Question 1

Figure 7-28  
-Refer to Figure 7-28. At the quantity Q3,

Accepted Answer

A)  the market is in equilibrium. 
B)  consumer surplus is maximized. 
C)  the sum of consumer surplus and producer surplus is maximized. 
D)  the marginal value to buyers is less than the marginal cost to sellers. 
A)  the market is in equilibrium. 
B)  consumer surplus is maximized. 
C)  the sum of consumer surplus and producer surplus is maximized. 
D)  the marginal value to buyers is less than the marginal cost to sellers.

Question 2

Table 7-10
The only four consumers in a market have the following willingness to pay for a good:
Buyer Willingness to Pay
  
-Refer to Table 7-10. If there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the good will sell for

Accepted Answer

A)  $12 or slightly less 
B)  $15 or slightly more 
C)  $19 or slightly more 
D)  $27 or slightly less 
A)  $12 or slightly less 
B)  $15 or slightly more 
C)  $19 or slightly more 
D)  $27 or slightly less

Question 3

Producer surplus is

Accepted Answer

A)  represented on a graph by the area below the demand curve and above the supply curve. 
B)  the amount a seller is paid minus the cost of production. 
C)  also referred to as excess supply. 
D)  All of the above are correct. 
A)  represented on a graph by the area below the demand curve and above the supply curve. 
B)  the amount a seller is paid minus the cost of production. 
C)  also referred to as excess supply. 
D)  All of the above are correct.

Question 4

We can say that the allocation of resources is efficient if

Accepted Answer

A)  producer surplus is maximized. 
B)  consumer surplus is maximized. 
C)  total surplus is maximized. 
D)  sellers' costs are minimized. 
A)  producer surplus is maximized. 
B)  consumer surplus is maximized. 
C)  total surplus is maximized. 
D)  sellers' costs are minimized.

Question 5

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

Accepted Answer

A)  $100. 
B)  $200. 
C)  $50. 
D)  $450. 
A)  $100. 
B)  $200. 
C)  $50. 
D)  $450.

Question 6

Figure 7-16  
-Refer to Figure 7-16. Producer surplus amounts to $300 if the price of the good is

Accepted Answer

A)  $300. 
B)  $350. 
C)  $400. 
D)  $450. 
A)  $300. 
B)  $350. 
C)  $400. 
D)  $450.

Question 7

Given the following two equations:
1) Total Surplus = Consumer Surplus + Producer Surplus
2) Total Surplus = Value to Buyers - Cost to Sellers
Show how equation (1) can be used to derive equation (2).

Accepted Answer

Start with the equation: Total Surplus =

Question 8

Table 7-11
The following table represents the costs of five possible sellers.
  
-Refer to Table 7-11. Who is a marginal seller when the price is $1,100?

Accepted Answer

A)  Dianne 
B)  Bobby and Abby 
C)  Carlos, Dianne, and Evaline 
D)  Carlos, Dianne, Evaline, and Bobby 
A)  Dianne 
B)  Bobby and Abby 
C)  Carlos, Dianne, and Evaline 
D)  Carlos, Dianne, Evaline, and Bobby

Question 9

One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of

Accepted Answer

A)  factor markets. 
B)  energy markets. 
C)  welfare economics. 
D)  labor economics. 
A)  factor markets. 
B)  energy markets. 
C)  welfare economics. 
D)  labor economics.

Question 10

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

Accepted Answer

A)  31 cents. 
B)  38 cents. 
C)  45 cents. 
D)  55 cents. 
A)  31 cents. 
B)  38 cents. 
C)  45 cents. 
D)  55 cents.

Question 11

On a graph, consumer surplus is represented by the area

Accepted Answer

A)  between the demand and supply curves. 
B)  below the demand curve and above price. 
C)  below the price and above the supply curve. 
D)  below the demand curve and to the right of equilibrium price. 
A)  between the demand and supply curves. 
B)  below the demand curve and above price. 
C)  below the price and above the supply curve. 
D)  below the demand curve and to the right of equilibrium price.

Question 12

Table 7-11
The following table represents the costs of five possible sellers.
  
-Refer to Table 7-11. If the market price is $1,100, the combined total cost of all participating sellers is

Accepted Answer

A)  $2,800. 
B)  $2,900. 
C)  $1,700. 
D)  $4,000. 
A)  $2,800. 
B)  $2,900. 
C)  $1,700. 
D)  $4,000.

Question 13

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit . We know that

Accepted Answer

A)  the equilibrium price of good x is somewhere between $35 and $40. 
B)  the equilibrium quantity of good x exceeds 500 units. 
C)  500 units is not an efficient quantity of good x. 
D)  All of the above are correct. 
A)  the equilibrium price of good x is somewhere between $35 and $40. 
B)  the equilibrium quantity of good x exceeds 500 units. 
C)  500 units is not an efficient quantity of good x. 
D)  All of the above are correct.

Question 14

Tom tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $155 per tuning. One particular week, Tom is willing to tune the first piano for $120, the second piano for $125, the third piano for $140, and the fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. His producer surplus is

Accepted Answer

A)  $80. 
B)  $95. 
C)  $75. 
D)  $60. 
A)  $80. 
B)  $95. 
C)  $75. 
D)  $60.

Question 15

Scenario 7-1
Suppose market demand is given by the equation  
-Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, how much additional consumer surplus do consumers initially in the market at the $10 price receive?

Accepted Answer

The consumers initially in the

Question 16

Figure 7-7  
-Refer to Figure 7-7. What happens to the consumer surplus if the price rises from $100 to $150?

Accepted Answer

A)  The new consumer surplus is half of the original consumer surplus. 
B)  The new consumer surplus is 25 percent of the original consumer surplus. 
C)  The new consumer surplus is double the original consumer surplus. 
D)  The new consumer surplus is triple the original consumer surplus. 
A)  The new consumer surplus is half of the original consumer surplus. 
B)  The new consumer surplus is 25 percent of the original consumer surplus. 
C)  The new consumer surplus is double the original consumer surplus. 
D)  The new consumer surplus is triple the original consumer surplus.

Question 17

Economists typically measure efficiency using

Accepted Answer

A)  the price paid by buyers. 
B)  the quantity supplied by sellers. 
C)  total surplus. 
D)  profits to firms. 
A)  the price paid by buyers. 
B)  the quantity supplied by sellers. 
C)  total surplus. 
D)  profits to firms.

Question 18

Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is

Accepted Answer

A)  $8,500. 
B)  $15,500. 
C)  $24,000. 
D)  $39,500. 
A)  $8,500. 
B)  $15,500. 
C)  $24,000. 
D)  $39,500.

Question 19

In which of the following circumstances would a buyer be indifferent about buying a good?

Accepted Answer

A)  The amount of consumer surplus the buyer would experience as a result of buying the good is zero. 
B)  The price of the good is equal to the buyer's willingness to pay for the good. 
C)  The price of the good is equal to the value the buyer places on the good. 
D)  All of the above are correct. 
A)  The amount of consumer surplus the buyer would experience as a result of buying the good is zero. 
B)  The price of the good is equal to the buyer's willingness to pay for the good. 
C)  The price of the good is equal to the value the buyer places on the good. 
D)  All of the above are correct.

Question 20

An increase in price increases consumer surplus.

Accepted Answer

A) True 
 B)False

Figure 7-28 -Refer to Figure 7-28. At the quantity Q3,

Producer surplus is

We can say that the allocation of resources is efficient if

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

Figure 7-16 -Refer to Figure 7-16. Producer surplus amounts to $300 if the price of the good is

Given the following two equations: 1) Total Surplus = Consumer Surplus + Producer Surplus 2) Total Surplus = Value to Buyers - Cost to Sellers Show how equation (1) can be used to derive equation (2).

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. Who is a marginal seller when the price is $1,100?

One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

On a graph, consumer surplus is represented by the area

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,100, the combined total cost of all participating sellers is

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit . We know that

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, how much additional consumer surplus do consumers initially in the market at the $10 price receive?

Figure 7-7 -Refer to Figure 7-7. What happens to the consumer surplus if the price rises from $100 to $150?

Economists typically measure efficiency using

Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is

In which of the following circumstances would a buyer be indifferent about buying a good?

An increase in price increases consumer 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

Filters

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

Figure 7-28 -Refer to Figure 7-28. At the quantity Q3,

Producer surplus is

We can say that the allocation of resources is efficient if

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

Figure 7-16 -Refer to Figure 7-16. Producer surplus amounts to $300 if the price of the good is

Given the following two equations: 1) Total Surplus = Consumer Surplus + Producer Surplus 2) Total Surplus = Value to Buyers - Cost to Sellers Show how equation (1) can be used to derive equation (2).

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. Who is a marginal seller when the price is $1,100?

One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

On a graph, consumer surplus is represented by the area

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,100, the combined total cost of all participating sellers is

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit . We know that

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, how much additional consumer surplus do consumers initially in the market at the $10 price receive?

Figure 7-7 -Refer to Figure 7-7. What happens to the consumer surplus if the price rises from $100 to $150?

Economists typically measure efficiency using

Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is

In which of the following circumstances would a buyer be indifferent about buying a good?

An increase in price increases consumer 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

Filters