Question 1

Economists tend to see ticket scalping as

Accepted Answer

A)  a way for a few to profit without producing anything of value. 
B)  an inequitable interference in the orderly process of ticket distribution. 
C)  a way of increasing the efficiency of ticket distribution. 
D)  an unproductive activity which should be made illegal everywhere. 
A)  a way for a few to profit without producing anything of value. 
B)  an inequitable interference in the orderly process of ticket distribution. 
C)  a way of increasing the efficiency of ticket distribution. 
D)  an unproductive activity which should be made illegal everywhere.

Question 2

The marginal seller is the seller

Accepted Answer

A)  for whom the marginal cost of producing one more unit of output is the lowest among all sellers, and the marginal buyer is the buyer for whom the marginal benefit of one more unit of the good is the highest among all buyers. 
B)  who supplies the smallest quantity of the good among all sellers, and the marginal buyer is the buyer who demands the smallest quantity of the good among all buyers. 
C)  who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher. 
D)  who has the largest producer surplus, and the marginal buyer is the buyer who has the largest consumer surplus. 
A)  for whom the marginal cost of producing one more unit of output is the lowest among all sellers, and the marginal buyer is the buyer for whom the marginal benefit of one more unit of the good is the highest among all buyers. 
B)  who supplies the smallest quantity of the good among all sellers, and the marginal buyer is the buyer who demands the smallest quantity of the good among all buyers. 
C)  who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher. 
D)  who has the largest producer surplus, and the marginal buyer is the buyer who has the largest consumer surplus.

Question 3

Figure 7-1  
-Refer to Figure 7-1. If the price of the good is $200, then

Accepted Answer

A)  consumer surplus is $150. 
B)  consumer surplus is $650. 
C)  producer surplus is $650. 
D)  producer surplus is $750. 
A)  consumer surplus is $150. 
B)  consumer surplus is $650. 
C)  producer surplus is $650. 
D)  producer surplus is $750.

Question 4

Which of the following is not equal to total surplus?

Accepted Answer

A)  consumer surplus - producer surplus 
B)  buyers' willingness to pay ­ sellers' costs 
C)  value to buyers - amount paid by buyers + amount received by sellers - cost to sellers 
D)  value to buyers - cost to sellers 
A)  consumer surplus - producer surplus 
B)  buyers' willingness to pay ­ sellers' costs 
C)  value to buyers - amount paid by buyers + amount received by sellers - cost to sellers 
D)  value to buyers - cost to sellers

Question 5

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called

Accepted Answer

A)  deadweight loss. 
B)  willingness to pay. 
C)  consumer surplus. 
D)  producer surplus. 
A)  deadweight loss. 
B)  willingness to pay. 
C)  consumer surplus. 
D)  producer surplus.

Question 6

At the equilibrium price of a good, the good will be sold by those sellers

Accepted Answer

A)  whose cost is more than price. 
B)  whose cost is less than price. 
C)  that can produce the good. 
D)  enter the market first. 
A)  whose cost is more than price. 
B)  whose cost is less than price. 
C)  that can produce the good. 
D)  enter the market first.

Question 7

Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day.
  
-Refer to Table 7-5. If the market price of an orange is $0.40, then

Accepted Answer

A)  6 oranges are demanded per day, and consumer surplus amounts to $4.95. 
B)  6 oranges are demanded per day, and consumer surplus amounts to $5.10. 
C)  7 oranges are demanded per day, and consumer surplus amounts to $5.30. 
D)  7 oranges are demanded per day, and consumer surplus amounts to $5.15. 
A)  6 oranges are demanded per day, and consumer surplus amounts to $4.95. 
B)  6 oranges are demanded per day, and consumer surplus amounts to $5.10. 
C)  7 oranges are demanded per day, and consumer surplus amounts to $5.30. 
D)  7 oranges are demanded per day, and consumer surplus amounts to $5.15.

Question 8

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)  Rational people think at the margin. 
C)  Markets are usually a good way to organize economic activity. 
D)  People respond to incentives. 
A)  The cost of something is what you give up to get it. 
B)  Rational people think at the margin. 
C)  Markets are usually a good way to organize economic activity. 
D)  People respond to incentives.

Question 9

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Accepted Answer

A)  Dallas's consumer surplus would be unaffected. 
B)  Dallas's consumer surplus would increase. 
C)  Dallas's consumer surplus would decrease. 
D)  Dallas would be wise to buy fewer strawberries than before. 
A)  Dallas's consumer surplus would be unaffected. 
B)  Dallas's consumer surplus would increase. 
C)  Dallas's consumer surplus would decrease. 
D)  Dallas would be wise to buy fewer strawberries than before.

Question 10

Figure 7-13  
-Refer to Figure 7-13. If the equilibrium price is $60, what is the producer surplus?

Accepted Answer

A)  $600 
B)  $1,200 
C)  $2,400 
D)  $4,800 
A)  $600 
B)  $1,200 
C)  $2,400 
D)  $4,800

Question 11

Figure 7-2  
-Refer to Figure 7-2. If the price of the good is $100, then consumer surplus amounts to

Accepted Answer

A)  $50. 
B)  $75. 
C)  $100. 
D)  $125. 
A)  $50. 
B)  $75. 
C)  $100. 
D)  $125.

Question 12

Economists say that a market where goods are not consumed by those valuing the goods most highly is

Accepted Answer

A)  laissez-faire.. 
B)  unequal. 
C)  inefficient. 
D)  rational. 
A)  laissez-faire.. 
B)  unequal. 
C)  inefficient. 
D)  rational.

Question 13

Market power and externalities are examples of market failures.

Accepted Answer

A) True 
 B)False

Question 14

Wendy is willing to pay $50 for a concert ticket and Bruce would like to receive $25. If the market price is $40 for this transaction, then the total surplus would be $15.

Accepted Answer

A) True 
 B)False

Question 15

Welfare economics is the study of

Accepted Answer

A)  the well-being of less fortunate people. 
B)  welfare programs in the United States. 
C)  how the allocation of resources affects economic well-being. 
D)  the effect of income redistribution on work effort. 
A)  the well-being of less fortunate people. 
B)  welfare programs in the United States. 
C)  how the allocation of resources affects economic well-being. 
D)  the effect of income redistribution on work effort.

Question 16

An example of positive analysis is studying

Accepted Answer

A)  how market forces produce equilibrium. 
B)  whether equilibrium outcomes are fair. 
C)  whether equilibrium outcomes are socially desirable. 
D)  if income distributions are fair. 
A)  how market forces produce equilibrium. 
B)  whether equilibrium outcomes are fair. 
C)  whether equilibrium outcomes are socially desirable. 
D)  if income distributions are fair.

Question 17

Figure 7-27  
-Refer to Figure 7-27. Sellers whose costs are less than the equilibrium price are represented by which line segment?

Accepted Answer

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

Question 18

Producer surplus equals

Accepted Answer

A)  Value to buyers - Amount paid by buyers. 
B)  Amount received by sellers - Costs of sellers. 
C)  Value to buyers - Costs of sellers. 
D)  Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers. 
A)  Value to buyers - Amount paid by buyers. 
B)  Amount received by sellers - Costs of sellers. 
C)  Value to buyers - Costs of sellers. 
D)  Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers.

Question 19

Figure 7-34  
-Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the government removed the price ceiling, by how much would total producer surplus increase for those producers entering the market after the price ceiling is removed?

Accepted Answer

When the price ceiling is remo

Question 20

The marginal seller is the seller who

Accepted Answer

A)  cannot compete with the other sellers in the market. 
B)  would leave the market first if the price were any lower. 
C)  can produce at the lowest cost. 
D)  has the largest producer surplus. 
A)  cannot compete with the other sellers in the market. 
B)  would leave the market first if the price were any lower. 
C)  can produce at the lowest cost. 
D)  has the largest producer surplus.

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

Economists tend to see ticket scalping as

The marginal seller is the seller

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $200, then

Which of the following is not equal to total surplus?

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called

At the equilibrium price of a good, the good will be sold by those sellers

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

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Figure 7-13 -Refer to Figure 7-13. If the equilibrium price is $60, what is the producer surplus?

Figure 7-2 -Refer to Figure 7-2. If the price of the good is $100, then consumer surplus amounts to

Economists say that a market where goods are not consumed by those valuing the goods most highly is

Market power and externalities are examples of market failures.

Wendy is willing to pay $50 for a concert ticket and Bruce would like to receive $25. If the market price is $40 for this transaction, then the total surplus would be $15.

Welfare economics is the study of

An example of positive analysis is studying

Figure 7-27 -Refer to Figure 7-27. Sellers whose costs are less than the equilibrium price are represented by which line segment?

Producer surplus equals

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the government removed the price ceiling, by how much would total producer surplus increase for those producers entering the market after the price ceiling is removed?

The marginal seller is the seller who

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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