 
D)  $850 
A)  $150 
B)  $350 
C)  $500 
D)  $850

Question 15

When a good is purchased, the difference between what a consumer is willing to pay and what they actually have to pay is consumer surplus.

Accepted Answer

A) True 
 B)False

Question 16

Graph 7-3
  
-Refer to Graph 7-3. When the price falls from P2 to P1, which of the following is NOT 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 
D)  all of the above are correct 
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 
D)  all of the above are correct

Question 17

Graph 7-5
  
-In Graph 7-5, for the quantity Q3, willingness to buy:

Accepted Answer

A)  and willingness to sell are both P2 
B)  is P1 and willingness to sell is P3 
C)  and willingness to sell are both P3 
D)  is P3 and willingness to sell is P2 
A)  and willingness to sell are both P2 
B)  is P1 and willingness to sell is P3 
C)  and willingness to sell are both P3 
D)  is P3 and willingness to sell is P2

Question 18

Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

Accepted Answer

A) True 
 B)False

Question 19

Table 7-3
Market supply and demand for good X
  
-Refer to Table 7-3. The equilibrium or market-clearing 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

Question 20

Total surplus in a market can be measured as the area below the supply curve and the area above the demand curve.

Accepted Answer

A) True 
 B)False

Exam 7: Consumers, Producers and the Efficiency of Markets

Graph 7-3 -According to Graph 7-3, when the price is P2, producer surplus is:

An efficient allocation of resources would be characterised by:

Producer surplus measures all of the following EXCEPT the:

How does consumer surplus differ from the market price?

Costa and Soula sell lemonade on the corner for $0.10 per glass. Their producer surplus is $0.06 per glass. Their willingness to sell is:

Normative analysis refers to what:

Table 7-5 -Refer to Table 7-5. Given the information about Fred and Frieda's willingness to pay for pizza, calculate the consumer surplus for Fred and for Frieda if the price of pizza is: a. $13. b. $10. c. $8. d. $6. e. $4.

Graph 7-4 -In Graph 7-4, the efficient price-quantity combination is:

A consumer's willingness to pay is:

Legalising ticket scalping would make everyone worse off.

An allocation of resources that maximises total surplus is said to be equitable.

If some buyers and sellers are prevented from trading, the efficient allocation will not occur.

If Brock is willing to pay $500 for a new suit but is able to buy the suit for $350, his consumer surplus is:

When a good is purchased, the difference between what a consumer is willing to pay and what they actually have to pay is consumer surplus.

Graph 7-3 -Refer to Graph 7-3. When the price falls from P2 to P1, which of the following is NOT true?

Graph 7-5 -In Graph 7-5, for the quantity Q3, willingness to buy:

Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

Table 7-3 Market supply and demand for good X -Refer to Table 7-3. The equilibrium or market-clearing price is:

Total surplus in a market can be measured as the area below the supply curve and the area above the demand curve.

Ten Lessons From 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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

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

Five Debates Over Macroeconomic Policy

Filters

Graph 7-3 -According to Graph 7-3, when the price is P₂, producer surplus is:

Graph 7-3 -Refer to Graph 7-3. When the price falls from P₂ to P₁, which of the following is NOT true?

Graph 7-5 -In Graph 7-5, for the quantity Q₃,willingness to buy: