Question 1

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. B

Question 2

Figure 7-32  
-Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is consumer surplus?

Accepted Answer

Consumer surplus is $112.50.

Question 3

Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market

Accepted Answer

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

Question 4

Jeff decides that he would pay as much as $2,000 for a new laptop computer. He buys the computer and realizes a consumer surplus of $300. How much did Jeff pay for his computer?

Accepted Answer

A)  $300. 
B)  $1,700. 
C)  $2,000. 
D)  $2,300. 
A)  $300. 
B)  $1,700. 
C)  $2,000. 
D)  $2,300.

Question 5

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 $3.80,

Accepted Answer

A)  David's consumer surplus is $4.70 and total consumer surplus for the five individuals is $9.50. 
B)  Megan's consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80. 
C)  David, Laura, and Megan will be the only buyers of Vanilla Coke. 
D)  the demand curve for Vanilla Coke, taking the five individuals into account, is horizontal. 
A)  David's consumer surplus is $4.70 and total consumer surplus for the five individuals is $9.50. 
B)  Megan's consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80. 
C)  David, Laura, and Megan will be the only buyers of Vanilla Coke. 
D)  the demand curve for Vanilla Coke, taking the five individuals into account, is horizontal.

Question 6

Consumer surplus is the

Accepted Answer

A)  amount of a good consumers get without paying anything. 
B)  amount a consumer pays minus the amount the consumer is willing to pay. 
C)  amount a consumer is willing to pay minus the amount the consumer actually pays. 
D)  value of a good to a consumer. 
A)  amount of a good consumers get without paying anything. 
B)  amount a consumer pays minus the amount the consumer is willing to pay. 
C)  amount a consumer is willing to pay minus the amount the consumer actually pays. 
D)  value of a good to a consumer.

Question 7

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 8

Figure 7-33  
-Refer to Figure 7-33. How much is total producer surplus in this market at the equilibrium price?

Accepted Answer

Total producer surpl

Question 9

Figure 7-12  
-Refer to Figure 7-12. If the equilibrium price is $200, what is the producer surplus?

Accepted Answer

A)  $7,500 
B)  $3,750 
C)  $10,000 
D)  $15,000 
A)  $7,500 
B)  $3,750 
C)  $10,000 
D)  $15,000

Question 10

Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is

Accepted Answer

A)  $15. 
B)  $90 
C)  $105. 
D)  $75. 
A)  $15. 
B)  $90 
C)  $105. 
D)  $75.

Question 11

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound,

Accepted Answer

A)  Henry experiences an increase in consumer surplus, but Janine does not. 
B)  Janine experiences an increase in consumer surplus, but Henry does not. 
C)  both Janine and Henry experience an increase in consumer surplus. 
D)  neither Janine nor Henry experiences an increase in consumer surplus. 
A)  Henry experiences an increase in consumer surplus, but Janine does not. 
B)  Janine experiences an increase in consumer surplus, but Henry does not. 
C)  both Janine and Henry experience an increase in consumer surplus. 
D)  neither Janine nor Henry experiences an increase in consumer surplus.

Question 12

Figure 7-33  
-Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price.
How much is total surplus in this market at the new equilibrium price?

Accepted Answer

Total surplus at the

Question 13

Table 7-20
  
-Refer to Table 7-20. How much is total consumer surplus at the equilibrium price in this market?

Accepted Answer

Total consumer surpl

Question 14

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 15

Answer each of the following questions about demand and consumer surplus.
a. What is consumer surplus, and how is it measured?
b. What is the relationship between the demand curve and the willingness to pay?
c. Other things equal, what happens to consumer surplus if the price of a good falls? Why?
Illustrate using a demand curve.
d. In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand curve, what else must be considered to determine consumer surplus?

Accepted Answer

a. Consumer surplus measures the benefit

Question 16

Figure 7-12  
-Refer to Figure 7-12. If the equilibrium price is $350, what is the producer surplus?

Accepted Answer

A)  $60,000 
B)  $15,000 
C)  $30,000 
D)  $70,000 
A)  $60,000 
B)  $15,000 
C)  $30,000 
D)  $70,000

Question 17

Figure 7-11  
-Refer to Figure 7-11. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?

Accepted Answer

A)  $625 
B)  $1,250 
C)  $2,500 
D)  $5,000 
A)  $625 
B)  $1,250 
C)  $2,500 
D)  $5,000

Question 18

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

Accepted Answer

A) True 
 B)False

Question 19

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market

Accepted Answer

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

Question 20

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Accepted Answer

A) True 
 B)False

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

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

Figure 7-32 -Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is consumer surplus?

Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market

Jeff decides that he would pay as much as $2,000 for a new laptop computer. He buys the computer and realizes a consumer surplus of $300. How much did Jeff pay for his computer?

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 $3.80,

Consumer surplus is the

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

Figure 7-33 -Refer to Figure 7-33. How much is total producer surplus in this market at the equilibrium price?

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price is $200, what is the producer surplus?

Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound,

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total surplus in this market at the new equilibrium price?

Table 7-20 -Refer to Table 7-20. How much is total consumer surplus at the equilibrium price in this market?

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

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price is $350, what is the producer surplus?

Figure 7-11 -Refer to Figure 7-11. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

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 Costs of Production

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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