Question 1

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Accepted Answer

A) True 
 B)False

Question 2

Figure 7-33  
-Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price.
How much is total surplus in this market at the new equilibrium price?

Accepted Answer

Total surplus at the

Question 3

Consumer surplus is a good measure of economic welfare if policymakers want to

Accepted Answer

A)  maximize total benefit. 
B)  minimize deadweight loss. 
C)  respect the preferences of sellers. 
D)  respect the preferences of buyers. 
A)  maximize total benefit. 
B)  minimize deadweight loss. 
C)  respect the preferences of sellers. 
D)  respect the preferences of buyers.

Question 4

Table 7-1
  
-Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?

Accepted Answer

A)  Calvin 
B)  Calvin and Sam 
C)  Calvin, Sam, and Andrew 
D)  Calvin, Sam, Andrew, and Lori 
A)  Calvin 
B)  Calvin and Sam 
C)  Calvin, Sam, and Andrew 
D)  Calvin, Sam, Andrew, and Lori

Question 5

Total surplus measures the

Accepted Answer

A)  loss to buyers from paying higher prices plus the benefit to sellers from receiving lower prices. 
B)  buyers' willingness to pay less the sellers' costs. 
C)  fairness of the distribution of resources in society. 
D)  value to the government of goods and services sold in society. 
A)  loss to buyers from paying higher prices plus the benefit to sellers from receiving lower prices. 
B)  buyers' willingness to pay less the sellers' costs. 
C)  fairness of the distribution of resources in society. 
D)  value to the government of goods and services sold in society.

Question 6

Figure 7-33  
-Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price.
How much is total producer surplus in this market at the new equilibrium price?

Accepted Answer

Total producer surpl

Question 7

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Accepted Answer

A)  Consumer surplus decreases. 
B)  Consumer surplus remains unchanged. 
C)  Consumer surplus increases. 
D)  Consumer surplus may increase, decrease, or remain unchanged. 
A)  Consumer surplus decreases. 
B)  Consumer surplus remains unchanged. 
C)  Consumer surplus increases. 
D)  Consumer surplus may increase, decrease, or remain unchanged.

Question 8

Tammy loves donuts. The table shown reflects the value Tammy places on each donut she eats:
   
a. Use this information to construct Tammy's demand curve for donuts.
b. If the price of donuts is $0.20, how many donuts will Tammy buy?
c. Show Tammy's consumer surplus on your graph. How much consumer surplus would she have at a price of $0.20?
d. If the price of donuts rose to $0.40, how many donuts would she purchase now? What would happen to Tammy's consumer surplus? Show this change on your graph.

Accepted Answer

a.
.
 @#IMG-DLM& a. At a price of $0.20, Tammy wou

Question 9

Which of the following events would increase producer surplus?

Accepted Answer

A)  Sellers' costs stay the same and the price of the good increases. 
B)  Sellers' costs increase and the price of the good stays the same. 
C)  Sellers' costs increase and the price of the good decreases. 
D)  All of the above are correct. 
A)  Sellers' costs stay the same and the price of the good increases. 
B)  Sellers' costs increase and the price of the good stays the same. 
C)  Sellers' costs increase and the price of the good decreases. 
D)  All of the above are correct.

Question 10

Willingness to pay

Accepted Answer

A)  measures the value that a buyer places on a good. 
B)  is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C)  is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D)  is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
A)  measures the value that a buyer places on a good. 
B)  is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C)  is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D)  is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

Question 11

Consumer surplus equals the

Accepted Answer

A)  value to buyers minus the amount paid by buyers. 
B)  value to buyers minus the cost to sellers. 
C)  amount received by sellers minus the cost to sellers. 
D)  amount received by sellers minus the amount paid by buyers. 
A)  value to buyers minus the amount paid by buyers. 
B)  value to buyers minus the cost to sellers. 
C)  amount received by sellers minus the cost to sellers. 
D)  amount received by sellers minus the amount paid by buyers.

Question 12

Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then

Accepted Answer

A)  the marginal buyer's willingness to pay for the 100th unit of the good is $25. 
B)  the sum of the five buyers' willingness to pay for the 100th unit of the good is $25. 
C)  the average of the five buyers' willingness to pay for the 100th unit of the good is $25. 
D)  all of the five buyers are willing to pay at least $25 for the 100th unit of the good. 
A)  the marginal buyer's willingness to pay for the 100th unit of the good is $25. 
B)  the sum of the five buyers' willingness to pay for the 100th unit of the good is $25. 
C)  the average of the five buyers' willingness to pay for the 100th unit of the good is $25. 
D)  all of the five buyers are willing to pay at least $25 for the 100th unit of the good.

Question 13

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. If Firm B produces a monitor that David buys, then the market outcome illustrates which of the following principles? (i) Free markets allocate the supply of goods to the buyers who value them most highly, as measured by their willingness to pay.
(ii) Free markets allocate the demand for goods to the sellers who can produce them at the least cost.

Accepted Answer

A)  (i) only 
B)  (ii) only 
C)  both (i) and (ii) 
D)  neither (i) nor (ii) 
A)  (i) only 
B)  (ii) only 
C)  both (i) and (ii) 
D)  neither (i) nor (ii)

Question 14

Figure 7-12  
-Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the producer surplus to new producers

Accepted Answer

A)  $15,000 
B)  $3,750 
C)  $7,500 
D) $30,000 
A)  $15,000 
B)  $3,750 
C)  $7,500 
D) $30,000

Question 15

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

Accepted Answer

A)  $13,000. 
B)  $105,000. 
C)  $118,000. 
D)  $131,000. 
A)  $13,000. 
B)  $105,000. 
C)  $118,000. 
D)  $131,000.

Question 16

Figure 7-12  
-Refer to Figure 7-12. If the equilibrium price is $200, what is the producer surplus?

Accepted Answer

A)  $7,500 
B)  $3,750 
C)  $10,000 
D)  $15,000 
A)  $7,500 
B)  $3,750 
C)  $10,000 
D)  $15,000

Question 17

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 were purchasing the good when the price floor was in place?

Accepted Answer

Those consumers who were alrea

Question 18

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is

Accepted Answer

A)  $150. 
B)  $200. 
C)  $350. 
D)  $550. 
A)  $150. 
B)  $200. 
C)  $350. 
D)  $550.

Question 19

Welfare economics is the study of

Accepted Answer

A)  the well-being of less fortunate people. 
B)  welfare programs in the United States. 
C)  how the allocation of resources affects economic well-being. 
D)  the effect of income redistribution on work effort. 
A)  the well-being of less fortunate people. 
B)  welfare programs in the United States. 
C)  how the allocation of resources affects economic well-being. 
D)  the effect of income redistribution on work effort.

Question 20

If the United States legally allowed for a market in transplant organs, it is estimated that one kidney would sell for at least $100,000.

Accepted Answer

A) True 
 B)False

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total surplus in this market at the new equilibrium price?

Consumer surplus is a good measure of economic welfare if policymakers want to

Table 7-1 -Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?

Total surplus measures the

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total producer surplus in this market at the new equilibrium price?

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Which of the following events would increase producer surplus?

Willingness to pay

Consumer surplus equals the

Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the producer surplus to new producers

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price is $200, what is the producer surplus?

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 were purchasing the good when the price floor was in place?

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is

Welfare economics is the study of

If the United States legally allowed for a market in transplant organs, it is estimated that one kidney would sell for at least $100,000.

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

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total surplus in this market at the new equilibrium price?

Consumer surplus is a good measure of economic welfare if policymakers want to

Table 7-1 -Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?

Total surplus measures the

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total producer surplus in this market at the new equilibrium price?

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Which of the following events would increase producer surplus?

Willingness to pay

Consumer surplus equals the

Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the producer surplus to new producers

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price is $200, what is the producer surplus?

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 were purchasing the good when the price floor was in place?

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is

Welfare economics is the study of

If the United States legally allowed for a market in transplant organs, it is estimated that one kidney would sell for at least $100,000.

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