Question 1

Table 7-1
  
-Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product?

Accepted Answer

A)  Calvin 
B)  Calvin and Sam 
C)  Calvin, Sam, and Andrew 
D)  Calvin, Sam, Andrew, and Lori 
A)  Calvin 
B)  Calvin and Sam 
C)  Calvin, Sam, and Andrew 
D)  Calvin, Sam, Andrew, and Lori

Question 2

Figure 7-34  
-Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase?

Accepted Answer

With the removal of the price

Question 3

Welfare economics explains which of the following in the market for televisions?

Accepted Answer

A)  The government sets the price of televisions; firms respond to the price by producing a specific level of output. 
B)  The government sets the quantity of televisions; firms respond to the quantity by charging a specific price. 
C)  The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers. 
D)  The market equilibrium price for televisions maximizes consumer welfare and minimizes producer profit. 
A)  The government sets the price of televisions; firms respond to the price by producing a specific level of output. 
B)  The government sets the quantity of televisions; firms respond to the quantity by charging a specific price. 
C)  The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers. 
D)  The market equilibrium price for televisions maximizes consumer welfare and minimizes producer profit.

Question 4

Table 7-11
The following table represents the costs of five possible sellers.
  
-Refer to Table 7-11. If the price is $1,l50, who would be willing to supply the product?

Accepted Answer

A)  Abby and Bobby 
B)  Abby, Bobby, and Dianne 
C)  Carlos, Dianne, and Evaline 
D)  Dianne and Evaline only 
A)  Abby and Bobby 
B)  Abby, Bobby, and Dianne 
C)  Carlos, Dianne, and Evaline 
D)  Dianne and Evaline only

Question 5

Table 7-7
  
-Refer to Table 7-7. You have four 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 offer to sell the tickets for $325. How many tickets do you sell, and what is the total consumer surplus in the market?

Accepted Answer

A)  one ticket; $175 
B)  two tickets; $225 
C)  three tickets; $225 
D)  three tickets; $275 
A)  one ticket; $175 
B)  two tickets; $225 
C)  three tickets; $225 
D)  three tickets; $275

Question 6

Figure 7-17  
-Refer to Figure 7-17. Suppose the market starts out in equilibrium with demand curve D and supply curve S. Next, suppose demand shifts left so as to decrease the quantity demanded by 20 units at every price. What is the change in producer surplus as a result of this demand shift?

Accepted Answer

A)  $80 
B)  $160 
C)  $240 
D)  $320 
A)  $80 
B)  $160 
C)  $240 
D)  $320

Question 7

The decisions of buyers and sellers that affect people who are not participants in the market create

Accepted Answer

A)  market power. 
B)  externalities. 
C)  profiteering. 
D)  market equilibrium. 
A)  market power. 
B)  externalities. 
C)  profiteering. 
D)  market equilibrium.

Question 8

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

Accepted Answer

Total surp

Question 9

Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is

Accepted Answer

A)  $8,500. 
B)  $15,500. 
C)  $24,000. 
D)  $39,500. 
A)  $8,500. 
B)  $15,500. 
C)  $24,000. 
D)  $39,500.

Question 10

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is
   If 80 units of the good are produced and sold, then producer surplus amounts to $1,200.

Accepted Answer

A) True 
 B)False

Question 11

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

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 12

When policymakers are considering a particular action, they can use consumer surplus as an)

Accepted Answer

A)  objective measure of the benefits to buyers as determined by policymakers. 
B)  measure of the benefits to buyers as the buyers perceive them. 
C)  potentially flawed measure of the benefits to buyers if the buyers are not rational. 
D)  Both b) and c) are correct. 
A)  objective measure of the benefits to buyers as determined by policymakers. 
B)  measure of the benefits to buyers as the buyers perceive them. 
C)  potentially flawed measure of the benefits to buyers if the buyers are not rational. 
D)  Both b) and c) are correct.

Question 13

Figure 7-8  
-Refer to Figure 7-8. At the equilibrium price, consumer surplus is

Accepted Answer

A)  $1,050. 
B)  $1,225. 
C)  $1,575. 
D)  $2,450. 
A)  $1,050. 
B)  $1,225. 
C)  $1,575. 
D)  $2,450.

Question 14

Figure 7-34  
-Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total producer surplus change, assuming the producers with the lowest cost were the ones supplying the market when the price floor was in place?

Accepted Answer

Total producer surplus with the price fl

Question 15

Figure 7-11  
-Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers?

Accepted Answer

A)  $625 
B)  $2,500 
C)  $3,125 
D)  $5,625 
A)  $625 
B)  $2,500 
C)  $3,125 
D)  $5,625

Question 16

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

Accepted Answer

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

Question 17

Table 7-1
  
-Refer to Table 7-1. If the market price is $105,

Accepted Answer

A)  Calvin's consumer surplus is $45 and total consumer surplus is $85. 
B)  Sam's consumer surplus is $30 and total consumer surplus is $90. 
C)  Andrew's consumer surplus is $15 and total consumer surplus is $67.50. 
D)  Lori's consumer surplus is ­$2 and total consumer surplus is $100. 
A)  Calvin's consumer surplus is $45 and total consumer surplus is $85. 
B)  Sam's consumer surplus is $30 and total consumer surplus is $90. 
C)  Andrew's consumer surplus is $15 and total consumer surplus is $67.50. 
D)  Lori's consumer surplus is ­$2 and total consumer surplus is $100.

Question 18

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 19

Figure 7-26  
-Refer to Figure 7-26. At the equilibrium price, consumer surplus is

Accepted Answer

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

Question 20

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.

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

Table 7-1 -Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product?

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase?

Welfare economics explains which of the following in the market for televisions?

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the price is $1,l50, who would be willing to supply the product?

Figure 7-17 -Refer to Figure 7-17. Suppose the market starts out in equilibrium with demand curve D and supply curve S. Next, suppose demand shifts left so as to decrease the quantity demanded by 20 units at every price. What is the change in producer surplus as a result of this demand shift?

The decisions of buyers and sellers that affect people who are not participants in the market create

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

Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is If 80 units of the good are produced and sold, then producer surplus amounts to $1,200.

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

When policymakers are considering a particular action, they can use consumer surplus as an)

Figure 7-8 -Refer to Figure 7-8. At the equilibrium price, consumer surplus is

Figure 7-11 -Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers?

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

Table 7-1 -Refer to Table 7-1. If the market price is $105,

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 7-26 -Refer to Figure 7-26. At the equilibrium price, consumer surplus is

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

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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