Question 1

Figure 7-24  
-Refer to Figure 7-24. At equilibrium, consumer surplus is measured by the area

Accepted Answer

A)  AHG. 
B)  AFB. 
C)  ABD. 
D)  BDF. 
A)  AHG. 
B)  AFB. 
C)  ABD. 
D)  BDF.

Question 2

Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is pleased since she paid $8,000 for the car but would have been willing to pay $11,000 for the car. Susie's consumer surplus is $2,000.

Accepted Answer

A) True 
 B)False

Question 3

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)  $100.00 higher than it would be without the price floor. 
B)  $50.00 lower than it would be without the price floor. 
C)  $125.00 lower than it would be without the price floor. 
D)  $62.50 lower than it would be without the price floor. 
A)  $100.00 higher than it would be without the price floor. 
B)  $50.00 lower than it would be without the price floor. 
C)  $125.00 lower than it would be without the price floor. 
D)  $62.50 lower than it would be without the price floor.

Question 4

Total surplus

Accepted Answer

A)  can be used to measure a market's efficiency. 
B)  is the sum of consumer and producer surplus. 
C)  is the value to buyers minus the cost to sellers. 
D)  All of the above are correct. 
A)  can be used to measure a market's efficiency. 
B)  is the sum of consumer and producer surplus. 
C)  is the value to buyers minus the cost to sellers. 
D)  All of the above are correct.

Question 5

Figure 7-22  
-Refer to Figure 7-22. At the equilibrium price, consumer surplus is

Accepted Answer

A)  $1,000. 
B)  $2,000. 
C)  $3,500. 
D)  $500. 
A)  $1,000. 
B)  $2,000. 
C)  $3,500. 
D)  $500.

Question 6

Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to

Accepted Answer

A)  only existing sellers who now receive higher prices on the pizzas they were already selling. 
B)  only new sellers who enter the market because of the higher prices. 
C)  both existing sellers who now receive higher prices on the pizzas they were already selling and new sellers who enter the market because of the higher prices. 
D)  Producer surplus does not increase; it decreases. 
A)  only existing sellers who now receive higher prices on the pizzas they were already selling. 
B)  only new sellers who enter the market because of the higher prices. 
C)  both existing sellers who now receive higher prices on the pizzas they were already selling and new sellers who enter the market because of the higher prices. 
D)  Producer surplus does not increase; it decreases.

Question 7

As a result of a decrease in price,

Accepted Answer

A)  new buyers enter the market, increasing consumer surplus. 
B)  new buyers enter the market, decreasing consumer surplus. 
C)  existing buyers exit the market, increasing consumer surplus. 
D)  existing buyers exit the market, decreasing consumer surplus. 
A)  new buyers enter the market, increasing consumer surplus. 
B)  new buyers enter the market, decreasing consumer surplus. 
C)  existing buyers exit the market, increasing consumer surplus. 
D)  existing buyers exit the market, decreasing consumer surplus.

Question 8

Figure 7-21  
-Refer to Figure 7-21. When the price is P1, area B+C represents

Accepted Answer

A)  total surplus. 
B)  producer surplus. 
C)  consumer surplus. 
D)  None of the above is correct. 
A)  total surplus. 
B)  producer surplus. 
C)  consumer surplus. 
D)  None of the above is correct.

Question 9

Moving production from a high-cost producer to a low-cost producer will

Accepted Answer

A)  lower total surplus. 
B)  raise total surplus. 
C)  lower producer surplus. 
D)  raise producer surplus but lower consumer surplus. 
A)  lower total surplus. 
B)  raise total surplus. 
C)  lower producer surplus. 
D)  raise producer surplus but lower consumer surplus.

Question 10

Total surplus in a market is consumer surplus minus producer surplus.

Accepted Answer

A) True 
 B)False

Question 11

Refer to Table 7-12. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Accepted Answer

A)  $200. 
B)  $300. 
C)  $450. 
D)  $600. 
A)  $200. 
B)  $300. 
C)  $450. 
D)  $600.

Question 12

Figure 7-26  
-Refer to Figure 7-26. At the equilibrium price, producer surplus is

Accepted Answer

A)  $600. 
B)  $900. 
C)  $1,200. 
D)  $1,800. 
A)  $600. 
B)  $900. 
C)  $1,200. 
D)  $1,800.

Question 13

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. The bids are required to be rounded to the nearest dollar. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. Your parents have given you $450 to spend on piano lessons. You believe that the sellers with higher opportunity costs offer higher quality lessons. You want the highest quality lessons that you can afford, but you can spend any remaining money on dinner with friends. From whom will you take lessons, and how much money will you spend?

Accepted Answer

A)  Peter; $450 
B)  Cindy; $450 
C)  Greg; $401 
D)  Cindy; $401 
A)  Peter; $450 
B)  Cindy; $450 
C)  Greg; $401 
D)  Cindy; $401

Question 14

Figure 7-32  
-Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is consumer surplus?

Accepted Answer

Consumer s

Question 15

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 16

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.

Question 17

Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last tomato you bought this week, you paid a price exactly equal to your willingness to pay. Then

Accepted Answer

A)  you should buy more tomatoes before the end of the week. 
B)  you already have bought too many tomatoes this week. 
C)  your consumer surplus on the last tomato you bought is zero. 
D)  your consumer surplus on all of the tomatoes you have bought this week is zero. 
A)  you should buy more tomatoes before the end of the week. 
B)  you already have bought too many tomatoes this week. 
C)  your consumer surplus on the last tomato you bought is zero. 
D)  your consumer surplus on all of the tomatoes you have bought this week is zero.

Question 18

Consumer 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.

Question 19

Table 7-1
  
-Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product?

Accepted Answer

A)  Calvin 
B)  Calvin and Sam 
C)  Calvin, Sam, and Andrew 
D)  Calvin, Sam, Andrew, and Lori 
A)  Calvin 
B)  Calvin and Sam 
C)  Calvin, Sam, and Andrew 
D)  Calvin, Sam, Andrew, and Lori

Question 20

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Accepted Answer

A) True 
 B)False

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

Figure 7-24 -Refer to Figure 7-24. At equilibrium, consumer surplus is measured by the area

Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is pleased since she paid $8,000 for the car but would have been willing to pay $11,000 for the car. Susie's consumer surplus is $2,000.

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

Total surplus

Figure 7-22 -Refer to Figure 7-22. At the equilibrium price, consumer surplus is

Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to

As a result of a decrease in price,

Figure 7-21 -Refer to Figure 7-21. When the price is P1, area B+C represents

Moving production from a high-cost producer to a low-cost producer will

Total surplus in a market is consumer surplus minus producer surplus.

Refer to Table 7-12. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Figure 7-26 -Refer to Figure 7-26. At the equilibrium price, producer surplus is

Figure 7-32 -Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is consumer surplus?

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

The marginal seller is the seller who

Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last tomato you bought this week, you paid a price exactly equal to your willingness to pay. Then

Consumer surplus equals the

Table 7-1 -Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product?

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

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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