Question 1

For any given quantity, the price on a demand curve represents the marginal buyer's willingness to pay.

Accepted Answer

A) True 
 B)False

Question 2

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 market price is $5.50, the consumer surplus in the market will be

Accepted Answer

A)  $3.00. 
B)  $4.50. 
C)  $15.50. 
D)  $21.00. 
A)  $3.00. 
B)  $4.50. 
C)  $15.50. 
D)  $21.00.

Question 3

Total surplus in a market will increase when the government

Accepted Answer

A)  imposes a tax on that market. 
B)  imposes a binding price floor on that market. 
C)  removes a binding price ceiling from that market. 
D)  None of the above is correct. 
A)  imposes a tax on that market. 
B)  imposes a binding price floor on that market. 
C)  removes a binding price ceiling from that market. 
D)  None of the above is correct.

Question 4

Table 7-10
The only four consumers in a market have the following willingness to pay for a good:
Buyer Willingness to Pay
  
-Refer to Table 7-10. If the market price for the good is $20, who will purchase the good?

Accepted Answer

A)  Danita only 
B)  Carolyn and Danita only 
C)  Ashleigh, Barb, and Carolyn only 
D)  All four buyers would purchase the good. 
A)  Danita only 
B)  Carolyn and Danita only 
C)  Ashleigh, Barb, and Carolyn only 
D)  All four buyers would purchase the good.

Question 5

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, what is the change in total consumer surplus in the market?

Accepted Answer

Consumer s

Question 6

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. Who experiences the largest gain in consumer surplus when the price of an orange decreases from $1.05 to $0.75?

Accepted Answer

A)  Allison 
B)  Bob 
C)  Charisse 
D)  Allison and Bob experience the same gain in consumer surplus, and Charisse's gain is zero. 
A)  Allison 
B)  Bob 
C)  Charisse 
D)  Allison and Bob experience the same gain in consumer surplus, and Charisse's gain is zero.

Question 7

In order to calculate consumer surplus in a market, we need to know willingness to pay and price.

Accepted Answer

A) True 
 B)False

Question 8

Scenario 7-2
Suppose market demand and market supply are given by the equations:  
-Refer to Scenario 7-2. How much is total surplus at the equilibrium price in this market?

Accepted Answer

Total surp

Question 9

Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise

Accepted Answer

A)  buys the dishwasher, and on her purchase she experiences a consumer surplus of $150. 
B)  buys the dishwasher, and on her purchase she experiences a consumer surplus of $-150. 
C)  does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $150. 
D)  does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $0. 
A)  buys the dishwasher, and on her purchase she experiences a consumer surplus of $150. 
B)  buys the dishwasher, and on her purchase she experiences a consumer surplus of $-150. 
C)  does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $150. 
D)  does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $0.

Question 10

Figure 7-31  
-Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the increase in producer surplus to the producers supplying units at the initial $25 price?

Accepted Answer

The increase in prod

Question 11

Ticket scalping can increase total surplus in the market for tickets to sporting events.

Accepted Answer

A) True 
 B)False

Question 12

Table 7-15
  
-Refer to Table 7-15. You and your best friend want to hire a professional photographer to take pictures of your two families. The table shows the costs of the four potential sellers in the local photography market. You and your friend take bids from the sellers. Who offers the two winning bids, and what do they offer to charge for the photography sessions?

Accepted Answer

A)  LeBron and Kobe; more than $450 but less than $600 
B)  Kevin and Steve; more than $450 but less than $600 
C)  LeBron and Kobe; more than $700 
D)  Kevin and Steve; less than $400 
A)  LeBron and Kobe; more than $450 but less than $600 
B)  Kevin and Steve; more than $450 but less than $600 
C)  LeBron and Kobe; more than $700 
D)  Kevin and Steve; less than $400

Question 13

Figure 7-8  
-Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

Accepted Answer

A)  $150. 
B)  $325. 
C)  $650. 
D)  $675. 
A)  $150. 
B)  $325. 
C)  $650. 
D)  $675.

Question 14

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
  
-Refer to Table 7-2. Which of the following is not true?

Accepted Answer

A)  At a price of $9.00, no buyer is willing to purchase Vanilla Coke. 
B)  At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not buying one. 
C)  At a price of $4.00, total consumer surplus in the market will be $9.00. 
D)  All of the above are correct. 
A)  At a price of $9.00, no buyer is willing to purchase Vanilla Coke. 
B)  At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not buying one. 
C)  At a price of $4.00, total consumer surplus in the market will be $9.00. 
D)  All of the above are correct.

Question 15

All else equal, an increase in supply will cause an increase in consumer surplus.

Accepted Answer

A) True 
 B)False

Question 16

Figure 7-6  
-Refer to Figure 7-6. At the equilibrium price, consumer surplus is

Accepted Answer

A)  $1,600. 
B)  $800. 
C)  $1,400. 
D)  $700. 
A)  $1,600. 
B)  $800. 
C)  $1,400. 
D)  $700.

Question 17

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 $40 each, then what is the total consumer surplus in the market?

Accepted Answer

A)  $90. 
B)  $30. 
C)  $70. 
D)  $110. 
A)  $90. 
B)  $30. 
C)  $70. 
D)  $110.

Question 18

Producer surplus measures the

Accepted Answer

A)  benefits to sellers of participating in a market. 
B)  costs to sellers of participating in a market. 
C)  price that buyers are willing to pay for sellers' output of a good or service. 
D)  benefit to sellers of producing a greater quantity of a good or service than buyers demand. 
A)  benefits to sellers of participating in a market. 
B)  costs to sellers of participating in a market. 
C)  price that buyers are willing to pay for sellers' output of a good or service. 
D)  benefit to sellers of producing a greater quantity of a good or service than buyers demand.

Question 19

Figure 7-13  
-Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the additional producer surplus to initial producers in the market?

Accepted Answer

A)  $1,200 
B)  $2,400 
C)  $3,600 
D)  $4,800 
A)  $1,200 
B)  $2,400 
C)  $3,600 
D)  $4,800

Question 20

Consumer surplus

Accepted Answer

A)  is the amount a buyer pays for a good minus the amount the buyer is willing to pay for it. 
B)  is represented on a supply-demand graph by the area below the price and above the demand curve. 
C)  measures the benefit sellers receive from participating in a market. 
D)  measures the benefit buyers receive from participating in a market. 
A)  is the amount a buyer pays for a good minus the amount the buyer is willing to pay for it. 
B)  is represented on a supply-demand graph by the area below the price and above the demand curve. 
C)  measures the benefit sellers receive from participating in a market. 
D)  measures the benefit buyers receive from participating in a market.

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

For any given quantity, the price on a demand curve represents the marginal buyer's willingness to pay.

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 market price is $5.50, the consumer surplus in the market will be

Total surplus in a market will increase when the government

Table 7-10 The only four consumers in a market have the following willingness to pay for a good: Buyer Willingness to Pay -Refer to Table 7-10. If the market price for the good is $20, who will purchase the good?

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, what is the change in total consumer surplus in the market?

In order to calculate consumer surplus in a market, we need to know willingness to pay and price.

Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. How much is total surplus at the equilibrium price in this market?

Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise

Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the increase in producer surplus to the producers supplying units at the initial $25 price?

Ticket scalping can increase total surplus in the market for tickets to sporting events.

Figure 7-8 -Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. Which of the following is not true?

All else equal, an increase in supply will cause an increase in consumer surplus.

Figure 7-6 -Refer to Figure 7-6. At the equilibrium price, consumer 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 $40 each, then what is the total consumer surplus in the market?

Producer surplus measures the

Figure 7-13 -Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the additional producer surplus to initial producers in the market?

Consumer surplus

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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