Question 1

Figure 7-11  
-Refer to Figure 7-11.Area B represents

Accepted Answer

A)  the combined profits of all producers when the price is P2. 
B)  the increase in producer surplus to all producers as the result of an increase in the price from P1 to P2. 
C)  producer surplus to new producers entering the market as the result of an increase in the price from P1 to P2. 
D)  that portion of the increase in producer surplus that is offset by a loss in consumer surplus when the price increases from P1 to P2. 
A)  the combined profits of all producers when the price is P2. 
B)  the increase in producer surplus to all producers as the result of an increase in the price from P1 to P2. 
C)  producer surplus to new producers entering the market as the result of an increase in the price from P1 to P2. 
D)  that portion of the increase in producer surplus that is offset by a loss in consumer surplus when the price increases from P1 to P2.

Question 2

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

Accepted Answer

A)  $150. 
B)  $200. 
C)  $350. 
D)  $550. 
A)  $150. 
B)  $200. 
C)  $350. 
D)  $550.

Question 3

Figure 7-16  
-Refer to Figure 7-16.At equilibrium,consumer surplus is represented by the area

Accepted Answer

A)  A. 
B)  A+B+C. 
C)  D+H+F. 
D)  A+B+C+D+H+F. 
A)  A. 
B)  A+B+C. 
C)  D+H+F. 
D)  A+B+C+D+H+F.

Question 4

Michael values a stainless steel refrigerator for his new house at $3,500,but he succeeds in buying one for $3,000.Michael's consumer surplus is

Accepted Answer

A)  $500. 
B)  $3,000. 
C)  $3,500. 
D)  $6,500. 
A)  $500. 
B)  $3,000. 
C)  $3,500. 
D)  $6,500.

Question 5

If the cost of producing sofas decreases,then consumer surplus in the sofa market will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  increase for some buyers and decrease for other buyers. 
A)  increase. 
B)  decrease. 
C)  remain constant. 
D)  increase for some buyers and decrease for other buyers.

Question 6

Figure 7-15  
-Refer to Figure 7-15.If the price decreases from $22 to $16 due to a shift in the supply curve,consumer surplus increases by

Accepted Answer

A)  $120. 
B)  $360. 
C)  $480. 
D)  $600. 
A)  $120. 
B)  $360. 
C)  $480. 
D)  $600.

Question 7

PlayStations and PlaySation games are complementary goods.A technological advance in the production of PlayStations will

Accepted Answer

A)  increase consumer surplus in the market for PlayStations and decrease producer surplus in the market for PlayStation games. 
B)  increase consumer surplus in the market for PlayStations and increase producer surplus in the market for PlayStation games. 
C)  decrease consumer surplus in the market for PlayStations and increase producer surplus in the market for PlayStation games. 
D)  decrease consumer surplus in the market for PlayStations and decrease producer surplus in the market for PlayStation games. 
A)  increase consumer surplus in the market for PlayStations and decrease producer surplus in the market for PlayStation games. 
B)  increase consumer surplus in the market for PlayStations and increase producer surplus in the market for PlayStation games. 
C)  decrease consumer surplus in the market for PlayStations and increase producer surplus in the market for PlayStation games. 
D)  decrease consumer surplus in the market for PlayStations and decrease producer surplus in the market for PlayStation games.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Connie can clean windows in large office buildings at a cost of $1 per window.The market price for window-cleaning services is $3 per window.If Connie cleans 100 windows,her producer surplus is $200.

Accepted Answer

A) True 
 B)False

Question 10

Table 7-1
  
-Refer to Table 7-1.If price of the product is $30,then the total consumer surplus is

Accepted Answer

A)  $-10. 
B)  $-6. 
C)  $20. 
D)  $30. 
A)  $-10. 
B)  $-6. 
C)  $20. 
D)  $30.

Question 11

Figure 7-1  
-Refer to Figure 7-1.When the price rises from P1 to P2,consumer surplus

Accepted Answer

A)  increases by an amount equal to A. 
B)  decreases by an amount equal to B+C. 
C)  increases by an amount equal to B+C. 
D)  decreases by an amount equal to C. 
A)  increases by an amount equal to A. 
B)  decreases by an amount equal to B+C. 
C)  increases by an amount equal to B+C. 
D)  decreases by an amount equal to C.

Question 12

Figure 7-15  
-Refer to Figure 7-15.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.The increase in producer surplus to producers already in the market would be

Accepted Answer

A)  $90. 
B)  $210. 
C)  $360. 
D)  $480. 
A)  $90. 
B)  $210. 
C)  $360. 
D)  $480.

Question 13

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field.Assume the ticket has no resale value.Willie Nelson is performing on the same night,and his concert is your next-best alternative activity.Tickets to see Willie Nelson cost $40.On any given day,you would be willing to pay up to $50 to see and hear Willie Nelson perform.Assume there are no other costs of seeing either event.Based on this information,at a minimum,how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?

Accepted Answer

A)  $0 
B)  $10 
C)  $40 
D)  $50 
A)  $0 
B)  $10 
C)  $40 
D)  $50

Question 14

Figure 7-8  
-Refer to Figure 7-8.If the supply curve is S',the demand curve is D,and the equilibrium price is $150,what is the producer surplus?

Accepted Answer

A)  $625 
B)  $1,250 
C)  $2,500 
D)  $5,000 
A)  $625 
B)  $1,250 
C)  $2,500 
D)  $5,000

Question 15

Figure 7-9  
-Refer to Figure 7-9.If the equilibrium price is $200,what is the producer surplus?

Accepted Answer

A)  $625 
B)  $3,750 
C)  $10,000 
D)  $20,000 
A)  $625 
B)  $3,750 
C)  $10,000 
D)  $20,000

Question 16

Total surplus is

Accepted Answer

A)  equal to producer surplus plus consumer surplus. 
B)  equal to the total cost to sellers minus the total value to buyers. 
C)  equal to consumers' willingness to pay plus producers' cost. 
D)  greater than the sum of consumer surplus plus producer surplus. 
A)  equal to producer surplus plus consumer surplus. 
B)  equal to the total cost to sellers minus the total value to buyers. 
C)  equal to consumers' willingness to pay plus producers' cost. 
D)  greater than the sum of consumer surplus plus producer surplus.

Question 17

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
  
-Refer to Table 7-2.If the market price is $5.50,the consumer surplus in the market will be

Accepted Answer

A)  $3.00. 
B)  $4.50. 
C)  $15.50. 
D)  $21.00. 
A)  $3.00. 
B)  $4.50. 
C)  $15.50. 
D)  $21.00.

Question 18

Figure 7-10  
-Refer to Figure 7-10.If the government imposes a price ceiling of $70 in this market,then the new producer surplus will be

Accepted Answer

A)  $50. 
B)  $100. 
C)  $175. 
D)  $350. 
A)  $50. 
B)  $100. 
C)  $175. 
D)  $350.

Question 19

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

Accepted Answer

A)  maximizes both the total revenue for firms and the quantity supplied of the product. 
B)  maximizes the combined welfare of buyers and sellers. 
C)  minimizes costs and maximizes output. 
D)  minimizes the level of welfare payments. 
A)  maximizes both the total revenue for firms and the quantity supplied of the product. 
B)  maximizes the combined welfare of buyers and sellers. 
C)  minimizes costs and maximizes output. 
D)  minimizes the level of welfare payments.

Question 20

Figure 7-11  
-Refer to Figure 7-6.When the price falls from P2 to P1,which of the following would not be 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 than it was before the decrease in the price. 
D)  Producer surplus would fall by area A + B. 
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 than it was before the decrease in the price. 
D)  Producer surplus would fall by area A + B.

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

Figure 7-11 -Refer to Figure 7-11.Area B represents

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

Figure 7-16 -Refer to Figure 7-16.At equilibrium,consumer surplus is represented by the area

Michael values a stainless steel refrigerator for his new house at $3,500,but he succeeds in buying one for $3,000.Michael's consumer surplus is

If the cost of producing sofas decreases,then consumer surplus in the sofa market will

Figure 7-15 -Refer to Figure 7-15.If the price decreases from $22 to $16 due to a shift in the supply curve,consumer surplus increases by

PlayStations and PlaySation games are complementary goods.A technological advance in the production of PlayStations will

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

Connie can clean windows in large office buildings at a cost of $1 per window.The market price for window-cleaning services is $3 per window.If Connie cleans 100 windows,her producer surplus is $200.

Table 7-1 -Refer to Table 7-1.If price of the product is $30,then the total consumer surplus is

Figure 7-1 -Refer to Figure 7-1.When the price rises from P1 to P2,consumer surplus

Figure 7-15 -Refer to Figure 7-15.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.The increase in producer surplus to producers already in the market would be

Figure 7-8 -Refer to Figure 7-8.If the supply curve is S',the demand curve is D,and the equilibrium price is $150,what is the producer surplus?

Figure 7-9 -Refer to Figure 7-9.If the equilibrium price is $200,what is the producer surplus?

Total surplus is

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2.If the market price is $5.50,the consumer surplus in the market will be

Figure 7-10 -Refer to Figure 7-10.If the government imposes a price ceiling of $70 in this market,then the new producer surplus will be

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

Figure 7-11 -Refer to Figure 7-6.When the price falls from P2 to P1,which of the following would not be true?

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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