Question 1

Consumer surplus measures the benefit to buyers of participating in a market.

Accepted Answer

A) True 
 B)False

Question 2

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
  
-Refer to Table 7-3. If the market price for the good is $20, who will purchase the good?

Accepted Answer

A)  Ming-la only 
B)  Carlos and Quilana only 
C)  Quilana and Wilbur only 
D)  Quilana, Wilbur, and Ming-la only 
A)  Ming-la only 
B)  Carlos and Quilana only 
C)  Quilana and Wilbur only 
D)  Quilana, Wilbur, and Ming-la only

Question 3

Figure 7-22  
-Refer to Figure 7-22. If 110 units of the good are bought and sold, then

Accepted Answer

A)  the marginal cost to sellers is equal to the marginal value to buyers. 
B)  the marginal value to buyers is greater than the marginal cost to sellers. 
C)  the marginal cost to buyers is greater than marginal value to sellers. 
D)  producer surplus is greater than consumer surplus. 
A)  the marginal cost to sellers is equal to the marginal value to buyers. 
B)  the marginal value to buyers is greater than the marginal cost to sellers. 
C)  the marginal cost to buyers is greater than marginal value to sellers. 
D)  producer surplus is greater than consumer surplus.

Question 4

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Accepted Answer

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

Question 5

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 6

Figure 7-17  
-Refer to Figure 7-17. Suppose the market starts out in equilibrium with demand curve D and supply curve S. Next, suppose demand shifts left so as to decrease the quantity demanded by 20 units at every price. What is the change in producer surplus as a result of this demand shift?

Accepted Answer

A)  $80 
B)  $160 
C)  $240 
D)  $320 
A)  $80 
B)  $160 
C)  $240 
D)  $320

Question 7

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 change?

Accepted Answer

Total producer surplus with th

Question 8

Table 7-17
  
-Refer to Table 7-17. The equilibrium price is

Accepted Answer

A)  $10.00. 
B)  $8.00. 
C)  $6.00. 
D)  $4.00. 
A)  $10.00. 
B)  $8.00. 
C)  $6.00. 
D)  $4.00.

Question 9

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 consumer surplus amounts to

Accepted Answer

A)  $0.60. 
B)  $1.20. 
C) $1.40. 
D)  $3.40 
A)  $0.60. 
B)  $1.20. 
C) $1.40. 
D)  $3.40

Question 10

Figure 7-32  
-Refer to Figure 7-32. If the government imposed a price ceiling at $20 in this market, how much are consumer surplus, producer surplus, and total surplus?

Accepted Answer

Consumer surplus is

Question 11

Table 7-15
  
-Refer to Table 7-15. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. Which of the following graphs represents the market supply curve?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 12

Even though participants in the economy are motivated by self-interest, the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)  $5,000. 
B)  $2,500. 
C)  $3,500. 
D)  $1,750. 
A)  $5,000. 
B)  $2,500. 
C)  $3,500. 
D)  $1,750.

Question 14

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 $0.65, then consumer surplus amounts to

Accepted Answer

A)  $3.90. 
B)  $6.75. 
C)  $3.60. 
D)  $7.50. 
A)  $3.90. 
B)  $6.75. 
C)  $3.60. 
D)  $7.50.

Question 15

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
  
-Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Accepted Answer

A)  $0 or slightly more. 
B)  $10 or slightly less. 
C)  $30 or slightly more. 
D)  $45 or slightly less. 
A)  $0 or slightly more. 
B)  $10 or slightly less. 
C)  $30 or slightly more. 
D)  $45 or slightly less.

Question 16

Which of the following events would increase producer surplus?

Accepted Answer

A)  Sellers' costs stay the same and the price of the good increases. 
B)  Sellers' costs increase and the price of the good stays the same. 
C)  Sellers' costs increase and the price of the good decreases. 
D)  All of the above are correct. 
A)  Sellers' costs stay the same and the price of the good increases. 
B)  Sellers' costs increase and the price of the good stays the same. 
C)  Sellers' costs increase and the price of the good decreases. 
D)  All of the above are correct.

Question 17

Total surplus is equal to

Accepted Answer

A)  value to buyers - profit to sellers. 
B)  value to buyers - cost to sellers. 
C)  consumer surplus x producer surplus. 
D)  consumer surplus + producer surplus) x equilibrium quantity. 
A)  value to buyers - profit to sellers. 
B)  value to buyers - cost to sellers. 
C)  consumer surplus x producer surplus. 
D)  consumer surplus + producer surplus) x equilibrium quantity.

Question 18

Figure 7-1  
-Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to

Accepted Answer

A)  $50. 
B)  $100. 
C)  $150. 
D)  $200. 
A)  $50. 
B)  $100. 
C)  $150. 
D)  $200.

Question 19

The "invisible hand" refers to

Accepted Answer

A)  the marketplace guiding the self-interests of market participants into promoting general economic well-being. 
B)  the fact that social planners sometimes have to intervene, even in perfectly competitive markets, to make those markets more efficient. 
C)  the equality that results from market forces allocating the goods produced in the market. 
D)  the automatic maximization of consumer surplus in free markets. 
A)  the marketplace guiding the self-interests of market participants into promoting general economic well-being. 
B)  the fact that social planners sometimes have to intervene, even in perfectly competitive markets, to make those markets more efficient. 
C)  the equality that results from market forces allocating the goods produced in the market. 
D)  the automatic maximization of consumer surplus in free markets.

Question 20

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.

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

Consumer surplus measures the benefit to buyers of participating in a market.

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If the market price for the good is $20, who will purchase the good?

Figure 7-22 -Refer to Figure 7-22. If 110 units of the good are bought and sold, then

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Inefficiency exists in an economy when a good is

Figure 7-17 -Refer to Figure 7-17. Suppose the market starts out in equilibrium with demand curve D and supply curve S. Next, suppose demand shifts left so as to decrease the quantity demanded by 20 units at every price. What is the change in producer surplus as a result of this demand shift?

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 change?

Table 7-17 -Refer to Table 7-17. The equilibrium price is

Figure 7-32 -Refer to Figure 7-32. If the government imposed a price ceiling at $20 in this market, how much are consumer surplus, producer surplus, and total surplus?

Table 7-15 -Refer to Table 7-15. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. Which of the following graphs represents the market supply curve?

Even though participants in the economy are motivated by self-interest, the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.

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

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Which of the following events would increase producer surplus?

Total surplus is equal to

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to

The "invisible hand" refers to

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?

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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