Question 1

Figure 7-32  
-Refer to Figure 7-32. At what price will total surplus be maximized in this market?

Accepted Answer

.Total surplus will

Question 2

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Accepted Answer

A) True 
 B)False

Question 3

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is
   If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

Accepted Answer

A) True 
 B)False

Question 4

In order to conclude that markets are efficient, we assume that they are perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 5

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

Accepted Answer

A)  $2.00 each. 
B)  $0.50 each. 
C)  $3.50 each. 
D)  $5.00 each. 
A)  $2.00 each. 
B)  $0.50 each. 
C)  $3.50 each. 
D)  $5.00 each.

Question 6

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $90.

Accepted Answer

A) True 
 B)False

Question 7

Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor. On a particular day, he is willing to tutor the first hour for $10, the second hour for $18, the third hour for $28, and the fourth hour for $40. Assume Allen is rational in deciding how many hours to tutor. His producer surplus is

Accepted Answer

A)  $40. 
B)  $64. 
C)  $12. 
D)  $56. 
A)  $40. 
B)  $64. 
C)  $12. 
D)  $56.

Question 8

Figure 7-7  
-Refer to Figure 7-7. What is the consumer surplus if the price is $100?

Accepted Answer

A)  $2,500 
B)  $5,000 
C)  $10,000 
D)  $20,000 
A)  $2,500 
B)  $5,000 
C)  $10,000 
D)  $20,000

Question 9

Table 7-18
The following table shows the willingness to pay for a good for the only four consumers in a market.
  
-Refer to Table 7-18. If the price of the good is $20, how many units will be demanded?

Accepted Answer

Three unit

Question 10

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 11

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for

Accepted Answer

A)  $6.50 each. 
B)  $7.50 each. 
C)  $9.50 each. 
D)  $10.50 each. 
A)  $6.50 each. 
B)  $7.50 each. 
C)  $9.50 each. 
D)  $10.50 each.

Question 12

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

Accepted Answer

A)  31 cents. 
B)  38 cents. 
C)  45 cents. 
D)  55 cents. 
A)  31 cents. 
B)  38 cents. 
C)  45 cents. 
D)  55 cents.

Question 13

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 14

Table 7-15
  
-Refer to Table 7-15. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. Which of the following graphs represents the market supply curve?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 15

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 16

Suppose that the equilibrium price in the market for tomatoes is $3 per pound. If a law reduced the maximum legal price for tomatoes to $2 per pound,

Accepted Answer

A)  any possible increase in consumer surplus would be larger than the loss of producer surplus. 
B)  any possible increase in consumer surplus would be smaller than the loss of producer surplus. 
C)  the resulting increase in producer surplus would be larger than any possible loss of consumer surplus. 
D)  the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus. 
A)  any possible increase in consumer surplus would be larger than the loss of producer surplus. 
B)  any possible increase in consumer surplus would be smaller than the loss of producer surplus. 
C)  the resulting increase in producer surplus would be larger than any possible loss of consumer surplus. 
D)  the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus.

Question 17

Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15. Chuck values the dog show at

Accepted Answer

A)  $5. 
B)  $15. 
C)  $20. 
D)  $35. 
A)  $5. 
B)  $15. 
C)  $20. 
D)  $35.

Question 18

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 19

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 20

At the equilibrium price of a good, the good will be purchased by those buyers who

Accepted Answer

A)  value the good more than price. 
B)  value the good less than price. 
C)  have the money to buy the good. 
D)  consider the good a necessity. 
A)  value the good more than price. 
B)  value the good less than price. 
C)  have the money to buy the good. 
D)  consider the good a necessity.

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

Figure 7-32 -Refer to Figure 7-32. At what price will total surplus be maximized in this market?

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

In order to conclude that markets are efficient, we assume that they are perfectly competitive.

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $90.

Figure 7-7 -Refer to Figure 7-7. What is the consumer surplus if the price is $100?

Table 7-18 The following table shows the willingness to pay for a good for the only four consumers in a market. -Refer to Table 7-18. If the price of the good is $20, how many units will be demanded?

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

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

Table 7-15 -Refer to Table 7-15. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. Which of the following graphs represents the market supply curve?

Which of the following is correct?

Suppose that the equilibrium price in the market for tomatoes is $3 per pound. If a law reduced the maximum legal price for tomatoes to $2 per pound,

Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15. Chuck values the dog show at

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

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

At the equilibrium price of a good, the good will be purchased by those buyers who

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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