Question 1

If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will

Accepted Answer

A)  increase producer surplus. 
B)  reduce producer surplus. 
C)  not affect producer surplus. 
D)  Any of the above are possible. 
A)  increase producer surplus. 
B)  reduce producer surplus. 
C)  not affect producer surplus. 
D)  Any of the above are possible.

Question 2

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

Accepted Answer

Total producer surpl

Question 3

A seller's opportunity cost measures the

Accepted Answer

A)  value of everything she must give up to produce a good. 
B)  amount she is paid for a good minus her cost of providing it. 
C)  consumer surplus. 
D)  out of pocket expenses to produce a good but not the value of her time. 
A)  value of everything she must give up to produce a good. 
B)  amount she is paid for a good minus her cost of providing it. 
C)  consumer surplus. 
D)  out of pocket expenses to produce a good but not the value of her time.

Question 4

Figure 7-27  
-Refer to Figure 7-27. Sellers whose costs are greater than the equilibrium price are represented by segment

Accepted Answer

A)  AC. 
B)  CK. 
C)  BC. 
D)  CH. 
A)  AC. 
B)  CK. 
C)  BC. 
D)  CH.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software?

Accepted Answer

A)  $50. 
B)  $150. 
C)  $200. 
D)  $350. 
A)  $50. 
B)  $150. 
C)  $200. 
D)  $350.

Question 7

Suppose John's cost for performing some carpentry work is $120. If John is paid $200 for the carpentry work, what is his producer surplus?

Accepted Answer

His produc

Question 8

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?

Accepted Answer

A)  For the three individuals together, consumer surplus amounts to $35. 
B)  Having bought the cell phone, Kristen is better off than she would have been had she not bought it. 
C)  Had the price of the cell phone been $95 rather than $80, Katie and Kendra definitely would have been buyers and Kristen definitely would not have been a buyer. 
D)  The fact that all three individuals paid $80 for the same type of cell phone indicates that each one placed the same value on that cell phone. 
A)  For the three individuals together, consumer surplus amounts to $35. 
B)  Having bought the cell phone, Kristen is better off than she would have been had she not bought it. 
C)  Had the price of the cell phone been $95 rather than $80, Katie and Kendra definitely would have been buyers and Kristen definitely would not have been a buyer. 
D)  The fact that all three individuals paid $80 for the same type of cell phone indicates that each one placed the same value on that cell phone.

Question 9

Table 7-11
The following table represents the costs of five possible sellers.
  
-Refer to Table 7-11. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 4 if the price is

Accepted Answer

A)  $860. 
B)  $1,050. 
C)  $1,650. 
D)  $1,400. 
A)  $860. 
B)  $1,050. 
C)  $1,650. 
D)  $1,400.

Question 10

Total surplus in a market can be measured as the area below the supply curve plus the area above the demand curve, up to the point of equilibrium.

Accepted Answer

A) True 
 B)False

Question 11

Figure 7-1  
-Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to

Accepted Answer

A)  $50. 
B)  $100. 
C)  $150. 
D)  $200. 
A)  $50. 
B)  $100. 
C)  $150. 
D)  $200.

Question 12

The area below the price and above the supply curve measures the producer surplus in a market.

Accepted Answer

A) True 
 B)False

Question 13

Consumer surplus equals the

Accepted Answer

A)  value to buyers minus the amount paid by buyers. 
B)  value to buyers minus the cost to sellers. 
C)  amount received by sellers minus the cost to sellers. 
D)  amount received by sellers minus the amount paid by buyers. 
A)  value to buyers minus the amount paid by buyers. 
B)  value to buyers minus the cost to sellers. 
C)  amount received by sellers minus the cost to sellers. 
D)  amount received by sellers minus the amount paid by buyers.

Question 14

Table 7-14
The only four producers in a market have the following costs:
  
-Refer to Table 7-14. If Abbey, Bev, and Carl sell the good, and the resulting producer surplus is $55 altogether, then the price must have been

Accepted Answer

A)  $40. 
B)  $50. 
C)  $60. 
D)  $70. 
A)  $40. 
B)  $50. 
C)  $60. 
D)  $70.

Question 15

Welfare economics is the study of

Accepted Answer

A)  taxes and subsidies. 
B)  how technology is best put to use in the production of goods and services. 
C)  government welfare programs for needy people. 
D)  how the allocation of resources affects economic well-being. 
A)  taxes and subsidies. 
B)  how technology is best put to use in the production of goods and services. 
C)  government welfare programs for needy people. 
D)  how the allocation of resources affects economic well-being.

Question 16

A demand curve reflects each of the following except the

Accepted Answer

A)  willingness to pay of all buyers in the market. 
B)  value each buyer in the market places on the good. 
C)  highest price buyers are willing to pay for each quantity. 
D)  ability of buyers to obtain the quantity they desire. 
A)  willingness to pay of all buyers in the market. 
B)  value each buyer in the market places on the good. 
C)  highest price buyers are willing to pay for each quantity. 
D)  ability of buyers to obtain the quantity they desire.

Question 17

Figure 7-8  
-Refer to Figure 7-8. If the government imposes a price ceiling of $80 in this market, then, assuming those with the highest willingness to pay purchase the good, consumer surplus will be

Accepted Answer

A)  $900. 
B)  $1,200. 
C)  $1,500. 
D)  $1,600. 
A)  $900. 
B)  $1,200. 
C)  $1,500. 
D)  $1,600.

Question 18

Which of the Ten Principles of Economics does welfare economics explain more fully?

Accepted Answer

A)  The cost of something is what you give up to get it. 
B)  Markets are usually a good way to organize economic activity. 
C)  Trade can make everyone better off. 
D)  A country's standard of living depends on its ability to produce goods and services. 
A)  The cost of something is what you give up to get it. 
B)  Markets are usually a good way to organize economic activity. 
C)  Trade can make everyone better off. 
D)  A country's standard of living depends on its ability to produce goods and services.

Question 19

Table 7-11
The following table represents the costs of five possible sellers.
  
-Refer to Table 7-11. If the market price is $1,200, the producer surplus in the market is

Accepted Answer

A)  $100. 
B)  $800. 
C)  $400. 
D)  $500. 
A)  $100. 
B)  $800. 
C)  $400. 
D)  $500.

Question 20

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 these four producers bid in an auction to supply one unit to a consumer, at what price will the good be sold?

Accepted Answer

The good w

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

If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will

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

A seller's opportunity cost measures the

Figure 7-27 -Refer to Figure 7-27. Sellers whose costs are greater than the equilibrium price are represented by segment

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

Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software?

Suppose John's cost for performing some carpentry work is $120. If John is paid $200 for the carpentry work, what is his producer surplus?

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 4 if the price is

Total surplus in a market can be measured as the area below the supply curve plus the area above the demand curve, up to the point of equilibrium.

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to

The area below the price and above the supply curve measures the producer surplus in a market.

Consumer surplus equals the

Table 7-14 The only four producers in a market have the following costs: -Refer to Table 7-14. If Abbey, Bev, and Carl sell the good, and the resulting producer surplus is $55 altogether, then the price must have been

Welfare economics is the study of

A demand curve reflects each of the following except the

Figure 7-8 -Refer to Figure 7-8. If the government imposes a price ceiling of $80 in this market, then, assuming those with the highest willingness to pay purchase the good, consumer surplus will be

Which of the Ten Principles of Economics does welfare economics explain more fully?

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,200, the producer 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 these four producers bid in an auction to supply one unit to a consumer, at what price will the good be sold?

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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