Question 1

The area below the demand curve and above the supply curve measures the producer surplus in a market.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Economists generally believe that,although there may be advantages to society from ticket-scalping,the costs to society of this activity outweigh the benefits.

Accepted Answer

A) True 
 B)False

Question 4

Total surplus is represented by the area

Accepted Answer

A)  under the demand curve and above the price. 
B)  above the supply curve and up to the price. 
C)  under the supply curve and up to the price. 
D)  between the demand and supply curves up to the point of equilibrium. 
A)  under the demand curve and above the price. 
B)  above the supply curve and up to the price. 
C)  under the supply curve and up to the price. 
D)  between the demand and supply curves up to the point of equilibrium.

Question 5

Figure 7-8  
-Refer to Figure 7-8.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

Janine would be willing to pay $50 to see Les Misérables,but she buys a ticket for only $30.Janine values the performance at

Accepted Answer

A)  $20. 
B)  $30. 
C)  $50. 
D)  $80. 
A)  $20. 
B)  $30. 
C)  $50. 
D)  $80.

Question 7

Table 7-8
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
  
-Refer to Table 7-8.The equilibrium market price for 10 piano lessons is $300.What is the total producer surplus in the market?

Accepted Answer

A)  $50 
B)  $150 
C)  $1,050 
D)  $1,500 
A)  $50 
B)  $150 
C)  $1,050 
D)  $1,500

Question 8

If a consumer places a value of $20 on a particular good and if the price of the good is $25,then the

Accepted Answer

A)  consumer has consumer surplus of $5 if he buys the good. 
B)  consumer does not purchase the good. 
C)  price of the good will rise due to market forces. 
D)  market is out of equilibrium. 
A)  consumer has consumer surplus of $5 if he buys the good. 
B)  consumer does not purchase the good. 
C)  price of the good will rise due to market forces. 
D)  market is out of equilibrium.

Question 9

At present,the maximum legal price for a human kidney is $0.The price of $0 maximizes

Accepted Answer

A)  consumer surplus but not producer surplus. 
B)  producer surplus but not consumer surplus. 
C)  both consumer and producer surplus. 
D)  neither consumer nor producer surplus. 
A)  consumer surplus but not producer surplus. 
B)  producer surplus but not consumer surplus. 
C)  both consumer and producer surplus. 
D)  neither consumer nor producer surplus.

Question 10

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.
  
-Refer to Table 7-5.If the market price of an orange is $1.20,the market quantity of oranges demanded per day is

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 11

If producing a soccer ball costs Jake $5,and he sells it for $40,his producer surplus is $45.

Accepted Answer

A) True 
 B)False

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

If the United States legally allowed for a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.

Accepted Answer

A) True 
 B)False

Question 14

Figure 7-15  
-Refer to Figure 7-15.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 15

Efficiency refers to whether a market outcome is fair,while equality refers to whether the maximum amount of output was produced from a given number of inputs.

Accepted Answer

A) True 
 B)False

Question 16

Market failure is the inability of

Accepted Answer

A)  buyers to interact harmoniously with sellers in the market. 
B)  a market to establish an equilibrium price. 
C)  buyers to place a value on the good or service. 
D)  some unregulated markets to allocate resources efficiently. 
A)  buyers to interact harmoniously with sellers in the market. 
B)  a market to establish an equilibrium price. 
C)  buyers to place a value on the good or service. 
D)  some unregulated markets to allocate resources efficiently.

Question 17

Figure 7-11  
-Refer to Figure 7-11.When the price rises from P1 to P2,which area represents the increase in producer surplus to existing producers?

Accepted Answer

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

Question 18

Denise values a stainless steel dishwasher for her new house at $500,but she succeeds in buying one for $350.Denise's consumer surplus is

Accepted Answer

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

Question 19

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. 
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. 
D)  All of the above are correct.

Question 20

Figure 7-4  
-Refer to Figure 7-4.If the government imposes a price floor of $120 in this market,then consumer surplus will decrease by

Accepted Answer

A)  $75. 
B)  $125. 
C)  $225. 
D)  $300. 
A)  $75. 
B)  $125. 
C)  $225. 
D)  $300.

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

The area below the demand curve and above the supply curve measures the producer surplus in a market.

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.

Economists generally believe that,although there may be advantages to society from ticket-scalping,the costs to society of this activity outweigh the benefits.

Total surplus is represented by the area

Figure 7-8 -Refer to Figure 7-8.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?

Janine would be willing to pay $50 to see Les Misérables,but she buys a ticket for only $30.Janine values the performance at

Table 7-8 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-8.The equilibrium market price for 10 piano lessons is $300.What is the total producer surplus in the market?

If a consumer places a value of $20 on a particular good and if the price of the good is $25,then the

At present,the maximum legal price for a human kidney is $0.The price of $0 maximizes

If producing a soccer ball costs Jake $5,and he sells it for $40,his producer surplus is $45.

Economists tend to see ticket scalping as

If the United States legally allowed for a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.

Figure 7-15 -Refer to Figure 7-15.The efficient price is

Efficiency refers to whether a market outcome is fair,while equality refers to whether the maximum amount of output was produced from a given number of inputs.

Market failure is the inability of

Figure 7-11 -Refer to Figure 7-11.When the price rises from P1 to P2,which area represents the increase in producer surplus to existing producers?

Denise values a stainless steel dishwasher for her new house at $500,but she succeeds in buying one for $350.Denise's consumer surplus is

Which of the following is correct?

Figure 7-4 -Refer to Figure 7-4.If the government imposes a price floor of $120 in this market,then consumer surplus will decrease by

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

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

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