Question 1

For any given quantity, the price on a demand curve represents the marginal buyer's willingness to pay.

Accepted Answer

A) True 
 B)False

Question 2

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

Table 7-17
  
-Refer to Table 7-17. At a price of $2.00, total surplus is

Accepted Answer

A)  larger than it would be at the equilibrium price. 
B)  smaller than it would be at the equilibrium price. 
C)  the same as it would be at the equilibrium price. 
D)  There is insufficient information to make this determination. 
A)  larger than it would be at the equilibrium price. 
B)  smaller than it would be at the equilibrium price. 
C)  the same as it would be at the equilibrium price. 
D)  There is insufficient information to make this determination.

Question 4

Figure 7-34  
-Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total consumer surplus?

Accepted Answer

Total consumer surpl

Question 5

Welfare economics is the study of

Accepted Answer

A)  taxes and subsidies. 
B)  how technology is best put to use in the production of goods and services. 
C)  government welfare programs for needy people. 
D)  how the allocation of resources affects economic well-being. 
A)  taxes and subsidies. 
B)  how technology is best put to use in the production of goods and services. 
C)  government welfare programs for needy people. 
D)  how the allocation of resources affects economic well-being.

Question 6

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
  
-Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Accepted Answer

A)  $0 or slightly more. 
B)  $10 or slightly less. 
C)  $30 or slightly more. 
D)  $45 or slightly less. 
A)  $0 or slightly more. 
B)  $10 or slightly less. 
C)  $30 or slightly more. 
D)  $45 or slightly less.

Question 7

David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is

Accepted Answer

A)  $-15. 
B)  $20. 
C)  $30. 
D)  $75. 
A)  $-15. 
B)  $20. 
C)  $30. 
D)  $75.

Question 8

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

Accepted Answer

A)  supply and demand are both limited. 
B)  supply is limited and demand is not limited. 
C)  supply is limited and demand is not limited. 
D)  supply and demand are both not limited. 
A)  supply and demand are both limited. 
B)  supply is limited and demand is not limited. 
C)  supply is limited and demand is not limited. 
D)  supply and demand are both not limited.

Question 9

Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market.

Accepted Answer

A) True 
 B)False

Question 10

Figure 7-1  
-Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to

Accepted Answer

A)  $50. 
B)  $100. 
C)  $150. 
D)  $200. 
A)  $50. 
B)  $100. 
C)  $150. 
D)  $200.

Question 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Figure 7-5  
-Refer to Figure 7-5. If the price of the good is $12, then consumer surplus is

Accepted Answer

A)  $11. 
B)  $9. 
C)  $13. 
D)  $16. 
A)  $11. 
B)  $9. 
C)  $13. 
D)  $16.

Question 15

When a buyer's willingness to pay for a good is equal to the price of the good, the

Accepted Answer

A)  buyer's consumer surplus for that good is maximized. 
B)  buyer will buy as much of the good as the buyer's budget allows. 
C)  price of the good exceeds the value that the buyer places on the good. 
D)  buyer is indifferent between buying the good and not buying it. 
A)  buyer's consumer surplus for that good is maximized. 
B)  buyer will buy as much of the good as the buyer's budget allows. 
C)  price of the good exceeds the value that the buyer places on the good. 
D)  buyer is indifferent between buying the good and not buying it.

Question 16

Figure 7-26  
-Refer to Figure 7-26. At the equilibrium price, consumer surplus is

Accepted Answer

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

Question 17

Figure 7-15  
-Refer to Figure 7-15. When the price is P2, producer surplus is

Accepted Answer

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

Question 18

The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate

Accepted Answer

A)  increases, and producer surplus increases. 
B)  increases, and producer surplus decreases. 
C)  decreases, and producer surplus increases. 
D)  decreases, and producer surplus decreases. 
A)  increases, and producer surplus increases. 
B)  increases, and producer surplus decreases. 
C)  decreases, and producer surplus increases. 
D)  decreases, and producer surplus decreases.

Question 19

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is

Accepted Answer

A)  $650. 
B)  $150. 
C)  $250. 
D)  $400. 
A)  $650. 
B)  $150. 
C)  $250. 
D)  $400.

Question 20

All else equal, a decrease in demand will cause an increase in producer surplus.

Accepted Answer

A) True 
 B)False

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

For any given quantity, the price on a demand curve represents the marginal buyer's willingness to pay.

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

Table 7-17 -Refer to Table 7-17. At a price of $2.00, total surplus is

Figure 7-34 -Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total consumer surplus?

Welfare economics is the study of

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market.

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to

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

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

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

Figure 7-5 -Refer to Figure 7-5. If the price of the good is $12, then consumer surplus is

When a buyer's willingness to pay for a good is equal to the price of the good, the

Figure 7-26 -Refer to Figure 7-26. At the equilibrium price, consumer surplus is

Figure 7-15 -Refer to Figure 7-15. When the price is P2, producer surplus is

The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is

All else equal, a decrease in demand will cause an increase in producer surplus.

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

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