Question 1

Which of the following will cause a decrease in consumer surplus?

Accepted Answer

A)  an increase in the number of sellers of the good 
B)  a decrease in the production cost of the good 
C)  sellers expect the price of the good to be lower next month 
D)  the imposition of a binding price floor in the market 
A)  an increase in the number of sellers of the good 
B)  a decrease in the production cost of the good 
C)  sellers expect the price of the good to be lower next month 
D)  the imposition of a binding price floor in the market

Question 2

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

Accepted Answer

A)  consumer has consumer surplus of $5 if he buys the good. 
B)  consumer does not purchase the good. 
C)  price of the good will rise due to market forces. 
D)  market is out of equilibrium. 
A)  consumer has consumer surplus of $5 if he buys the good. 
B)  consumer does not purchase the good. 
C)  price of the good will rise due to market forces. 
D)  market is out of equilibrium.

Question 3

Ronnie operates a lawn-care service. On each day, the cost of mowing the first lawn is $15, the cost of mowing the second lawn is $25, and the cost of mowing the third lawn is $40. His producer surplus on the first three lawns of the day is $100. If Ronnie charges all customers the same price for lawn mowing, that price is

Accepted Answer

A)  $20. 
B)  $60. 
C)  $80. 
D)  $180. 
A)  $20. 
B)  $60. 
C)  $80. 
D)  $180.

Question 4

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175, the price of the tickets is $625.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following equations is not valid?

Accepted Answer

A)  Consumer surplus = Value to buyers - Amount paid by buyers 
B)  Producer surplus = Amount received by sellers - Cost to sellers 
C)  Total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers 
D)  Total surplus = Value to sellers - Cost to sellers 
A)  Consumer surplus = Value to buyers - Amount paid by buyers 
B)  Producer surplus = Amount received by sellers - Cost to sellers 
C)  Total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers 
D)  Total surplus = Value to sellers - Cost to sellers

Question 6

Figure 7-4  
-Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Accepted Answer

A)  BDF 
B)  AFG 
C)  BCGD 
D)  ABC 
A)  BDF 
B)  AFG 
C)  BCGD 
D)  ABC

Question 7

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
  
-Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Accepted Answer

A)  Quilana 
B)  Wilbur 
C)  Ming-la 
D)  All three buyers experience the same loss of consumer surplus. 
A)  Quilana 
B)  Wilbur 
C)  Ming-la 
D)  All three buyers experience the same loss of consumer surplus.

Question 8

If a market is in equilibrium, then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good.

Accepted Answer

A) True 
 B)False

Question 9

The decisions of buyers and sellers that affect people who are not participants in the market create

Accepted Answer

A)  market power. 
B)  externalities. 
C)  profiteering. 
D)  market equilibrium. 
A)  market power. 
B)  externalities. 
C)  profiteering. 
D)  market equilibrium.

Question 10

Justin builds fences for a living. Justin's out­of­pocket expenses for wood, paint, etc.) plus the value that he places

Accepted Answer

A)  producer surplus. 
B)  producer deficit. 
C)  cost of building fences. 
D)  profit. 
A)  producer surplus. 
B)  producer deficit. 
C)  cost of building fences. 
D)  profit.

Question 11

Figure 7-17  
-Refer to Figure 7-17. If the supply curve is S and the demand curve is D, what is total producer surplus at the equilibrium price?

Accepted Answer

A)  $202.50 
B)  $405 
C)  $810 
D)  $1,215 
A)  $202.50 
B)  $405 
C)  $810 
D)  $1,215

Question 12

Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is

Accepted Answer

A)  $15. 
B)  $90 
C)  $105. 
D)  $75. 
A)  $15. 
B)  $90 
C)  $105. 
D)  $75.

Question 13

Figure 7-21  
-Refer to Figure 7-21. Which area represents total surplus in the market when the price is P1?

Accepted Answer

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

Question 14

Figure 7-24  
-Refer to Figure 7-24. The equilibrium allocation of resources is

Accepted Answer

A)  efficient because total surplus is maximized at the equilibrium. 
B)  efficient because consumer surplus is maximized at the equilibrium. 
C)  inefficient because consumer surplus is larger than producer surplus at the equilibrium. 
D)  inefficient because producer surplus is not maximized. 
A)  efficient because total surplus is maximized at the equilibrium. 
B)  efficient because consumer surplus is maximized at the equilibrium. 
C)  inefficient because consumer surplus is larger than producer surplus at the equilibrium. 
D)  inefficient because producer surplus is not maximized.

Question 15

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, how much consumer surplus do consumers entering the market after the price drop receive?

Accepted Answer

The consumers enteri

Question 16

Consumer surplus

Accepted Answer

A)  is closely related to the supply curve for a product. 
B)  is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward- sloping line. 
C)  is measured using the demand curve for a product. 
D)  does not reflect economic well-being in most markets. 
A)  is closely related to the supply curve for a product. 
B)  is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward- sloping line. 
C)  is measured using the demand curve for a product. 
D)  does not reflect economic well-being in most markets.

Question 17

Table 7-1
  
-Refer to Table 7-1. If the price of the product is $110, 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 18

Suppose John's cost for performing some carpentry work is $120. If John is paid $200 for the carpentry work, what is his producer surplus?

Accepted Answer

His produc

Question 19

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 20

Table 7-1
  
-Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is

Accepted Answer

The answer of Table 7-1
  
-Refer to Table 7-1....

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

Which of the following will cause a decrease in consumer surplus?

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175, the price of the tickets is $625.

Which of the following equations is not valid?

Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

If a market is in equilibrium, then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good.

The decisions of buyers and sellers that affect people who are not participants in the market create

Justin builds fences for a living. Justin's out­of­pocket expenses for wood, paint, etc.) plus the value that he places

Figure 7-17 -Refer to Figure 7-17. If the supply curve is S and the demand curve is D, what is total producer surplus at the equilibrium price?

Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is

Figure 7-21 -Refer to Figure 7-21. Which area represents total surplus in the market when the price is P1?

Figure 7-24 -Refer to Figure 7-24. The equilibrium allocation of resources is

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, how much consumer surplus do consumers entering the market after the price drop receive?

Consumer surplus

Table 7-1 -Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product?

Suppose John's cost for performing some carpentry work is $120. If John is paid $200 for the carpentry work, what is his producer 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

Table 7-1 -Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is

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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Justin builds fences for a living. Justin's outofpocket expenses for wood, paint, etc.) plus the value that he places