Question 1

Figure 7-10  
-Refer to Figure 7-10. Which area represents producer surplus when the price is P1?

Accepted Answer

A)  BCG 
B)  ACH 
C)  ABGD 
D)  DGH 
A)  BCG 
B)  ACH 
C)  ABGD 
D)  DGH

Question 2

Inefficiency can be caused in a market by the presence of

Accepted Answer

A)  market power. 
B)  externalities. 
C)  imperfectly competitive markets. 
D)  All of the above are correct. 
A)  market power. 
B)  externalities. 
C)  imperfectly competitive markets. 
D)  All of the above are correct.

Question 3

The cost of production plus producer surplus is the price a seller is paid.

Accepted Answer

A) True 
 B)False

Question 4

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, so you take bids from each of the sellers. 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)  $251 
C)  $249 
D)  $199 
A)  $351 
B)  $251 
C)  $249 
D)  $199

Question 5

Table 7-17
  
-Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, consumer surplus will be

Accepted Answer

A)  $21. 
B)  $28. 
C)  $36. 
D)  $42. 
A)  $21. 
B)  $28. 
C)  $36. 
D)  $42.

Question 6

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

Accepted Answer

A)  $36. 
B)  $54. 
C)  $18. 
D)  $108. 
A)  $36. 
B)  $54. 
C)  $18. 
D)  $108.

Question 7

Figure 7-21  
-Refer to Figure 7-21. Which area represents total surplus in the market when the price is P1?

Accepted Answer

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

Question 8

An increase in price increases consumer surplus.

Accepted Answer

A) True 
 B)False

Question 9

Scenario 7-1
Suppose market demand is given by the equation  
-Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, how much additional consumer surplus do consumers initially in the market at the $10 price receive?

Accepted Answer

The consumers initially in the

Question 10

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

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 11

Producer surplus is

Accepted Answer

A)  represented on a graph by the area below the demand curve and above the supply curve. 
B)  the amount a seller is paid minus the cost of production. 
C)  also referred to as excess supply. 
D)  All of the above are correct. 
A)  represented on a graph by the area below the demand curve and above the supply curve. 
B)  the amount a seller is paid minus the cost of production. 
C)  also referred to as excess supply. 
D)  All of the above are correct.

Question 12

Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field.
  
-Refer to Table 7-4. If tickets sell for $25 each, then what is the total consumer surplus in the market?

Accepted Answer

A)  $25 
B)  $35 
C)  $60 
D)  $110 
A)  $25 
B)  $35 
C)  $60 
D)  $110

Question 13

Table 7-1
  
-Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is

Accepted Answer

A)  $28. 
B)  $41. 
C)  $43. 
D)  $405. 
A)  $28. 
B)  $41. 
C)  $43. 
D)  $405.

Question 14

If Martin sells a shirt for $40, and his producer surplus from the sale is $8, his cost must have been

Accepted Answer

A)  $48. 
B)  $32. 
C)  $8. 
D)  $40. 
A)  $48. 
B)  $32. 
C)  $8. 
D)  $40.

Question 15

Consumer surplus

Accepted Answer

A)  is closely related to the supply curve for a product. 
B)  is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward- sloping line. 
C)  is measured using the demand curve for a product. 
D)  does not reflect economic well-being in most markets. 
A)  is closely related to the supply curve for a product. 
B)  is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward- sloping line. 
C)  is measured using the demand curve for a product. 
D)  does not reflect economic well-being in most markets.

Question 16

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 much is the total consumer surplus?

Accepted Answer

Total cons

Question 17

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to

Accepted Answer

A)  only existing customers who now get lower prices on the gowns they were already planning to purchase. 
B)  only new customers who enter the market because of the lower prices. 
C)  both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. 
D)  Consumer surplus does not increase; it decreases. 
A)  only existing customers who now get lower prices on the gowns they were already planning to purchase. 
B)  only new customers who enter the market because of the lower prices. 
C)  both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. 
D)  Consumer surplus does not increase; it decreases.

Question 18

Figure 7-15  
-Refer to Figure 7-15. When the price is P2, producer surplus is

Accepted Answer

A)  A. 
B)  A+C. 
C)  A+B+C. 
D)  D+G. 
A)  A. 
B)  A+C. 
C)  A+B+C. 
D)  D+G.

Question 19

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
  
-Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good?

Accepted Answer

A)  all five individuals 
B)  Megan, Mallory and Audrey 
C)  David, Laura and Megan 
D)  David and Laura 
A)  all five individuals 
B)  Megan, Mallory and Audrey 
C)  David, Laura and Megan 
D)  David and Laura

Question 20

Which of the following is not true when the price of a good or service falls?

Accepted Answer

A)  Buyers who were already buying the good or service are better off. 
B)  Some new buyers, who are now willing to buy, enter the market. 
C)  The total consumer surplus in the market increases. 
D)  The total value of purchases before and after the price change is the same. 
A)  Buyers who were already buying the good or service are better off. 
B)  Some new buyers, who are now willing to buy, enter the market. 
C)  The total consumer surplus in the market increases. 
D)  The total value of purchases before and after the price change is the same.

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

Figure 7-10 -Refer to Figure 7-10. Which area represents producer surplus when the price is P1?

Inefficiency can be caused in a market by the presence of

The cost of production plus producer surplus is the price a seller is paid.

Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, consumer surplus will be

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

Figure 7-21 -Refer to Figure 7-21. Which area represents total surplus in the market when the price is P1?

An increase in price increases consumer surplus.

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, how much additional consumer surplus do consumers initially in the market at the $10 price receive?

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

Producer surplus is

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If tickets sell for $25 each, then what is the total consumer surplus in the market?

Table 7-1 -Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is

If Martin sells a shirt for $40, and his producer surplus from the sale is $8, his cost must have been

Consumer surplus

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 much is the total consumer surplus?

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to

Figure 7-15 -Refer to Figure 7-15. When the price is P2, producer surplus is

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good?

Which of the following is not true when the price of a good or service falls?

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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