Question 1

The lower the price, the lower the consumer surplus, all else equal.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is correct?

Accepted Answer

A)  Buyers always want to pay less and sellers always want to be paid more. 
B)  Buyers always want to pay less and sellers always want to be paid less. 
C)  Buyers always want to pay more and sellers always want to be paid more. 
D)  Buyers always want to pay more and sellers always want to be paid less. 
A)  Buyers always want to pay less and sellers always want to be paid more. 
B)  Buyers always want to pay less and sellers always want to be paid less. 
C)  Buyers always want to pay more and sellers always want to be paid more. 
D)  Buyers always want to pay more and sellers always want to be paid less.

Question 3

Figure 7-24  
-Refer to Figure 7-24. At equilibrium, producer surplus is measured by the area

Accepted Answer

A)  ABD. 
B)  ABF. 
C)  CDI. 
D)  BDF. 
A)  ABD. 
B)  ABF. 
C)  CDI. 
D)  BDF.

Question 4

Figure 7-1  
-Refer to Figure 7-1. If the price of the good is $200, then

Accepted Answer

A)  consumer surplus is $150. 
B)  consumer surplus is $650. 
C)  producer surplus is $650. 
D)  producer surplus is $750. 
A)  consumer surplus is $150. 
B)  consumer surplus is $650. 
C)  producer surplus is $650. 
D)  producer surplus is $750.

Question 5

Consumer surplus measures the benefit to buyers of participating in a market.

Accepted Answer

A) True 
 B)False

Question 6

Figure 7-18  
-Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

Accepted Answer

A)  $100, then the price of the good is $130. 
B)  $130, then the price of the good is $120. 
C)  $160, then the price of the good is $100. 
D)  $120, then the price of the good is $90. 
A)  $100, then the price of the good is $130. 
B)  $130, then the price of the good is $120. 
C)  $160, then the price of the good is $100. 
D)  $120, then the price of the good is $90.

Question 7

Table 7-13
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
  
-Refer to Table 7-13. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept?

Accepted Answer

A)  $351 
B)  $251 
C)  $249 
D)  $199 
A)  $351 
B)  $251 
C)  $249 
D)  $199

Question 8

Figure 7-30  
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

Accepted Answer

Consumer s

Question 9

When there is a technological advance in the pork industry, consumer surplus in that market will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change, since technology affects producers and not consumers. 
D)  not change, since consumers' willingness to pay is unaffected by the technological advance. 
A)  increase. 
B)  decrease. 
C)  not change, since technology affects producers and not consumers. 
D)  not change, since consumers' willingness to pay is unaffected by the technological advance.

Question 10

Table 7-12
The only four producers in a market have the following costs:
  
-Refer to Table 7-12. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Accepted Answer

A)  $200. 
B)  $300. 
C)  $450. 
D)  $600. 
A)  $200. 
B)  $300. 
C)  $450. 
D)  $600.

Question 11

Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20. Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30.
Which of the following statements is correct?

Accepted Answer

A)  Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been a buyer. 
B)  Brent's consumer surplus is the smallest of the three individual consumer surpluses. 
C)  For the three individuals together, consumer surplus amounts to $60. 
D)  The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener. 
A)  Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been a buyer. 
B)  Brent's consumer surplus is the smallest of the three individual consumer surpluses. 
C)  For the three individuals together, consumer surplus amounts to $60. 
D)  The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener.

Question 12

Table 7-13
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
  
-Refer to Table 7-13. You wish to purchase 10 piano lessons for yourself and for your brother, so you take bids from each of the sellers. You will take lessons at the same time, so one teacher cannot provide lessons to both of you. You must pay the same price for both sets of lessons, and you will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept?

Accepted Answer

A)  $351 
B)  $349 
C)  $201 
D)  $199 
A)  $351 
B)  $349 
C)  $201 
D)  $199

Question 13

Figure 7-22  
-Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus would be

Accepted Answer

A)  $2,500. 
B)  $900. 
C)  $800. 
D)  $1,600. 
A)  $2,500. 
B)  $900. 
C)  $800. 
D)  $1,600.

Question 14

Which of the following will cause no change in producer surplus?

Accepted Answer

A)  the imposition of a nonbinding price ceiling in the market 
B)  buyers expect the price of a good to be higher next month 
C)  the price of a substitute increases 
D)  income increases and buyers consider the good to be inferior 
A)  the imposition of a nonbinding price ceiling in the market 
B)  buyers expect the price of a good to be higher next month 
C)  the price of a substitute increases 
D)  income increases and buyers consider the good to be inferior

Question 15

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6, producer surplus

Accepted Answer

A)  would necessarily increase even if the higher price resulted in a surplus of widgets. 
B)  would necessarily decrease because the higher price would create a surplus of widgets. 
C)  might increase or decrease. 
D)  would be unaffected. 
A)  would necessarily increase even if the higher price resulted in a surplus of widgets. 
B)  would necessarily decrease because the higher price would create a surplus of widgets. 
C)  might increase or decrease. 
D)  would be unaffected.

Question 16

Answer each of the following questions about demand and consumer surplus.
a. What is consumer surplus, and how is it measured?
b. What is the relationship between the demand curve and the willingness to pay?
c. Other things equal, what happens to consumer surplus if the price of a good falls? Why?
Illustrate using a demand curve.
d. In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand curve, what else must be considered to determine consumer surplus?

Accepted Answer

a. Consumer surplus measures the benefit

Question 17

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Accepted Answer

A) True 
 B)False

Question 18

Figure 7-2  
-Refer to Figure 7-2. If the price of the good is $80, then consumer surplus amounts to

Accepted Answer

A)  $110. 
B)  $135. 
C)  $160 . 
D)  $185. 
A)  $110. 
B)  $135. 
C)  $160 . 
D)  $185.

Question 19

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 20

Figure 7-3  
-Refer to Figure 7-3. When the price is P2, consumer surplus is

Accepted Answer

A)  A. 
B)  B. 
C)  A+c. 
D)  A+B+d. 
A)  A. 
B)  B. 
C)  A+c. 
D)  A+B+d.

The lower the price, the lower the consumer surplus, all else equal.

Which of the following statements is correct?

Figure 7-24 -Refer to Figure 7-24. At equilibrium, producer surplus is measured by the area

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $200, then

Consumer surplus measures the benefit to buyers of participating in a market.

Figure 7-18 -Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

When there is a technological advance in the pork industry, consumer surplus in that market will

Table 7-12 The only four producers in a market have the following costs: -Refer to Table 7-12. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20. Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30. Which of the following statements is correct?

Figure 7-22 -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus would be

Which of the following will cause no change in producer surplus?

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6, producer surplus

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Figure 7-2 -Refer to Figure 7-2. If the price of the good is $80, then consumer surplus amounts to

Total surplus is represented by the area

Figure 7-3 -Refer to Figure 7-3. When the price is P2, consumer surplus is

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

Filters

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

The lower the price, the lower the consumer surplus, all else equal.

Which of the following statements is correct?

Figure 7-24 -Refer to Figure 7-24. At equilibrium, producer surplus is measured by the area

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $200, then

Consumer surplus measures the benefit to buyers of participating in a market.

Figure 7-18 -Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

When there is a technological advance in the pork industry, consumer surplus in that market will

Table 7-12 The only four producers in a market have the following costs: -Refer to Table 7-12. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20. Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30. Which of the following statements is correct?

Figure 7-22 -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus would be

Which of the following will cause no change in producer surplus?

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6, producer surplus

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Figure 7-2 -Refer to Figure 7-2. If the price of the good is $80, then consumer surplus amounts to

Total surplus is represented by the area

Figure 7-3 -Refer to Figure 7-3. When the price is P2, consumer surplus is

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

Filters