Question 1

Table 7-11
The following table represents the costs of five possible sellers.
  
-Refer to Table 7-11. If the price is $1,000,

Accepted Answer

A)  Bobby is an eager supplier. 
B)  Dianne is an eager supplier. 
C)  Evaline's producer surplus is $100. 
D)  All of the above are correct. 
A)  Bobby is an eager supplier. 
B)  Dianne is an eager supplier. 
C)  Evaline's producer surplus is $100. 
D)  All of the above are correct.

Question 2

Total surplus in a market will increase when the government

Accepted Answer

A)  imposes a binding price floor or a binding price ceiling on that market. 
B)  imposes a tax on that market. 
C)  Both a and b are correct. 
D)  Neither a nor b is correct. 
A)  imposes a binding price floor or a binding price ceiling on that market. 
B)  imposes a tax on that market. 
C)  Both a and b are correct. 
D)  Neither a nor b is correct.

Question 3

In which of the following circumstances would a buyer be indifferent about buying a good?

Accepted Answer

A)  The amount of consumer surplus the buyer would experience as a result of buying the good is zero. 
B)  The price of the good is equal to the buyer's willingness to pay for the good. 
C)  The price of the good is equal to the value the buyer places on the good. 
D)  All of the above are correct. 
A)  The amount of consumer surplus the buyer would experience as a result of buying the good is zero. 
B)  The price of the good is equal to the buyer's willingness to pay for the good. 
C)  The price of the good is equal to the value the buyer places on the good. 
D)  All of the above are correct.

Question 4

Figure 7-30  
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Accepted Answer

Consumers entering t

Question 5

Figure 7-19  
-Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be

Accepted Answer

A)  $137.50. 
B)  $125.00. 
C)  $187.50. 
D)  $275.00. 
A)  $137.50. 
B)  $125.00. 
C)  $187.50. 
D)  $275.00.

Question 6

Figure 7-23  
-Refer to Figure 7-23. The efficient price-quantity combination is

Accepted Answer

A)  P1 and Q1. 
B)  P2 and Q2. 
C)  P3 and Q1. 
D)  P4 and 0. 
A)  P1 and Q1. 
B)  P2 and Q2. 
C)  P3 and Q1. 
D)  P4 and 0.

Question 7

Scenario 7-2
Suppose market demand and market supply are given by the equations:  
-Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to   How much total consumer surplus goes to new consumers who enter the market after the supply curve shifts?

Accepted Answer

Total consumer surplus increas

Question 8

Table 7-1
  
-Refer to Table 7-1. If price of the product is $135, then the total consumer surplus is

Accepted Answer

A)  $-50. 
B)  $-35. 
C)  $15. 
D)  $150. 
A)  $-50. 
B)  $-35. 
C)  $15. 
D)  $150.

Question 9

Figure 7-23  
-Refer to Figure 7-23. The equilibrium price is

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P4. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P4.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Figure 7-15  
-Refer to Figure 7-15. Suppose producer surplus is larger than C but smaller than A+B+C. The price of the good must be

Accepted Answer

A)  lower than P1. 
B)  P1. 
C)  between P1 and P2. 
D)  higher than P2. 
A)  lower than P1. 
B)  P1. 
C)  between P1 and P2. 
D)  higher than P2.

Question 12

All else equal, what happens to consumer surplus if the price of a good decreases?

Accepted Answer

A)  Consumer surplus increases. 
B)  Consumer surplus decreases. 
C)  Consumer surplus is unchanged. 
D)  Consumer surplus may increase, decrease, or remain unchanged. 
A)  Consumer surplus increases. 
B)  Consumer surplus decreases. 
C)  Consumer surplus is unchanged. 
D)  Consumer surplus may increase, decrease, or remain unchanged.

Question 13

Figure 7-1  
-Refer to Figure 7-1. The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

Accepted Answer

A)  $200. 
B)  $150. 
C)  $125 . 
D)  $100. 
A)  $200. 
B)  $150. 
C)  $125 . 
D)  $100.

Question 14

Producing a soccer ball costs Jake $5. He sells it to Darby for $35. Darby values the soccer ball at $50. For this transaction, the total surplus in the market is $40.

Accepted Answer

A) True 
 B)False

Question 15

Producer surplus is

Accepted Answer

A)  measured using the demand curve for a good. 
B)  always a negative number for sellers in a competitive market. 
C)  the amount a seller is paid minus the cost of production. 
D)  the opportunity cost of production minus the cost of producing goods that go unsold. 
A)  measured using the demand curve for a good. 
B)  always a negative number for sellers in a competitive market. 
C)  the amount a seller is paid minus the cost of production. 
D)  the opportunity cost of production minus the cost of producing goods that go unsold.

Question 16

Given the following two equations:
1) Total Surplus = Consumer Surplus + Producer Surplus
2) Total Surplus = Value to Buyers - Cost to Sellers
Show how equation 1) can be used to derive equation 2).

Accepted Answer

Start with the equation: Total Surplus =

Question 17

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is

Accepted Answer

A)  $150. 
B)  $200. 
C)  $350. 
D)  $550. 
A)  $150. 
B)  $200. 
C)  $350. 
D)  $550.

Question 18

Inefficiency exists in an economy when a good is

Accepted Answer

A)  being produced with less than all available resources. 
B)  not distributed fairly among buyers. 
C)  not being produced by the lowest-cost producers. 
D)  being consumed by buyers who value it most highly. 
A)  being produced with less than all available resources. 
B)  not distributed fairly among buyers. 
C)  not being produced by the lowest-cost producers. 
D)  being consumed by buyers who value it most highly.

Question 19

Welfare economics is the study of the welfare system.

Accepted Answer

A) True 
 B)False

Question 20

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
  
-Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Accepted Answer

A)  Quilana 
B)  Wilbur 
C)  Ming-la 
D)  All three buyers experience the same loss of consumer surplus. 
A)  Quilana 
B)  Wilbur 
C)  Ming-la 
D)  All three buyers experience the same loss of consumer surplus.

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

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the price is $1,000,

Total surplus in a market will increase when the government

In which of the following circumstances would a buyer be indifferent about buying a good?

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Figure 7-19 -Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be

Figure 7-23 -Refer to Figure 7-23. The efficient price-quantity combination is

Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to How much total consumer surplus goes to new consumers who enter the market after the supply curve shifts?

Table 7-1 -Refer to Table 7-1. If price of the product is $135, then the total consumer surplus is

Figure 7-23 -Refer to Figure 7-23. The equilibrium price is

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

Figure 7-15 -Refer to Figure 7-15. Suppose producer surplus is larger than C but smaller than A+B+C. The price of the good must be

All else equal, what happens to consumer surplus if the price of a good decreases?

Figure 7-1 -Refer to Figure 7-1. The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

Producing a soccer ball costs Jake $5. He sells it to Darby for $35. Darby values the soccer ball at $50. For this transaction, the total surplus in the market is $40.

Producer surplus is

Given the following two equations: 1) Total Surplus = Consumer Surplus + Producer Surplus 2) Total Surplus = Value to Buyers - Cost to Sellers Show how equation 1) can be used to derive equation 2).

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is

Inefficiency exists in an economy when a good is

Welfare economics is the study of the welfare system.

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

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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