Question 1

Which of the following will cause a decrease in consumer surplus?

Accepted Answer

A)  an increase in the number of sellers of the good 
B)  a decrease in the production cost of the good 
C)  sellers expect the price of the good to be lower next month 
D)  the imposition of a binding price floor in the market 
A)  an increase in the number of sellers of the good 
B)  a decrease in the production cost of the good 
C)  sellers expect the price of the good to be lower next month 
D)  the imposition of a binding price floor in the market

Question 2

Which of the following statements is not correct?

Accepted Answer

A)  A seller would be eager to sell her product at a price higher than her cost. 
B)  A seller would refuse to sell her product at a price lower than her cost. 
C)  A seller would be indifferent about selling her product at a price equal to her cost. 
D)  Since sellers cannot set the price for their product,they must be willing to sell their product at any price. 
A)  A seller would be eager to sell her product at a price higher than her cost. 
B)  A seller would refuse to sell her product at a price lower than her cost. 
C)  A seller would be indifferent about selling her product at a price equal to her cost. 
D)  Since sellers cannot set the price for their product,they must be willing to sell their product at any price.

Question 3

Total surplus in a market will increase when the government

Accepted Answer

A)  imposes a binding price floor or a binding price ceiling on that market. 
B)  imposes a tax on that market. 
C)  Both a and b are correct. 
D)  Neither a nor b is correct. 
A)  imposes a binding price floor or a binding price ceiling on that market. 
B)  imposes a tax on that market. 
C)  Both a and b are correct. 
D)  Neither a nor b is correct.

Question 4

Which of the following statements is not correct?

Accepted Answer

A)  An invisible hand leads buyers and sellers to an equilibrium that maximizes total surplus. 
B)  Market power can cause markets to be inefficient. 
C)  Externalities can cause markets to be inefficient. 
D)  The invisible hand can remedy most if not all types of market failures. 
A)  An invisible hand leads buyers and sellers to an equilibrium that maximizes total surplus. 
B)  Market power can cause markets to be inefficient. 
C)  Externalities can cause markets to be inefficient. 
D)  The invisible hand can remedy most if not all types of market failures.

Question 5

The study of how the allocation of resources affects economic well-being is called

Accepted Answer

A)  consumer economics. 
B)  macroeconomics. 
C)  willingness-to-pay economics. 
D)  welfare economics. 
A)  consumer economics. 
B)  macroeconomics. 
C)  willingness-to-pay economics. 
D)  welfare economics.

Question 6

Chad is willing to pay $5.00 to get his first cup of morning latté;he is willing to pay $4.50 for a second cup.He buys his first cup from a vendor selling latté for $3.75 per cup.He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup.Chad buys a second cup.Which of the following statements is correct?

Accepted Answer

A)  Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté. 
B)  Chad's consumer surplus on his second cup of latté was larger than his consumer surplus on his first cup of latté. 
C)  Chad is irrational in that he is willing to pay a different price for his second cup of latté than what he is willing to pay for his first cup of latté. 
D)  Chad places a higher value on his second cup of latté than on his first cup of latté. 
A)  Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté. 
B)  Chad's consumer surplus on his second cup of latté was larger than his consumer surplus on his first cup of latté. 
C)  Chad is irrational in that he is willing to pay a different price for his second cup of latté than what he is willing to pay for his first cup of latté. 
D)  Chad places a higher value on his second cup of latté than on his first cup of latté.

Question 7

If the price a consumer pays for a product is equal to a consumer's willingness to pay,then the consumer surplus relevant to that purchase is

Accepted Answer

A)  zero. 
B)  negative,and the consumer would not purchase the product. 
C)  positive,and the consumer would purchase the product. 
D)  There is not enough information given to answer this question. 
A)  zero. 
B)  negative,and the consumer would not purchase the product. 
C)  positive,and the consumer would purchase the product. 
D)  There is not enough information given to answer this question.

Question 8

Many economists believe that restrictions against ticket scalping result in each of the following except

Accepted Answer

A)  a smaller audience for cultural and sporting events. 
B)  shorter lines at cultural and sporting events. 
C)  less tax revenue for the state. 
D)  an increase in ticket prices. 
A)  a smaller audience for cultural and sporting events. 
B)  shorter lines at cultural and sporting events. 
C)  less tax revenue for the state. 
D)  an increase in ticket prices.

Question 9

Ally mows lawns for a living.Ally's out-of-pocket expenses (for equipment,gasoline,and so on)plus the value that she places on her own time amount to her

Accepted Answer

A)  producer surplus. 
B)  producer deficit. 
C)  cost of mowing lawns. 
D)  profit. 
A)  producer surplus. 
B)  producer deficit. 
C)  cost of mowing lawns. 
D)  profit.

Question 10

Total surplus in a market is equal to

Accepted Answer

A)  value to buyers - amount paid by buyers. 
B)  amount received by sellers - costs of sellers. 
C)  value to buyers - costs of sellers. 
D)  amount received by sellers - amount paid by buyers. 
A)  value to buyers - amount paid by buyers. 
B)  amount received by sellers - costs of sellers. 
C)  value to buyers - costs of sellers. 
D)  amount received by sellers - amount paid by buyers.

Question 11

Raisin bran and milk are complementary goods.A decrease in the price of raisins will

Accepted Answer

A)  increase consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk. 
B)  increase consumer surplus in the market for raisin bran and increase producer surplus in the market for milk. 
C)  decrease consumer surplus in the market for raisin bran and increase producer surplus in the market for milk. 
D)  decrease consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk. 
A)  increase consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk. 
B)  increase consumer surplus in the market for raisin bran and increase producer surplus in the market for milk. 
C)  decrease consumer surplus in the market for raisin bran and increase producer surplus in the market for milk. 
D)  decrease consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk.

Question 12

Cameron visits a sporting goods store to buy a new set of golf clubs.He is willing to pay $750 for the clubs but buys them on sale for $575.Cameron's consumer surplus from the purchase is

Accepted Answer

A)  $175. 
B)  $575. 
C)  $750. 
D)  $1,325. 
A)  $175. 
B)  $575. 
C)  $750. 
D)  $1,325.

Question 13

Table 7-9
  
-Refer to Table 7-9.Both the demand curve and the supply curve are straight lines.If the price is $8 but only 4 units are bought and sold,producer surplus will be

Accepted Answer

A)  $24. 
B)  $28. 
C)  $32. 
D)  $40. 
A)  $24. 
B)  $28. 
C)  $32. 
D)  $40.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

When markets fail,public policy can

Accepted Answer

A)  do nothing to improve the situation. 
B)  potentially remedy the problem and increase economic efficiency. 
C)  always remedy the problem and increase economic efficiency. 
D)  in theory,remedy the problem,but in practice,public policy has proven to be ineffective. 
A)  do nothing to improve the situation. 
B)  potentially remedy the problem and increase economic efficiency. 
C)  always remedy the problem and increase economic efficiency. 
D)  in theory,remedy the problem,but in practice,public policy has proven to be ineffective.

Question 16

On a graph,the area below a demand curve and above the price measures

Accepted Answer

A)  producer surplus. 
B)  consumer surplus. 
C)  deadweight loss. 
D)  willingness to pay. 
A)  producer surplus. 
B)  consumer surplus. 
C)  deadweight loss. 
D)  willingness to pay.

Question 17

Laissez-faire is a French expression which literally means

Accepted Answer

A)  to make do. 
B)  to get involved. 
C)  whatever works. 
D)  allow them to do. 
A)  to make do. 
B)  to get involved. 
C)  whatever works. 
D)  allow them to do.

Question 18

If the government imposes a binding price floor in a market,then the consumer surplus in that market will decrease.

Accepted Answer

A) True 
 B)False

Question 19

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 20

One of the basic principles of economics is that markets are usually a good way to organize economic activity.This principle is explained by the study of

Accepted Answer

A)  factor markets. 
B)  energy markets. 
C)  welfare economics. 
D)  labor economics. 
A)  factor markets. 
B)  energy markets. 
C)  welfare economics. 
D)  labor economics.

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

Which of the following will cause a decrease in consumer surplus?

Which of the following statements is not correct?

Total surplus in a market will increase when the government

Which of the following statements is not correct?

The study of how the allocation of resources affects economic well-being is called

If the price a consumer pays for a product is equal to a consumer's willingness to pay,then the consumer surplus relevant to that purchase is

Many economists believe that restrictions against ticket scalping result in each of the following except

Ally mows lawns for a living.Ally's out-of-pocket expenses (for equipment,gasoline,and so on)plus the value that she places on her own time amount to her

Total surplus in a market is equal to

Raisin bran and milk are complementary goods.A decrease in the price of raisins will

Cameron visits a sporting goods store to buy a new set of golf clubs.He is willing to pay $750 for the clubs but buys them on sale for $575.Cameron's consumer surplus from the purchase is

Table 7-9 -Refer to Table 7-9.Both the demand curve and the supply curve are straight lines.If the price is $8 but only 4 units are bought and sold,producer surplus will be

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

When markets fail,public policy can

On a graph,the area below a demand curve and above the price measures

Laissez-faire is a French expression which literally means

If the government imposes a binding price floor in a market,then the consumer surplus in that market will decrease.

Total surplus is represented by the area below the

One of the basic principles of economics is that markets are usually a good way to organize economic activity.This principle is explained by the study of

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

Filters