Question 1

Figure 7-22  
-Refer to Figure 7-22. If 110 units of the good are bought and sold, then

Accepted Answer

A)  the marginal cost to sellers is equal to the marginal value to buyers. 
B)  the marginal value to buyers is greater than the marginal cost to sellers. 
C)  the marginal cost to buyers is greater than marginal value to sellers. 
D)  producer surplus is greater than consumer surplus. 
A)  the marginal cost to sellers is equal to the marginal value to buyers. 
B)  the marginal value to buyers is greater than the marginal cost to sellers. 
C)  the marginal cost to buyers is greater than marginal value to sellers. 
D)  producer surplus is greater than consumer surplus.

Question 2

Unless markets are perfectly competitive, they may fail to maximize the total benefits to buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 3

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

Accepted Answer

A)  both the value of MP3 players to consumers and the cost of producing MP3 players has increased. 
B)  both the value of MP3 players to consumers and the cost of producing MP3 players has decreased. 
C)  the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased. 
D)  the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased. 
A)  both the value of MP3 players to consumers and the cost of producing MP3 players has increased. 
B)  both the value of MP3 players to consumers and the cost of producing MP3 players has decreased. 
C)  the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased. 
D)  the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased.

Question 4

Figure 7-5  
-Refer to Figure 7-5. If the price of the good is $6, then consumer surplus is

Accepted Answer

A)  $16. 
B)  $24. 
C)  $30. 
D)  $36. 
A)  $16. 
B)  $24. 
C)  $30. 
D)  $36.

Question 5

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

Accepted Answer

A)  $700 
B)  $2,300 
C)  $3,000 
D)  $3,700 
A)  $700 
B)  $2,300 
C)  $3,000 
D)  $3,700

Question 6

Figure 7-16  
-Refer to Figure 7-16. If the price of the good is $600, then producer surplus amounts to

Accepted Answer

A)  $650. 
B)  $800. 
C)  $900. 
D)  $1,000. 
A)  $650. 
B)  $800. 
C)  $900. 
D)  $1,000.

Question 7

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 8

An example of normative analysis is studying

Accepted Answer

A)  how market forces produce equilibrium. 
B)  surpluses and shortages. 
C)  whether equilibrium outcomes are socially desirable. 
D)  income distributions. 
A)  how market forces produce equilibrium. 
B)  surpluses and shortages. 
C)  whether equilibrium outcomes are socially desirable. 
D)  income distributions.

Question 9

Figure 7-34  
-Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase for those consumers who enter the market after the price floor is removed?

Accepted Answer

New consumers entering the mar

Question 10

Figure 7-33  
-Refer to Figure 7-33. How much is total consumer surplus in this market at the equilibrium price?

Accepted Answer

Total consumer surpl

Question 11

Figure 7-27  
-Refer to Figure 7-27. Buyers who value this good more 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.

Question 12

All else equal, an increase in demand will always increase consumer surplus.

Accepted Answer

A) True 
 B)False

Question 13

Justin builds fences for a living. Justin's out­of­pocket expenses (for wood, paint, etc.) plus the value that he places

Accepted Answer

A)  producer surplus. 
B)  producer deficit. 
C)  cost of building fences. 
D)  profit. 
A)  producer surplus. 
B)  producer deficit. 
C)  cost of building fences. 
D)  profit.

Question 14

The Surgeon General announces that eating apples promotes healthy teeth. As a result, the equilibrium price of apples

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 15

Figure 7-15  
-Refer to Figure 7-15. When the price falls from P2 to P1, producer surplus

Accepted Answer

A)  decreases by an amount equal to C. 
B)  decreases by an amount equal to A+B. 
C)  decreases by an amount equal to A+C. 
D)  increases by an amount equal to A+B. 
A)  decreases by an amount equal to C. 
B)  decreases by an amount equal to A+B. 
C)  decreases by an amount equal to A+C. 
D)  increases by an amount equal to A+B.

Question 16

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $100.

Accepted Answer

A) True 
 B)False

Question 17

Table 7-17
  
-Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. If 6 units are bought and sold, then total surplus is

Accepted Answer

A)  $18 lower than it would be if the equilibrium number of units were bought and sold. 
B)  $22 lower than it would be if the equilibrium number of units were bought and sold. 
C)  $26 lower than it would be if the equilibrium number of units were bought and sold. 
D)  $6 higher than it would be if the equilibrium number of units were bought and sold. 
A)  $18 lower than it would be if the equilibrium number of units were bought and sold. 
B)  $22 lower than it would be if the equilibrium number of units were bought and sold. 
C)  $26 lower than it would be if the equilibrium number of units were bought and sold. 
D)  $6 higher than it would be if the equilibrium number of units were bought and sold.

Question 18

Figure 7-3  
-Refer to Figure 7-3. When the price rises from P1 to P2, consumer surplus

Accepted Answer

A)  increases by an amount equal to A. 
B)  decreases by an amount equal to B+C. 
C)  increases by an amount equal to B+C. 
D)  decreases by an amount equal to d. 
A)  increases by an amount equal to A. 
B)  decreases by an amount equal to B+C. 
C)  increases by an amount equal to B+C. 
D)  decreases by an amount equal to d.

Question 19

Figure 7-21  
-Refer to Figure 7-21. Which area represents producer surplus when the price is P1?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 20

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 the market price for the good is $20, who will purchase the good?

Accepted Answer

A)  Ming-la only 
B)  Carlos and Quilana only 
C)  Quilana and Wilbur only 
D)  Quilana, Wilbur, and Ming-la only 
A)  Ming-la only 
B)  Carlos and Quilana only 
C)  Quilana and Wilbur only 
D)  Quilana, Wilbur, and Ming-la only

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

Figure 7-22 -Refer to Figure 7-22. If 110 units of the good are bought and sold, then

Unless markets are perfectly competitive, they may fail to maximize the total benefits to buyers and sellers.

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

Figure 7-5 -Refer to Figure 7-5. If the price of the good is $6, then consumer surplus is

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

Figure 7-16 -Refer to Figure 7-16. If the price of the good is $600, then producer surplus amounts to

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

An example of normative analysis is studying

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase for those consumers who enter the market after the price floor is removed?

Figure 7-33 -Refer to Figure 7-33. How much is total consumer surplus in this market at the equilibrium price?

Figure 7-27 -Refer to Figure 7-27. Buyers who value this good more than the equilibrium price are represented by which line segment?

All else equal, an increase in demand will always increase consumer surplus.

Justin builds fences for a living. Justin's out­of­pocket expenses (for wood, paint, etc.) plus the value that he places

The Surgeon General announces that eating apples promotes healthy teeth. As a result, the equilibrium price of apples

Figure 7-15 -Refer to Figure 7-15. When the price falls from P2 to P1, producer surplus

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $100.

Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. If 6 units are bought and sold, then total surplus is

Figure 7-3 -Refer to Figure 7-3. When the price rises from P1 to P2, consumer surplus

Figure 7-21 -Refer to Figure 7-21. Which area represents producer surplus when the price is P1?

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 the market price for the good is $20, who will purchase the good?

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

Justin builds fences for a living. Justin's outofpocket expenses (for wood, paint, etc.) plus the value that he places