Question 1

Which of the following is correct?

Accepted Answer

A) Efficiency deals with the size of the economic pie,and equality deals with how fairly the pie is sliced. 
B) Equality can be judged on positive grounds whereas efficiency requires normative judgments. 
C) Efficiency is more difficult to evaluate than equality. 
D) Equality and efficiency are both maximized in a society when total surplus is maximized. 
A) Efficiency deals with the size of the economic pie,and equality deals with how fairly the pie is sliced. 
B) Equality can be judged on positive grounds whereas efficiency requires normative judgments. 
C) Efficiency is more difficult to evaluate than equality. 
D) Equality and efficiency are both maximized in a society when total surplus is maximized.

Question 2

Figure 7-27  
-Refer to Figure 7-27.Sellers whose costs are less 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 3

If the government allowed a free market in organs for transplant there would be

Accepted Answer

A) a decrease in the shortage of organs for transplant. 
B) a decrease in producer surplus. 
C) an decrease in consumer surplus 
D) an increase in the waiting period for transplant organs. 
A) a decrease in the shortage of organs for transplant. 
B) a decrease in producer surplus. 
C) an decrease in consumer surplus 
D) an increase in the waiting period for transplant organs.

Question 4

Figure 7-19  
-Refer to Figure 7-19.If the government imposes a price ceiling of $55 in this market,then total surplus will be

Accepted Answer

A) $187.50. 
B) $125.00. 
C) $250.00. 
D) $266.67. 
A) $187.50. 
B) $125.00. 
C) $250.00. 
D) $266.67.

Question 5

Economists tend to see ticket scalping as

Accepted Answer

A) a way for a few to profit without producing anything of value. 
B) an inequitable interference in the orderly process of ticket distribution. 
C) a way of increasing the efficiency of ticket distribution. 
D) an unproductive activity which should be made illegal everywhere. 
A) a way for a few to profit without producing anything of value. 
B) an inequitable interference in the orderly process of ticket distribution. 
C) a way of increasing the efficiency of ticket distribution. 
D) an unproductive activity which should be made illegal everywhere.

Question 6

Figure 7-18  
-Refer to Figure 7-18.Total surplus amounts to $500 if consumer surplus amounts to

Accepted Answer

A) $290 and if the price of the good is $150. 
B) $300 and if the price of the good is $130. 
C) $275 and if the price of the good is $160. 
D) $400 and if the price of the good is $100. 
A) $290 and if the price of the good is $150. 
B) $300 and if the price of the good is $130. 
C) $275 and if the price of the good is $160. 
D) $400 and if the price of the good is $100.

Question 7

At present,the maximum legal price for a human kidney is $0.The price of $0 maximizes

Accepted Answer

A) consumer surplus but not producer surplus. 
B) producer surplus but not consumer surplus. 
C) both consumer and producer surplus. 
D) neither consumer nor producer surplus. 
A) consumer surplus but not producer surplus. 
B) producer surplus but not consumer surplus. 
C) both consumer and producer surplus. 
D) neither consumer nor producer surplus.

Question 8

Inefficiency exists in an economy when a good is

Accepted Answer

A) not being consumed by buyers who value it most highly. 
B) not distributed fairly among buyers. 
C) not produced because buyers do not value it very highly. 
D) being produced with less than all available resources. 
A) not being consumed by buyers who value it most highly. 
B) not distributed fairly among buyers. 
C) not produced because buyers do not value it very highly. 
D) being produced with less than all available resources.

Question 9

Figure 7-27  
-Refer to Figure 7-27.If the government mandated a price increase from P1 to a higher price,then

Accepted Answer

A) total surplus would decrease. 
B) consumer surplus would increase. 
C) total surplus would increase,since producer surplus would increase. 
D) total surplus would remain unchanged. 
A) total surplus would decrease. 
B) consumer surplus would increase. 
C) total surplus would increase,since producer surplus would increase. 
D) total surplus would remain unchanged.

Question 10

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

Accepted Answer

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

Question 11

Which of the following statements is not correct about a market in equilibrium?

Accepted Answer

A) The price determines which buyers and which sellers participate in the market. 
B) Those buyers who value the good more than the price choose to buy the good. 
C) Those sellers whose costs are less than the price choose to produce and sell the good. 
D) Consumer surplus will be equal to producer surplus. 
A) The price determines which buyers and which sellers participate in the market. 
B) Those buyers who value the good more than the price choose to buy the good. 
C) Those sellers whose costs are less than the price choose to produce and sell the good. 
D) Consumer surplus will be equal to producer surplus.

Question 12

Figure 7-24  
-Refer to Figure 7-24.At equilibrium,consumer surplus is measured by the area

Accepted Answer

A) AHG. 
B) AFB. 
C) ABD. 
D) BDF. 
A) AHG. 
B) AFB. 
C) ABD. 
D) BDF.

Question 13

Figure 7-29  
-Refer to Figure 7-29.Which of the following statements is correct?

Accepted Answer

A) The market is in equilibrium at Q1. 
B) At Q2,the cost to sellers exceeds the value to buyers. 
C) At Q4,the value to buyers is less than the cost to sellers. 
D) At Q3,the market is producing too much output. 
A) The market is in equilibrium at Q1. 
B) At Q2,the cost to sellers exceeds the value to buyers. 
C) At Q4,the value to buyers is less than the cost to sellers. 
D) At Q3,the market is producing too much output.

Question 14

Laissez-faire is a French expression which literally means

Accepted Answer

A) to make do. 
B) to get involved. 
C) whatever works. 
D) allow them to do. 
A) to make do. 
B) to get involved. 
C) whatever works. 
D) allow them to do.

Question 15

Figure 7-26  
-Refer to Figure 7-26.If the government imposes a price floor of $90 in this market,then consumer surplus will be

Accepted Answer

A) $225. 
B) $450. 
C) $975. 
D) $1,350 
A) $225. 
B) $450. 
C) $975. 
D) $1,350

Question 16

Figure 7-20  
-Refer to Figure 7-20.Total surplus can be measured as the area

Accepted Answer

A) JNK. 
B) JNML. 
C) JRL. 
D) JNL. 
A) JNK. 
B) JNML. 
C) JRL. 
D) JNL.

Question 17

Which of the following is correct?

Accepted Answer

A) Consumer surplus refers to a situation in which there are more buyers than sellers in a market. 
B) Producer surplus refers to a situation in which there are more sellers than buyers in a market. 
C) Total surplus is measured as the area below the demand curve and above the supply curve,up to the equilibrium quantity. 
D) All of the above are correct. 
A) Consumer surplus refers to a situation in which there are more buyers than sellers in a market. 
B) Producer surplus refers to a situation in which there are more sellers than buyers in a market. 
C) Total surplus is measured as the area below the demand curve and above the supply curve,up to the equilibrium quantity. 
D) All of the above are correct.

Question 18

Figure 7-24  
-Refer to Figure 7-24.If 4 units of the good are produced and sold,then

Accepted Answer

A) producer surplus is greater than consumer surplus. 
B) consumer surplus is $16. 
C) total surplus is minimized. 
D) total surplus is not maximized. 
A) producer surplus is greater than consumer surplus. 
B) consumer surplus is $16. 
C) total surplus is minimized. 
D) total surplus is not maximized.

Question 19

Figure 7-22  
-Refer to Figure 7-22.Assume demand increases,which causes the equilibrium price to increase from $50 to $70.The increase in producer surplus to producers already in the market would be

Accepted Answer

A) $1,600. 
B) $600. 
C) $800. 
D) $1,200. 
A) $1,600. 
B) $600. 
C) $800. 
D) $1,200.

Question 20

Total surplus

Accepted Answer

A) can be used to measure a market's efficiency. 
B) is the sum of consumer and producer surplus. 
C) is the value to buyers minus the cost to sellers. 
D) All of the above are correct. 
A) can be used to measure a market's efficiency. 
B) is the sum of consumer and producer surplus. 
C) is the value to buyers minus the cost to sellers. 
D) All of the above are correct.

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

Which of the following is correct?

Figure 7-27 -Refer to Figure 7-27.Sellers whose costs are less than the equilibrium price are represented by which line segment?

If the government allowed a free market in organs for transplant there would be

Figure 7-19 -Refer to Figure 7-19.If the government imposes a price ceiling of $55 in this market,then total surplus will be

Economists tend to see ticket scalping as

Figure 7-18 -Refer to Figure 7-18.Total surplus amounts to $500 if consumer surplus amounts to

At present,the maximum legal price for a human kidney is $0.The price of $0 maximizes

Inefficiency exists in an economy when a good is

Figure 7-27 -Refer to Figure 7-27.If the government mandated a price increase from P1 to a higher price,then

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

Which of the following statements is not correct about a market in equilibrium?

Figure 7-24 -Refer to Figure 7-24.At equilibrium,consumer surplus is measured by the area

Figure 7-29 -Refer to Figure 7-29.Which of the following statements is correct?

Laissez-faire is a French expression which literally means

Figure 7-26 -Refer to Figure 7-26.If the government imposes a price floor of $90 in this market,then consumer surplus will be

Figure 7-20 -Refer to Figure 7-20.Total surplus can be measured as the area

Which of the following is correct?

Figure 7-24 -Refer to Figure 7-24.If 4 units of the good are produced and sold,then

Figure 7-22 -Refer to Figure 7-22.Assume demand increases,which causes the equilibrium price to increase from $50 to $70.The increase in producer surplus to producers already in the market would be

Total surplus

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A