Question 1

If the demand for leather decreases, producer surplus in the leather market

Accepted Answer

A)  increases. 
B)  decreases. 
C)  remains the same. 
D)  may increase, decrease, or remain the same. 
A)  increases. 
B)  decreases. 
C)  remains the same. 
D)  may increase, decrease, or remain the same.

Question 2

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

Accepted Answer

A) True 
 B)False

Question 3

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

Accepted Answer

A)  both the value of MP3 players to consumers and the cost of producing MP3 players has increased. 
B)  both the value of MP3 players to consumers and the cost of producing MP3 players has decreased. 
C)  the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased. 
D)  the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased. 
A)  both the value of MP3 players to consumers and the cost of producing MP3 players has increased. 
B)  both the value of MP3 players to consumers and the cost of producing MP3 players has decreased. 
C)  the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased. 
D)  the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased.

Question 4

If the government imposes a binding price floor in a market, then the consumer surplus in that market will decrease.

Accepted Answer

A) True 
 B)False

Question 5

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. You hire Kevin for a price of $500. What is his producer surplus?

Accepted Answer

A) $500 
B) $150 
C) $100 
D) $50 
A) $500 
B) $150 
C) $100 
D) $50

Question 6

Figure 7-24  
-Refer to Figure 7-24. If 4 units of the good are produced and sold, then

Accepted Answer

A)  producer surplus is greater than consumer surplus. 
B)  consumer surplus is $16. 
C)  total surplus is minimized. 
D)  total surplus is not maximized. 
A)  producer surplus is greater than consumer surplus. 
B)  consumer surplus is $16. 
C)  total surplus is minimized. 
D)  total surplus is not maximized.

Question 7

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
  
-Refer to Table 7-3. If the price is $20, then consumer surplus in the market is

Accepted Answer

A)  $20, and Wilbur and Ming-la purchase the good. 
B)  $45, and Carlos and Quilana purchase the good. 
C)  $45, and Quilana, Wilbur, and Ming-la purchase the good. 
D)  $55, and Carlos, Wilbur, and Ming-la purchase the good. 
A)  $20, and Wilbur and Ming-la purchase the good. 
B)  $45, and Carlos and Quilana purchase the good. 
C)  $45, and Quilana, Wilbur, and Ming-la purchase the good. 
D)  $55, and Carlos, Wilbur, and Ming-la purchase the good.

Question 8

Table 7-19
The following table shows the cost of producing a good for the only four producers in a market.
  
-Refer to Table 7-19. If the market equilibrium price is $28, what is total producer surplus in the market?

Accepted Answer

Total prod

Question 9

Each seller of a product is willing to sell as long as the price he or she can receive is greater than the opportunity cost of producing the product.

Accepted Answer

A) True 
 B)False

Question 10

Figure 7-23  
-Refer to Figure 7-23. At equilibrium, consumer surplus is represented by the area

Accepted Answer

A)  A. 
B)  A+B+C. 
C)  D+H+F. 
D)  A+B+C+D+H+F. 
A)  A. 
B)  A+B+C. 
C)  D+H+F. 
D)  A+B+C+D+H+F.

Question 11

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6,

Accepted Answer

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

Question 12

Figure 7-25  
-Refer to Figure 7-25. At the equilibrium price, total surplus is

Accepted Answer

A)  $288. 
B)  $576. 
C)  $1,152. 
D)  $2,304. 
A)  $288. 
B)  $576. 
C)  $1,152. 
D)  $2,304.

Question 13

Total surplus is

Accepted Answer

A)  equal to consumer surplus minus producer surplus. 
B)  equal to the total value to buyers minus the total cost to sellers. 
C)  equal to consumers' willingness to pay plus producers' cost. 
D)  greater than the sum of consumer surplus plus producer surplus. 
A)  equal to consumer surplus minus producer surplus. 
B)  equal to the total value to buyers minus the total cost to sellers. 
C)  equal to consumers' willingness to pay plus producers' cost. 
D)  greater than the sum of consumer surplus plus producer surplus.

Question 14

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

Accepted Answer

A)  seller's producer surplus. 
B)  seller's cost of production. 
C)  seller's profit. 
D)  average willingness to pay of buyers of the product. 
A)  seller's producer surplus. 
B)  seller's cost of production. 
C)  seller's profit. 
D)  average willingness to pay of buyers of the product.

Question 15

Justin builds fences for a living. Justin's out­of­pocket expenses for wood, paint, etc.) plus the value that he places

Accepted Answer

A)  producer surplus. 
B)  producer deficit. 
C)  cost of building fences. 
D)  profit. 
A)  producer surplus. 
B)  producer deficit. 
C)  cost of building fences. 
D)  profit.

Question 16

If an allocation of resources is efficient, then

Accepted Answer

A)  consumer surplus is maximized. 
B)  producer surplus is maximized. 
C)  all potential gains from trade among buyers are sellers are being realized. 
D)  the allocation achieves equality as well. 
A)  consumer surplus is maximized. 
B)  producer surplus is maximized. 
C)  all potential gains from trade among buyers are sellers are being realized. 
D)  the allocation achieves equality as well.

Question 17

Total surplus = Value to buyers - Costs to sellers.

Accepted Answer

A) True 
 B)False

Question 18

Figure 7-14  
-Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then producer surplus will

Accepted Answer

A)  $325. 
B)  $100. 
C)  $300. 
D)  $200. 
A)  $325. 
B)  $100. 
C)  $300. 
D)  $200.

Question 19

Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?

Accepted Answer

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

Question 20

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $200.

Accepted Answer

A) True 
 B)False

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

If the demand for leather decreases, producer surplus in the leather market

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

If the government imposes a binding price floor in a market, then the consumer surplus in that market will decrease.

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. You hire Kevin for a price of $500. What is his producer surplus?

Figure 7-24 -Refer to Figure 7-24. If 4 units of the good are produced and sold, then

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If the price is $20, then consumer surplus in the market is

Table 7-19 The following table shows the cost of producing a good for the only four producers in a market. -Refer to Table 7-19. If the market equilibrium price is $28, what is total producer surplus in the market?

Each seller of a product is willing to sell as long as the price he or she can receive is greater than the opportunity cost of producing the product.

Figure 7-23 -Refer to Figure 7-23. At equilibrium, consumer surplus is represented by the area

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6,

Figure 7-25 -Refer to Figure 7-25. At the equilibrium price, total surplus is

Total surplus is

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

Justin builds fences for a living. Justin's out­of­pocket expenses for wood, paint, etc.) plus the value that he places

If an allocation of resources is efficient, then

Total surplus = Value to buyers - Costs to sellers.

Figure 7-14 -Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then producer surplus will

Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $200.

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

Justin builds fences for a living. Justin's outofpocket expenses for wood, paint, etc.) plus the value that he places