Question 1

Figure 7-24  
-Refer to Figure 7-24.At equilibrium,producer surplus is

Accepted Answer

A) $36. 
B) $72. 
C) $54. 
D) $18. 
A) $36. 
B) $72. 
C) $54. 
D) $18.

Question 2

If the United States changed its laws to allow for the legal sale of a kidney,which of the following is least likely to occur?

Accepted Answer

A) The supply of kidneys would increase. 
B) The shortage of kidneys would decrease. 
C) Many lives would be saved. 
D) The allocation of kidneys would be fair. 
A) The supply of kidneys would increase. 
B) The shortage of kidneys would decrease. 
C) Many lives would be saved. 
D) The allocation of kidneys would be fair.

Question 3

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

Accepted Answer

A) $100.00 higher than it would be without the price floor. 
B) $50.00 lower than it would be without the price floor. 
C) $125.00 lower than it would be without the price floor. 
D) $62.50 lower than it would be without the price floor. 
A) $100.00 higher than it would be without the price floor. 
B) $50.00 lower than it would be without the price floor. 
C) $125.00 lower than it would be without the price floor. 
D) $62.50 lower than it would be without the price floor.

Question 4

Total surplus is

Accepted Answer

A) the total cost to sellers of providing the good minus the total value of the good to buyers. 
B) the total value of the good to buyers minus the cost to sellers of providing the good. 
C) the difference between consumer surplus and sellers' cost. 
D) always smaller than producer surplus. 
A) the total cost to sellers of providing the good minus the total value of the good to buyers. 
B) the total value of the good to buyers minus the cost to sellers of providing the good. 
C) the difference between consumer surplus and sellers' cost. 
D) always smaller than producer surplus.

Question 5

Figure 7-24  
-Refer to Figure 7-24.The equilibrium allocation of resources is

Accepted Answer

A) efficient because total surplus is maximized at the equilibrium. 
B) efficient because consumer surplus is maximized at the equilibrium. 
C) inefficient because consumer surplus is larger than producer surplus at the equilibrium. 
D) inefficient because producer surplus is not maximized. 
A) efficient because total surplus is maximized at the equilibrium. 
B) efficient because consumer surplus is maximized at the equilibrium. 
C) inefficient because consumer surplus is larger than producer surplus at the equilibrium. 
D) inefficient because producer surplus is not maximized.

Question 6

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 7

According to many economists,government restrictions on ticket scalping do all of the following except

Accepted Answer

A) inconvenience the public. 
B) reduce the audience for cultural and sports events. 
C) waste police officers' time. 
D) keep the cost of tickets to all consumers low. 
A) inconvenience the public. 
B) reduce the audience for cultural and sports events. 
C) waste police officers' time. 
D) keep the cost of tickets to all consumers low.

Question 8

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

Accepted Answer

A) profits and costs to firms 
B) consumer and producer surplus 
C) the equilibrium price and quantity 
D) incomes of and prices paid by buyers 
A) profits and costs to firms 
B) consumer and producer surplus 
C) the equilibrium price and quantity 
D) incomes of and prices paid by buyers

Question 9

Steak and chicken are substitutes.A sharp reduction in the supply of steak would

Accepted Answer

A) increase consumer surplus in the market for steak and decrease producer surplus in the market for chicken. 
B) increase consumer surplus in the market for steak and increase producer surplus in the market for chicken. 
C) decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken. 
D) decrease consumer surplus in the market for steak and decrease producer surplus in the market for chicken. 
A) increase consumer surplus in the market for steak and decrease producer surplus in the market for chicken. 
B) increase consumer surplus in the market for steak and increase producer surplus in the market for chicken. 
C) decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken. 
D) decrease consumer surplus in the market for steak and decrease producer surplus in the market for chicken.

Question 10

Figure 7-22  
-Refer to Figure 7-22.At the equilibrium price,producer surplus is

Accepted Answer

A) $5,000. 
B) $2,500. 
C) $3,500. 
D) $1,750. 
A) $5,000. 
B) $2,500. 
C) $3,500. 
D) $1,750.

Question 11

Figure 7-21  
-Refer to Figure 7-21.When the price is P1,area B represents

Accepted Answer

A) total surplus. 
B) producer surplus. 
C) consumer surplus. 
D) profits. 
A) total surplus. 
B) producer surplus. 
C) consumer surplus. 
D) profits.

Question 12

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 A produces a monitor that Cassie buys but David does not,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 13

Figure 7-21  
-Refer to Figure 7-21.When the price is P1,area C represents

Accepted Answer

A) total benefit. 
B) producer surplus. 
C) consumer surplus. 
D) None of the above is correct. 
A) total benefit. 
B) producer surplus. 
C) consumer surplus. 
D) None of the above is correct.

Question 14

The "invisible hand" is

Accepted Answer

A) used to describe the welfare system in the United States. 
B) a concept developed by Adam Smith to describe the virtues of free markets. 
C) a concept used by J.M.Keynes to describe the role of government in guiding the allocation of resources in the economy. 
D) a term used by some economists to characterize the role of government in an economy - inevitable but invisible. 
A) used to describe the welfare system in the United States. 
B) a concept developed by Adam Smith to describe the virtues of free markets. 
C) a concept used by J.M.Keynes to describe the role of government in guiding the allocation of resources in the economy. 
D) a term used by some economists to characterize the role of government in an economy - inevitable but invisible.

Question 15

Efficiency in a market is achieved when

Accepted Answer

A) a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. 
B) the sum of producer surplus and consumer surplus is maximized. 
C) all firms are producing the good at the same low cost per unit. 
D) no buyer is willing to pay more than the equilibrium price for any unit of the good. 
A) a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. 
B) the sum of producer surplus and consumer surplus is maximized. 
C) all firms are producing the good at the same low cost per unit. 
D) no buyer is willing to pay more than the equilibrium price for any unit of the good.

Question 16

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 would be

Accepted Answer

A) $2,500. 
B) $900. 
C) $800. 
D) $1,600. 
A) $2,500. 
B) $900. 
C) $800. 
D) $1,600.

Question 17

Figure 7-22  
-Refer to Figure 7-22.At the equilibrium price,consumer surplus is

Accepted Answer

A) $1,000. 
B) $2,000. 
C) $3,500. 
D) $500. 
A) $1,000. 
B) $2,000. 
C) $3,500. 
D) $500.

Question 18

Figure 7-22  
-Refer to Figure 7-22.At the equilibrium price,total surplus is

Accepted Answer

A) $2,500. 
B) $1,000. 
C) $3,500. 
D) $7,000. 
A) $2,500. 
B) $1,000. 
C) $3,500. 
D) $7,000.

Question 19

Total surplus is represented by the area

Accepted Answer

A) under the demand curve and above the price. 
B) above the supply curve and up to the price. 
C) under the supply curve and up to the price. 
D) between the demand and supply curves up to the point of equilibrium. 
A) under the demand curve and above the price. 
B) above the supply curve and up to the price. 
C) under the supply curve and up to the price. 
D) between the demand and supply curves up to the point of equilibrium.

Question 20

Figure 7-24  
-Refer to Figure 7-24.If 10 units of the good are produced and sold,then

Accepted Answer

A) the marginal cost to sellers exceeds the marginal value to buyers. 
B) producer surplus is maximized. 
C) total surplus is minimized. 
D) the marginal value to buyers exceeds the marginal cost to sellers. 
A) the marginal cost to sellers exceeds the marginal value to buyers. 
B) producer surplus is maximized. 
C) total surplus is minimized. 
D) the marginal value to buyers exceeds the marginal cost to sellers.

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

Figure 7-24 -Refer to Figure 7-24.At equilibrium,producer surplus is

If the United States changed its laws to allow for the legal sale of a kidney,which of the following is least likely to occur?

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

Total surplus is

Figure 7-24 -Refer to Figure 7-24.The equilibrium allocation of resources is

Economists typically measure efficiency using

According to many economists,government restrictions on ticket scalping do all of the following except

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

Steak and chicken are substitutes.A sharp reduction in the supply of steak would

Figure 7-22 -Refer to Figure 7-22.At the equilibrium price,producer surplus is

Figure 7-21 -Refer to Figure 7-21.When the price is P1,area B represents

Figure 7-21 -Refer to Figure 7-21.When the price is P1,area C represents

The "invisible hand" is

Efficiency in a market is achieved when

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 would be

Figure 7-22 -Refer to Figure 7-22.At the equilibrium price,consumer surplus is

Figure 7-22 -Refer to Figure 7-22.At the equilibrium price,total surplus is

Total surplus is represented by the area

Figure 7-24 -Refer to Figure 7-24.If 10 units of the good are produced and sold,then

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

Application International Trade: Part B