Question 1

Efficiency is related to the size of the economic pie, whereas equality is related to how the pie gets sliced and distributed.

Accepted Answer

A) True 
 B)False

Question 2

Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?

Accepted Answer

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

Question 3

Figure 7-14  
-Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then producer surplus will

Accepted Answer

A)  $325. 
B)  $100. 
C)  $300. 
D)  $200. 
A)  $325. 
B)  $100. 
C)  $300. 
D)  $200.

Question 4

Which of the following is not correct?

Accepted Answer

A)  Market power can cause markets to be inefficient. 
B)  When the decisions of buyers and sellers affect nonparticipants, markets may be inefficient. 
C)  The tools of welfare economics cannot help economists when markets are inefficient. 
D)  Externalities can cause markets to be inefficient. 
A)  Market power can cause markets to be inefficient. 
B)  When the decisions of buyers and sellers affect nonparticipants, markets may be inefficient. 
C)  The tools of welfare economics cannot help economists when markets are inefficient. 
D)  Externalities can cause markets to be inefficient.

Question 5

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

Accepted Answer

A)  consumer has consumer surplus of $5 if he buys the good. 
B)  consumer does not purchase the good. 
C)  price of the good will rise due to market forces. 
D)  market is out of equilibrium. 
A)  consumer has consumer surplus of $5 if he buys the good. 
B)  consumer does not purchase the good. 
C)  price of the good will rise due to market forces. 
D)  market is out of equilibrium.

Question 6

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

Accepted Answer

A)  consumer surplus is $800. 
B)  consumer surplus is $900. 
C)  producer surplus is $900. 
D)  producer surplus is $1,000. 
A)  consumer surplus is $800. 
B)  consumer surplus is $900. 
C)  producer surplus is $900. 
D)  producer surplus is $1,000.

Question 7

Scenario 7-2
Suppose market demand and market supply are given by the equations:  
-Refer to Scenario 7-2. How much is total surplus at the equilibrium price in this market?

Accepted Answer

Total surp

Question 8

A supply curve can be used to measure producer surplus because it reflects

Accepted Answer

A)  the actions of sellers. 
B)  quantity supplied. 
C)  sellers' costs. 
D)  the amount that will be purchased by consumers in the market. 
A)  the actions of sellers. 
B)  quantity supplied. 
C)  sellers' costs. 
D)  the amount that will be purchased by consumers in the market.

Question 9

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 $70, how much is the combined total cost of all participating sellers in the market?

Accepted Answer

A)  $100 
B)  $150 
C)  $250 
D)  $350 
A)  $100 
B)  $150 
C)  $250 
D)  $350

Question 10

Figure 7-9  
-Refer to Figure 7-9. If producer surplus is $19, then the price of the good is

Accepted Answer

A)  $11.50. 
B)  $14.50. 
C)  $13.50. 
D)  $9.75. 
A)  $11.50. 
B)  $14.50. 
C)  $13.50. 
D)  $9.75.

Question 11

Figure 7-10  
-Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

Accepted Answer

A)  BCG 
B)  ACH 
C)  DGH 
D)  AHGB 
A)  BCG 
B)  ACH 
C)  DGH 
D)  AHGB

Question 12

Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is

Accepted Answer

A)  $1.40. 
B)  $14. 
C)  $3.80. 
D)  $52. 
A)  $1.40. 
B)  $14. 
C)  $3.80. 
D)  $52.

Question 13

Economists normally assume people's preferences should be

Accepted Answer

A)  respected. 
B)  adjusted. 
C)  overruled. 
D)  ignored. 
A)  respected. 
B)  adjusted. 
C)  overruled. 
D)  ignored.

Question 14

The cost of production plus producer surplus is the price a seller is paid.

Accepted Answer

A) True 
 B)False

Question 15

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be

Accepted Answer

A)  $3. 
B)  $8. 
C)  $5. 
D)  $11. 
A)  $3. 
B)  $8. 
C)  $5. 
D)  $11.

Question 16

Tomato sauce and spaghetti noodles are complementary goods. A decrease in the price of tomatoes will

Accepted Answer

A)  increase consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles. 
B)  increase consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles. 
C)  decrease consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles. 
D)  decrease consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles. 
A)  increase consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles. 
B)  increase consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles. 
C)  decrease consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles. 
D)  decrease consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles.

Question 17

Figure 7-22  
-Refer to Figure 7-22. The efficient price is

Accepted Answer

A)  $80, and the efficient quantity is 50. 
B)  $70, and the efficient quantity is 60. 
C)  $70, and the efficient quantity is 100. 
D)  $50, and the efficient quantity is 60. 
A)  $80, and the efficient quantity is 50. 
B)  $70, and the efficient quantity is 60. 
C)  $70, and the efficient quantity is 100. 
D)  $50, and the efficient quantity is 60.

Question 18

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
  
-Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good?

Accepted Answer

A)  all five individuals 
B)  Megan, Mallory and Audrey 
C)  David, Laura and Megan 
D)  David and Laura 
A)  all five individuals 
B)  Megan, Mallory and Audrey 
C)  David, Laura and Megan 
D)  David and Laura

Question 19

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

Accepted Answer

A)  $24. 
B)  $32. 
C)  $48. 
D)  $64. 
A)  $24. 
B)  $32. 
C)  $48. 
D)  $64.

Question 20

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
  
-Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be

Accepted Answer

A)  $3.00. 
B)  $4.50. 
C)  $15.50. 
D)  $21.00. 
A)  $3.00. 
B)  $4.50. 
C)  $15.50. 
D)  $21.00.

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

Efficiency is related to the size of the economic pie, whereas equality is related to how the pie gets sliced and distributed.

Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?

Figure 7-14 -Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then producer surplus will

Which of the following is not correct?

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

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

Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. How much is total surplus at the equilibrium price in this market?

A supply curve can be used to measure producer surplus because it reflects

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 $70, how much is the combined total cost of all participating sellers in the market?

Figure 7-9 -Refer to Figure 7-9. If producer surplus is $19, then the price of the good is

Figure 7-10 -Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is

Economists normally assume people's preferences should be

The cost of production plus producer surplus is the price a seller is paid.

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be

Tomato sauce and spaghetti noodles are complementary goods. A decrease in the price of tomatoes will

Figure 7-22 -Refer to Figure 7-22. The efficient price is

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good?

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

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be

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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