Question 1

If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would

Accepted Answer

A)  not reduce the shortage of organs. 
B)  benefit rich people but not poor people. 
C)  be inefficient because markets are not good at allocating scarce resources. 
D)  be inferior to a plan imposed by a benevolent dictator. 
A)  not reduce the shortage of organs. 
B)  benefit rich people but not poor people. 
C)  be inefficient because markets are not good at allocating scarce resources. 
D)  be inferior to a plan imposed by a benevolent dictator.

Question 2

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 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

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 5

Figure 7-24  
-Refer to Figure 7-24. If 6 units of the good are produced and sold, then

Accepted Answer

A)  efficiency is achieved in this market. 
B)  the marginal value to buyers equals the marginal cost to sellers. 
C)  the sum of consumer surplus and producer surplus is maximized. 
D)  All of the above are correct. 
A)  efficiency is achieved in this market. 
B)  the marginal value to buyers equals the marginal cost to sellers. 
C)  the sum of consumer surplus and producer surplus is maximized. 
D)  All of the above are correct.

Question 6

Scenario 7-2
Suppose market demand and market supply are given by the equations:  
-Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to   By how much does total consumer surplus increase as a result of this supply shift?

Accepted Answer

Total consumer surplus prior t

Question 7

Chad is willing to pay $5.00 to get his first cup of morning latté. He buys a cup from a vendor selling latté for $3.75 per cup. Chad's consumer surplus is

Accepted Answer

A)  $8.75. 
B)  $5.00. 
C)  $3.75. 
D)  $1.25. 
A)  $8.75. 
B)  $5.00. 
C)  $3.75. 
D)  $1.25.

Question 8

Answer the following questions based on the graph that represents J.R.'s demand for ribs per week at Judy's Rib Shack.
a. At the equilibrium price, how many ribs would J.R. be willing to purchase?
b. How much is J.R. willing to pay for 20 ribs?
c. What is the magnitude of J.R.'s consumer surplus at the equilibrium price?
d. At the equilibrium price, how many ribs would Judy be willing to sell?
e. How high must the price of ribs be for Judy to supply 20 ribs to the market?
f. At the equilibrium price, what is the magnitude of total surplus in the market?
g. If the price of ribs rose to $10, what would happen to J.R.'s consumer surplus?
h. If the price of ribs fell to $5, what would happen to Judy's producer surplus?
i. Explain why the graph that is shown verifies the fact that the market equilibrium quantity) maximizes the sum of producer and consumer surplus.

Accepted Answer

a. 40
b. $10.00
c. $80.00.
d. 40
e. $5
f

Question 9

The study of how the allocation of resources affects economic well-being is called

Accepted Answer

A)  consumer economics. 
B)  macroeconomics. 
C)  willingness-to-pay economics. 
D)  welfare economics. 
A)  consumer economics. 
B)  macroeconomics. 
C)  willingness-to-pay economics. 
D)  welfare economics.

Question 10

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to

Accepted Answer

A)  $4. 
B)  $16. 
C)  $20. 
D)  $36. 
A)  $4. 
B)  $16. 
C)  $20. 
D)  $36.

Question 11

All else equal, what happens to consumer surplus if the price of a good increases?

Accepted Answer

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

Question 12

Table 7-17
  
-Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is

Accepted Answer

A)  $24. 
B)  $32. 
C)  $48. 
D)  $64. 
A)  $24. 
B)  $32. 
C)  $48. 
D)  $64.

Question 13

Figure 7-3  
-Refer to Figure 7-3. Area C represents the

Accepted Answer

A)  decrease in consumer surplus that results from a downward-sloping demand curve. 
B)  consumer surplus to new consumers who enter the market when the price falls from P2 to P1. 
C)  increase in producer surplus when quantity sold increases from Q2 to Q1. 
D)  decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2. 
A)  decrease in consumer surplus that results from a downward-sloping demand curve. 
B)  consumer surplus to new consumers who enter the market when the price falls from P2 to P1. 
C)  increase in producer surplus when quantity sold increases from Q2 to Q1. 
D)  decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2.

Question 14

Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day.
  
-Refer to Table 7-5. If the market price of an orange is $0.90, then the market quantity of oranges demanded per day is

Accepted Answer

A)  5. 
B)  2. 
C)  3. 
D)  4. 
A)  5. 
B)  2. 
C)  3. 
D)  4.

Question 15

Table 7-7
  
-Refer to Table 7-7. You have two essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the two tickets. Michael and Earvin each offer to pay $360 for a ticket, and you sell them the two tickets. What is the total consumer surplus in the market?

Accepted Answer

A)  $720 
B)  $180 
C)  $140 
D)  $40 
A)  $720 
B)  $180 
C)  $140 
D)  $40

Question 16

Figure 7-14  
-Refer to Figure 7-14. If the market price increases to $130 due to an increase in demand, then producer surplus is

Accepted Answer

A)  $1,800. 
B)  $900. 
C)  $975. 
D)  $1,950. 
A)  $1,800. 
B)  $900. 
C)  $975. 
D)  $1,950.

Question 17

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

Accepted Answer

A)  supply and demand are both limited. 
B)  supply is limited and demand is not limited. 
C)  supply is limited and demand is limited. 
D)  supply and demand are both not limited. 
A)  supply and demand are both limited. 
B)  supply is limited and demand is not limited. 
C)  supply is limited and demand is limited. 
D)  supply and demand are both not limited.

Question 18

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 19

Table 7-13
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
  
-Refer to Table 7-13. You wish to purchase 10 piano lessons for yourself and for your brother, so you take bids from each of the sellers. You will take lessons at the same time, so one teacher cannot provide lessons to both of you. You must pay the same price for both sets of lessons, and you will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept?

Accepted Answer

A)  $351 
B)  $349 
C)  $201 
D)  $199 
A)  $351 
B)  $349 
C)  $201 
D)  $199

Question 20

Moving production from a high-cost producer to a low-cost producer will

Accepted Answer

A)  lower total surplus. 
B)  raise total surplus. 
C)  lower producer surplus. 
D)  raise producer surplus but lower consumer surplus. 
A)  lower total surplus. 
B)  raise total surplus. 
C)  lower producer surplus. 
D)  raise producer surplus but lower consumer surplus.

If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would

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 floor of $55 in this market, then total surplus will be

The "invisible hand" is

Figure 7-24 -Refer to Figure 7-24. If 6 units of the good are produced and sold, then

Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to By how much does total consumer surplus increase as a result of this supply shift?

Chad is willing to pay $5.00 to get his first cup of morning latté. He buys a cup from a vendor selling latté for $3.75 per cup. Chad's consumer surplus is

The study of how the allocation of resources affects economic well-being is called

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to

All else equal, what happens to consumer surplus if the price of a good increases?

Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is

Figure 7-3 -Refer to Figure 7-3. Area C represents the

Figure 7-14 -Refer to Figure 7-14. If the market price increases to $130 due to an increase in demand, then producer surplus is

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

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

Moving production from a high-cost producer to a low-cost producer will

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

If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would

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 floor of $55 in this market, then total surplus will be

The "invisible hand" is

Figure 7-24 -Refer to Figure 7-24. If 6 units of the good are produced and sold, then

Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to By how much does total consumer surplus increase as a result of this supply shift?

Chad is willing to pay $5.00 to get his first cup of morning latté. He buys a cup from a vendor selling latté for $3.75 per cup. Chad's consumer surplus is

The study of how the allocation of resources affects economic well-being is called

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to

All else equal, what happens to consumer surplus if the price of a good increases?

Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is

Figure 7-3 -Refer to Figure 7-3. Area C represents the

Figure 7-14 -Refer to Figure 7-14. If the market price increases to $130 due to an increase in demand, then producer surplus is

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

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

Moving production from a high-cost producer to a low-cost producer will

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

Filters