Question 1

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)  Markets are usually a good way to organize economic activity. 
C)  Trade can make everyone better off. 
D)  A country's standard of living depends on its ability to produce goods and services. 
A)  The cost of something is what you give up to get it. 
B)  Markets are usually a good way to organize economic activity. 
C)  Trade can make everyone better off. 
D)  A country's standard of living depends on its ability to produce goods and services.

Question 2

Table 7-16
The following table represents the costs of five possible sellers.
Seller Cost ($)
  
-Refer to Table 7-16. Suppose each of the five sellers can supply at most one unit of the good. At which of the following prices would the market quantity supplied be exactly three units?

Accepted Answer

A)  $20 
B)  $50 
C)  $90 
D)  $120 
A)  $20 
B)  $50 
C)  $90 
D)  $120

Question 3

Table 7-16
The following table represents the costs of five possible sellers.
Seller Cost ($)
  
-Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?

Accepted Answer

A)  $90 
B)  $110 
C)  $130 
D)  $140 
A)  $90 
B)  $110 
C)  $130 
D)  $140

Question 4

Figure 7-16  
-Refer to Figure 7-16. If the price of the good is $500, then producer surplus amounts to

Accepted Answer

A)  $450. 
B)  $575. 
C)  $700. 
D)  $800. 
A)  $450. 
B)  $575. 
C)  $700. 
D)  $800.

Question 5

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 6

Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market

Accepted Answer

A)  decreases. 
B)  is unchanged. 
C)  increases. 
D)  may increase, decrease, or remain unchanged. 
A)  decreases. 
B)  is unchanged. 
C)  increases. 
D)  may increase, decrease, or remain unchanged.

Question 7

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for

Accepted Answer

A)  $6.50 each. 
B)  $7.50 each. 
C)  $9.50 each. 
D)  $10.50 each. 
A)  $6.50 each. 
B)  $7.50 each. 
C)  $9.50 each. 
D)  $10.50 each.

Question 8

Welfare economics is the study of the welfare system.

Accepted Answer

A) True 
 B)False

Question 9

Figure 7-19  
-Refer to Figure 7-19. At the equilibrium price, producer surplus is

Accepted Answer

A)  $300. 
B)  $150. 
C)  $450. 
D)  $125. 
A)  $300. 
B)  $150. 
C)  $450. 
D)  $125.

Question 10

Table 7-7
  
-Refer to Table 7-7. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You offer to sell the tickets for $325. How many tickets do you sell, and what is the total consumer surplus in the market?

Accepted Answer

A)  one ticket; $175 
B)  two tickets; $225 
C)  three tickets; $225 
D)  three tickets; $275 
A)  one ticket; $175 
B)  two tickets; $225 
C)  three tickets; $225 
D)  three tickets; $275

Question 11

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 12

Figure 7-9  
-Refer to Figure 7-9. If the price of the good is $14, then producer surplus is

Accepted Answer

A)  $19.50. 
B)  $22.50. 
C)  $20.50. 
D)  $25.00. 
A)  $19.50. 
B)  $22.50. 
C)  $20.50. 
D)  $25.00.

Question 13

Table 7-17
  
-Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Accepted Answer

A)  $44. 
B)  $56. 
C)  $72. 
D)  $96. 
A)  $44. 
B)  $56. 
C)  $72. 
D)  $96.

Question 14

Which of the following is not true when the price of a good or service falls?

Accepted Answer

A)  Buyers who were already buying the good or service are better off. 
B)  Some new buyers, who are now willing to buy, enter the market. 
C)  The total consumer surplus in the market increases. 
D)  The total value of purchases before and after the price change is the same. 
A)  Buyers who were already buying the good or service are better off. 
B)  Some new buyers, who are now willing to buy, enter the market. 
C)  The total consumer surplus in the market increases. 
D)  The total value of purchases before and after the price change is the same.

Question 15

Figure 7-28  
-Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers

Accepted Answer

A)  and the marginal cost to sellers are both P2. 
B)  is P2, and the marginal cost to sellers is P3. 
C)  and the marginal cost to sellers are both P3. 
D)  is P3, and the marginal cost to sellers is P2. 
A)  and the marginal cost to sellers are both P2. 
B)  is P2, and the marginal cost to sellers is P3. 
C)  and the marginal cost to sellers are both P3. 
D)  is P3, and the marginal cost to sellers is P2.

Question 16

Figure 7-23  
-Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

Accepted Answer

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

Question 17

When policymakers are considering a particular action, they can use consumer surplus as a(n)

Accepted Answer

A)  objective measure of the benefits to buyers as determined by policymakers. 
B)  measure of the benefits to buyers as the buyers perceive them. 
C)  potentially flawed measure of the benefits to buyers if the buyers are not rational. 
D)  Both b) and c) are correct. 
A)  objective measure of the benefits to buyers as determined by policymakers. 
B)  measure of the benefits to buyers as the buyers perceive them. 
C)  potentially flawed measure of the benefits to buyers if the buyers are not rational. 
D)  Both b) and c) are correct.

Question 18

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to

Accepted Answer

A)  only existing customers who now get lower prices on the gowns they were already planning to purchase. 
B)  only new customers who enter the market because of the lower prices. 
C)  both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. 
D)  Consumer surplus does not increase; it decreases. 
A)  only existing customers who now get lower prices on the gowns they were already planning to purchase. 
B)  only new customers who enter the market because of the lower prices. 
C)  both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. 
D)  Consumer surplus does not increase; it decreases.

Question 19

Figure 7-3  
-Refer to Figure 7-3. 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 20

Table 7-13
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
  
-Refer to Table 7-13. The equilibrium market price for 10 piano lessons is $300. What is the total producer surplus in the market?

Accepted Answer

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

Table 7-16 The following table represents the costs of five possible sellers. Seller Cost ($) -Refer to Table 7-16. Suppose each of the five sellers can supply at most one unit of the good. At which of the following prices would the market quantity supplied be exactly three units?

Table 7-16 The following table represents the costs of five possible sellers. Seller Cost ($) -Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?

Figure 7-16 -Refer to Figure 7-16. If the price of the good is $500, then producer surplus amounts to

Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for

Welfare economics is the study of the welfare system.

Figure 7-19 -Refer to Figure 7-19. At the equilibrium price, producer surplus is

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

Figure 7-9 -Refer to Figure 7-9. If the price of the good is $14, then producer surplus is

Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Which of the following is not true when the price of a good or service falls?

Figure 7-28 -Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers

Figure 7-23 -Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

When policymakers are considering a particular action, they can use consumer surplus as a(n)

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to

Figure 7-3 -Refer to Figure 7-3. When the price is P1, consumer surplus is

Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. The equilibrium market price for 10 piano lessons is $300. What is the total producer surplus in the market?

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

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

Table 7-16 The following table represents the costs of five possible sellers. Seller Cost ($) -Refer to Table 7-16. Suppose each of the five sellers can supply at most one unit of the good. At which of the following prices would the market quantity supplied be exactly three units?

Table 7-16 The following table represents the costs of five possible sellers. Seller Cost ($) -Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?

Figure 7-16 -Refer to Figure 7-16. If the price of the good is $500, then producer surplus amounts to

Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for

Welfare economics is the study of the welfare system.

Figure 7-19 -Refer to Figure 7-19. At the equilibrium price, producer surplus is

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

Figure 7-9 -Refer to Figure 7-9. If the price of the good is $14, then producer surplus is

Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Which of the following is not true when the price of a good or service falls?

Figure 7-28 -Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers

Figure 7-23 -Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

When policymakers are considering a particular action, they can use consumer surplus as a(n)

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to

Figure 7-3 -Refer to Figure 7-3. When the price is P1, consumer surplus is

Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. The equilibrium market price for 10 piano lessons is $300. What is the total producer surplus in the market?

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