Question 1

Producer surplus is the

Accepted Answer

A) area under the supply curve to the left of the amount sold. 
B) amount a seller is paid minus the cost of production. 
C) area between the supply and demand curves,above the equilibrium price. 
D) cost to sellers of participating in a market. 
A) area under the supply curve to the left of the amount sold. 
B) amount a seller is paid minus the cost of production. 
C) area between the supply and demand curves,above the equilibrium price. 
D) cost to sellers of participating in a market.

Question 2

Producer surplus directly measures

Accepted Answer

A) the well-being of society as a whole. 
B) the well-being of buyers and sellers. 
C) the well-being of sellers. 
D) sellers' willingness to sell. 
A) the well-being of society as a whole. 
B) the well-being of buyers and sellers. 
C) the well-being of sellers. 
D) sellers' willingness to sell.

Question 3

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 4

Figure 7-16  
-Refer to Figure 7-16.Suppose the price of the good is $400.Then,on the first unit of the good that is sold,producer surplus amounts to

Accepted Answer

A) $200. 
B) $300. 
C) $400. 
D) $450. 
A) $200. 
B) $300. 
C) $400. 
D) $450.

Question 5

Figure 7-9  
-Refer to Figure 7-9.If the price of the good is $14,then producer surplus is

Accepted Answer

A) $19.50. 
B) $22.50. 
C) $20.50. 
D) $25.00. 
A) $19.50. 
B) $22.50. 
C) $20.50. 
D) $25.00.

Question 6

Figure 7-9  
-Refer to Figure 7-9.If the price of the good is $9.50,then producer surplus is

Accepted Answer

A) $3.00. 
B) $6.50. 
C) $10.50. 
D) $8.50. 
A) $3.00. 
B) $6.50. 
C) $10.50. 
D) $8.50.

Question 7

Figure 7-15  
-Refer to Figure 7-15.When the price rises from P1 to P2,which area represents the increase in producer surplus to existing producers?

Accepted Answer

A) A 
B) A+B 
C) A+B+C 
D) G 
A) A 
B) A+B 
C) A+B+C 
D) G

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

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

Bill created a new software program he is willing to sell for $300.He sells his first copy and enjoys a producer surplus of $250.What is the price paid for the software?

Accepted Answer

A) $50. 
B) $250. 
C) $300. 
D) $550. 
A) $50. 
B) $250. 
C) $300. 
D) $550.

Question 11

Suppose that the market price for pizzas increases.The increase in producer surplus comes from the benefit of the higher prices to

Accepted Answer

A) only existing sellers who now receive higher prices on the pizzas they were already selling. 
B) only new sellers who enter the market because of the higher prices. 
C) both existing sellers who now receive higher prices on the pizzas they were already selling and new sellers who enter the market because of the higher prices. 
D) Producer surplus does not increase;it decreases. 
A) only existing sellers who now receive higher prices on the pizzas they were already selling. 
B) only new sellers who enter the market because of the higher prices. 
C) both existing sellers who now receive higher prices on the pizzas they were already selling and new sellers who enter the market because of the higher prices. 
D) Producer surplus does not increase;it decreases.

Question 12

A seller's opportunity cost measures the

Accepted Answer

A) value of everything she must give up to produce a good. 
B) amount she is paid for a good minus her cost of providing it. 
C) consumer surplus. 
D) out of pocket expenses to produce a good but not the value of her time. 
A) value of everything she must give up to produce a good. 
B) amount she is paid for a good minus her cost of providing it. 
C) consumer surplus. 
D) out of pocket expenses to produce a good but not the value of her time.

Question 13

Kristi sells purses.Her cost is $35 per purse.On a certain day,she sells 12 purses,and her producer surplus for that day amounts to $180.Kristi sold each purse for

Accepted Answer

A) $65. 
B) $50. 
C) $45. 
D) $53. 
A) $65. 
B) $50. 
C) $45. 
D) $53.

Question 14

Figure 7-16  
-Refer to Figure 7-16.Sellers will be unwilling to sell more than

Accepted Answer

A) 1 unit of the good if its price is below $200. 
B) 2 units of the good if its price is below $450. 
C) 3 units of the good if its price is below $700. 
D) All of the above are correct. 
A) 1 unit of the good if its price is below $200. 
B) 2 units of the good if its price is below $450. 
C) 3 units of the good if its price is below $700. 
D) All of the above are correct.

Question 15

Figure 7-16  
-Refer to Figure 7-16.Suppose the price of the good is $450.Then,on the first unit of the good that is sold,producer surplus is

Accepted Answer

A) $250,and on the second unit of the good that is sold,producer surplus is $100. 
B) $250,and on the second unit of the good that is sold,producer surplus is $150. 
C) $350,and on the second unit of the good that is sold,producer surplus is $100. 
D) $350,and on the second unit of the good that is sold,producer surplus is $150. 
A) $250,and on the second unit of the good that is sold,producer surplus is $100. 
B) $250,and on the second unit of the good that is sold,producer surplus is $150. 
C) $350,and on the second unit of the good that is sold,producer surplus is $100. 
D) $350,and on the second unit of the good that is sold,producer surplus is $150.

Question 16

Which of the following statements is not correct?

Accepted Answer

A) A seller would be eager to sell her product at a price higher than her cost. 
B) A seller would refuse to sell her product at a price lower than her cost. 
C) A seller would be indifferent about selling her product at a price equal to her cost. 
D) Since sellers cannot set the price for their product,they must be willing to sell their product at any price. 
A) A seller would be eager to sell her product at a price higher than her cost. 
B) A seller would refuse to sell her product at a price lower than her cost. 
C) A seller would be indifferent about selling her product at a price equal to her cost. 
D) Since sellers cannot set the price for their product,they must be willing to sell their product at any price.

Question 17

Cost is a measure of the

Accepted Answer

A) seller's willingness to sell. 
B) seller's producer surplus. 
C) producer shortage. 
D) seller's willingness to buy. 
A) seller's willingness to sell. 
B) seller's producer surplus. 
C) producer shortage. 
D) seller's willingness to buy.

Question 18

Ronnie operates a lawn-care service.On each day,the cost of mowing the first lawn is $15,the cost of mowing the second lawn is $25,and the cost of mowing the third lawn is $40.His producer surplus on the first three lawns of the day is $100.If Ronnie charges all customers the same price for lawn mowing,that price is

Accepted Answer

A) $20. 
B) $60. 
C) $80. 
D) $180. 
A) $20. 
B) $60. 
C) $80. 
D) $180.

Question 19

Bill created a new software program he is willing to sell for $200.He sells his first copy and enjoys a producer surplus of $150.What is the price paid for the software?

Accepted Answer

A) $50. 
B) $150. 
C) $200. 
D) $350. 
A) $50. 
B) $150. 
C) $200. 
D) $350.

Question 20

Figure 7-15  
-Refer to Figure 7-15.When the price is P1,producer surplus is

Accepted Answer

A) A. 
B) C. 
C) A+B. 
D) C+D. 
A) A. 
B) C. 
C) A+B. 
D) C+D.

Exam 7: Consumers Producers and the Efficiency of Markets: Producer Surplus

Producer surplus is the

Producer surplus directly measures

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?

Figure 7-16 -Refer to Figure 7-16.Suppose the price of the good is $400.Then,on the first unit of the good that is sold,producer surplus amounts to

Figure 7-9 -Refer to Figure 7-9.If the price of the good is $14,then producer surplus is

Figure 7-9 -Refer to Figure 7-9.If the price of the good is $9.50,then producer surplus is

Figure 7-15 -Refer to Figure 7-15.When the price rises from P1 to P2,which area represents the increase in producer surplus to existing producers?

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

Which of the following events would increase producer surplus?

Bill created a new software program he is willing to sell for $300.He sells his first copy and enjoys a producer surplus of $250.What is the price paid for the software?

Suppose that the market price for pizzas increases.The increase in producer surplus comes from the benefit of the higher prices to

A seller's opportunity cost measures the

Kristi sells purses.Her cost is $35 per purse.On a certain day,she sells 12 purses,and her producer surplus for that day amounts to $180.Kristi sold each purse for

Figure 7-16 -Refer to Figure 7-16.Sellers will be unwilling to sell more than

Figure 7-16 -Refer to Figure 7-16.Suppose the price of the good is $450.Then,on the first unit of the good that is sold,producer surplus is

Which of the following statements is not correct?

Cost is a measure of the

Bill created a new software program he is willing to sell for $200.He sells his first copy and enjoys a producer surplus of $150.What is the price paid for the software?

Figure 7-15 -Refer to Figure 7-15.When the price is P1,producer surplus is

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: Market Efficiency

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