Question 1

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

Accepted Answer

A)  $6. 
B)  $2. 
C)  $8. 
D)  $4. 
A)  $6. 
B)  $2. 
C)  $8. 
D)  $4. C

Question 2

Producer 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. C

Question 3

Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then the new producer surplus will be

Accepted Answer

A)  $200. 
B)  $100. 
C)  $125. 
D)  $250. 
A)  $200. 
B)  $100. 
C)  $125. 
D)  $250. B

Question 4

Market power refers to the

Accepted Answer

A)  side effects that may occur in a market. 
B)  government regulations imposed on the sellers in a market. 
C)  ability of market participants to influence price. 
D)  forces of supply and demand in determining equilibrium price. 
A)  side effects that may occur in a market. 
B)  government regulations imposed on the sellers in a market. 
C)  ability of market participants to influence price. 
D)  forces of supply and demand in determining equilibrium price.

Question 5

Figure 7-16  
-Refer to Figure 7-16. Suppose the price of the good is $400. Then, on the first unit of the good that is sold, producer surplus amounts to

Accepted Answer

A)  $200. 
B)  $300. 
C)  $400. 
D)  $450. 
A)  $200. 
B)  $300. 
C)  $400. 
D)  $450.

Question 6

Willingness to pay

Accepted Answer

A)  measures the value that a buyer places on a good. 
B)  is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C)  is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D)  is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
A)  measures the value that a buyer places on a good. 
B)  is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C)  is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D)  is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

Question 7

Table 7-6
For each of three potential buyers of apples, the table displays the willingness to pay for the first three apples of the day. Assume Xavier, Yadier, and Zavi are the only three buyers of apples, and only three apples can be supplied per day.
  
-Refer to Table 7-6. If the market price of an apple is $1.40, then the market quantity of apples demanded per day is

Accepted Answer

A)  1. 
B)  2. 
C)  3. 
D)  4. 
A)  1. 
B)  2. 
C)  3. 
D)  4.

Question 8

Figure 7-33  
-Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?

Accepted Answer

Total surp

Question 9

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. If Firm B produces a monitor that David buys, then the market outcome illustrates which of the following principles? i) Free markets allocate the supply of goods to the buyers who value them most highly, as measured by their willingness to pay.
Ii) Free markets allocate the demand for goods to the sellers who can produce them at the least cost.

Accepted Answer

A)  i) only 
B)  ii) only 
C)  both i) and ii) 
D)  neither i) nor ii) 
A)  i) only 
B)  ii) only 
C)  both i) and ii) 
D)  neither i) nor ii)

Question 10

Figure 7-19  
-Refer to Figure 7-19. At the equilibrium price, total surplus is

Accepted Answer

A)  $125. 
B)  $450. 
C)  $250. 
D)  $500. 
A)  $125. 
B)  $450. 
C)  $250. 
D)  $500.

Question 11

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 12

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

Accepted Answer

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

Question 13

Suppose the market demand curve for a good passes through the point quantity demanded = 100, price = $25). If there are five buyers in the market, then

Accepted Answer

A)  the marginal buyer's willingness to pay for the 100th unit of the good is $25. 
B)  the sum of the five buyers' willingness to pay for the 100th unit of the good is $25. 
C)  the average of the five buyers' willingness to pay for the 100th unit of the good is $25. 
D)  all of the five buyers are willing to pay at least $25 for the 100th unit of the good. 
A)  the marginal buyer's willingness to pay for the 100th unit of the good is $25. 
B)  the sum of the five buyers' willingness to pay for the 100th unit of the good is $25. 
C)  the average of the five buyers' willingness to pay for the 100th unit of the good is $25. 
D)  all of the five buyers are willing to pay at least $25 for the 100th unit of the good.

Question 14

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit . We know that

Accepted Answer

A)  the equilibrium price of good x is somewhere between $35 and $40. 
B)  the equilibrium quantity of good x exceeds 500 units. 
C)  500 units is not an efficient quantity of good x. 
D)  All of the above are correct. 
A)  the equilibrium price of good x is somewhere between $35 and $40. 
B)  the equilibrium quantity of good x exceeds 500 units. 
C)  500 units is not an efficient quantity of good x. 
D)  All of the above are correct.

Question 15

Corn chips and potato chips are substitutes. Good weather that sharply increases the corn harvest would

Accepted Answer

A)  increase consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips. 
B)  increase consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips. 
C)  decrease consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips. 
D)  decrease consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips. 
A)  increase consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips. 
B)  increase consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips. 
C)  decrease consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips. 
D)  decrease consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips.

Question 16

Figure 7-26  
-Refer to Figure 7-26. If the government imposes a price floor of $90 in this market, then consumer surplus will be

Accepted Answer

A)  $225. 
B)  $450. 
C)  $975. 
D)  $1,350 
A)  $225. 
B)  $450. 
C)  $975. 
D)  $1,350

Question 17

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 18

Total surplus = Value to buyers - Costs to sellers.

Accepted Answer

A) True 
 B)False

Question 19

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?

Accepted Answer

A)  Firm A produces a monitor that Cassie buys. David does not purchase a monitor. 
B)  Firm A produces a monitor that David buys. 
C)  Firm B produces a monitor that Cassie buys. David does not purchase a monitor. 
D)  Firm B produces a monitor that David buys. 
A)  Firm A produces a monitor that Cassie buys. David does not purchase a monitor. 
B)  Firm A produces a monitor that David buys. 
C)  Firm B produces a monitor that Cassie buys. David does not purchase a monitor. 
D)  Firm B produces a monitor that David buys.

Question 20

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

Accepted Answer

A) True 
 B)False

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

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

Producer surplus equals the

Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then the new producer surplus will be

Market power refers to the

Figure 7-16 -Refer to Figure 7-16. Suppose the price of the good is $400. Then, on the first unit of the good that is sold, producer surplus amounts to

Willingness to pay

Figure 7-33 -Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?

Figure 7-19 -Refer to Figure 7-19. At the equilibrium price, total surplus is

An example of positive analysis is studying

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

Suppose the market demand curve for a good passes through the point quantity demanded = 100, price = $25). If there are five buyers in the market, then

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit . We know that

Corn chips and potato chips are substitutes. Good weather that sharply increases the corn harvest would

Figure 7-26 -Refer to Figure 7-26. If the government imposes a price floor of $90 in this market, then consumer surplus will be

Which of the following is not equal to total surplus?

Total surplus = Value to buyers - Costs to sellers.

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?

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

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

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

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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