Question 1

Figure 7-14  
-Refer to Figure 7-14.When the price is P1,area B represents

Accepted Answer

A)  total surplus. 
B)  producer surplus. 
C)  consumer surplus. 
D)  profits. 
A)  total surplus. 
B)  producer surplus. 
C)  consumer surplus. 
D)  profits.

Question 2

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 $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 3

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 would be

Accepted Answer

A)  $210. 
B)  $360. 
C)  $480. 
D)  $570. 
A)  $210. 
B)  $360. 
C)  $480. 
D)  $570.

Question 4

Inefficiency can be caused in a market by the presence of

Accepted Answer

A)  market power. 
B)  externalities. 
C)  imperfectly competitive markets. 
D)  All of the above are correct. 
A)  market power. 
B)  externalities. 
C)  imperfectly competitive markets. 
D)  All of the above are correct.

Question 5

Total surplus

Accepted Answer

A)  can be used to measure a market's efficiency. 
B)  is the sum of consumer and producer surplus. 
C)  is the to value to buyers minus the cost to sellers. 
D)  All of the above are correct. 
A)  can be used to measure a market's efficiency. 
B)  is the sum of consumer and producer surplus. 
C)  is the to value to buyers minus the cost to sellers. 
D)  All of the above are correct.

Question 6

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 7

Figure 7-6  
-Refer to Figure 7-6.If the price of the good is $8.50,then producer surplus is

Accepted Answer

A)  $2.50. 
B)  $6.50. 
C)  $8.00. 
D)  $11.00. 
A)  $2.50. 
B)  $6.50. 
C)  $8.00. 
D)  $11.00.

Question 8

Figure 7-17  
-Refer to Figure 7-17.At equilibrium,consumer surplus is measured by the area

Accepted Answer

A)  ACG. 
B)  AFG. 
C)  KBG. 
D)  CFG. 
A)  ACG. 
B)  AFG. 
C)  KBG. 
D)  CFG.

Question 9

Markets will always allocate resources efficiently.

Accepted Answer

A) True 
 B)False

Question 10

Figure 7-5  
-Refer to Figure 7-5.What is the consumer surplus if the price is $100?

Accepted Answer

A)  $2,500 
B)  $5,000 
C)  $10,000 
D)  $20,000 
A)  $2,500 
B)  $5,000 
C)  $10,000 
D)  $20,000

Question 11

Producer surplus is the cost of production minus the amount a seller is paid.

Accepted Answer

A) True 
 B)False

Question 12

A supply curve can be used to measure producer surplus because it reflects

Accepted Answer

A)  the actions of sellers. 
B)  quantity supplied. 
C)  sellers' costs. 
D)  the amount that will be purchased by consumers in the market. 
A)  the actions of sellers. 
B)  quantity supplied. 
C)  sellers' costs. 
D)  the amount that will be purchased by consumers in the market.

Question 13

If the government allowed a free market for transplant organs such as kidneys to exist,the

Accepted Answer

A)  shortage of organs would be eliminated,and there would be no surplus of organs. 
B)  shortage of organs would be eliminated,but a surplus of organs would develop. 
C)  shortage of organs would persist. 
D)  overall well-being of society would remain unchanged. 
A)  shortage of organs would be eliminated,and there would be no surplus of organs. 
B)  shortage of organs would be eliminated,but a surplus of organs would develop. 
C)  shortage of organs would persist. 
D)  overall well-being of society would remain unchanged.

Question 14

Table 7-6
The following table represents the costs of five possible sellers.
  
-Refer to Table 7-6.If the market price is $900,the producer surplus in the market is

Accepted Answer

A)  $350. 
B)  $550. 
C)  $750. 
D)  $1,000. 
A)  $350. 
B)  $550. 
C)  $750. 
D)  $1,000.

Question 15

A seller's opportunity cost measures the

Accepted Answer

A)  value of everything she must give up to produce a good. 
B)  amount she is paid for a good minus her cost of providing it. 
C)  consumer surplus. 
D)  out of pocket expenses to produce a good but not the value of her time. 
A)  value of everything she must give up to produce a good. 
B)  amount she is paid for a good minus her cost of providing it. 
C)  consumer surplus. 
D)  out of pocket expenses to produce a good but not the value of her time.

Question 16

Which of the Ten Principles of Economics does welfare economics explain more fully?

Accepted Answer

A)  The cost of something is what you give up to get it. 
B)  Rational people think at the margin. 
C)  Markets are usually a good way to organize economic activity. 
D)  People respond to incentives. 
A)  The cost of something is what you give up to get it. 
B)  Rational people think at the margin. 
C)  Markets are usually a good way to organize economic activity. 
D)  People respond to incentives.

Question 17

Figure 7-1  
-Refer to Figure 7-1.When the price is P1,consumer surplus is

Accepted Answer

A)  A. 
B)  A+B. 
C)  A+B+C. 
D)  A+B+D. 
A)  A. 
B)  A+B. 
C)  A+B+C. 
D)  A+B+D.

Question 18

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.The market quantity of oranges demanded per day is exactly 5 if the price of an orange,P,satisfies

Accepted Answer

A)  $1.00 < P < $1.50. 
B)  $0.80 < P < $1.50. 
C)  $0.80 < P < $1.00. 
D)  $0.75 < P < $0.80. 
A)  $1.00 < P < $1.50. 
B)  $0.80 < P < $1.50. 
C)  $0.80 < P < $1.00. 
D)  $0.75 < P < $0.80.

Question 19

Ivana produces cookies.Her production cost is $6 per dozen.She sells the cookies for $8 per dozen.Her producer surplus per dozen cookies is

Accepted Answer

A)  $2. 
B)  $6. 
C)  $8. 
D)  $14. 
A)  $2. 
B)  $6. 
C)  $8. 
D)  $14.

Question 20

Figure 7-18  
-Refer to Figure 7-18.Buyers who value this good less than the equilibrium price are represented by which line segment?

Accepted Answer

A)  AC. 
B)  CK. 
C)  BC. 
D)  CH. 
A)  AC. 
B)  CK. 
C)  BC. 
D)  CH.

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

Figure 7-14 -Refer to Figure 7-14.When the price is P1,area B represents

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 $400.What is the total producer surplus in the market?

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 would be

Inefficiency can be caused in a market by the presence of

Total surplus

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

Figure 7-6 -Refer to Figure 7-6.If the price of the good is $8.50,then producer surplus is

Figure 7-17 -Refer to Figure 7-17.At equilibrium,consumer surplus is measured by the area

Markets will always allocate resources efficiently.

Figure 7-5 -Refer to Figure 7-5.What is the consumer surplus if the price is $100?

Producer surplus is the cost of production minus the amount a seller is paid.

A supply curve can be used to measure producer surplus because it reflects

If the government allowed a free market for transplant organs such as kidneys to exist,the

Table 7-6 The following table represents the costs of five possible sellers. -Refer to Table 7-6.If the market price is $900,the producer surplus in the market is

A seller's opportunity cost measures the

Which of the Ten Principles of Economics does welfare economics explain more fully?

Figure 7-1 -Refer to Figure 7-1.When the price is P1,consumer surplus is

Ivana produces cookies.Her production cost is $6 per dozen.She sells the cookies for $8 per dozen.Her producer surplus per dozen cookies is

Figure 7-18 -Refer to Figure 7-18.Buyers who value this good less than the equilibrium price are represented by which line segment?

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