Question 1

Table 7-16 
-Refer to Table 7-16. At a price of $2.00, total surplus is

Accepted Answer

A) larger than it would be at the equilibrium price. 
B) smaller than it would be at the equilibrium price. 
C) the same as it would be at the equilibrium price. 
D) There is insufficient information to make this determination.

Question 2

Figure 7-34 
-Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase for those consumers who enter the market after the price floor is removed?

Accepted Answer

The answer of Figure 7-34 
-Refer to Figure 7-34. Suppose...

Question 3

Consumer surplus is the

Accepted Answer

A) amount of a good consumers get without paying anything. 
B) amount a consumer pays minus the amount the consumer is willing to pay. 
C) amount a consumer is willing to pay minus the amount the consumer actually pays. 
D) value of a good to a consumer.

Question 4

Figure 7-33 
-Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total consumer surplus in this market at the new equilibrium price?

Accepted Answer

The answer of Figure 7-33 
-Refer to Figure 7-33. Suppose...

Question 5

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 $0.90, then the market quantity of oranges demanded per day is

Accepted Answer

A) 5. 
B) 2. 
C) 3. 
D) 4.

Question 6

Total surplus in a market is equal to

Accepted Answer

A) value to buyers - amount paid by buyers. 
B) amount received by sellers - costs of sellers. 
C) value to buyers - costs of sellers. 
D) amount received by sellers - amount paid by buyers.

Question 7

Figure 7-18 
-Refer to Figure 7-18. Total surplus amounts to $500 if consumer surplus amounts to

Accepted Answer

A) $290 and if the price of the good is $150. 
B) $300 and if the price of the good is $130. 
C) $275 and if the price of the good is $160. 
D) $400 and if the price of the good is $100.

Question 8

If the cost of producing sofas decreases, then consumer surplus in the sofa market will

Accepted Answer

A) increase. 
B) decrease. 
C) remain constant. 
D) increase for some buyers and decrease for other buyers.

Question 9

Table 7-12
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. 
-Refer to Table 7-12. You wish to purchase 10 piano lessons for yourself and for your brother, so you take bids from each of the sellers. You will take lessons at the same time, so one teacher cannot provide lessons to both of you. You must pay the same price for both sets of lessons, and you will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept?

Accepted Answer

A) $351 
B) $349 
C) $201 
D) $199

Question 10

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.

Question 11

Figure 7-27 
-Refer to Figure 7-27. Sellers whose costs are less than the equilibrium price are represented by which line segment?

Accepted Answer

A) AC. 
B) CK. 
C) BC. 
D) CH.

Question 12

The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate

Accepted Answer

A) increases, and producer surplus increases. 
B) increases, and producer surplus decreases. 
C) decreases, and producer surplus increases. 
D) decreases, and producer surplus decreases.

Question 13

Figure 7-1 
-Refer to Figure 7-1. The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

Accepted Answer

A) $200. 
B) $150. 
C) $125. 
D) $100.

Question 14

Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software?

Accepted Answer

A) $50. 
B) $150. 
C) $200. 
D) $350.

Question 15

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.

Question 16

Figure 7-22 
-Refer to Figure 7-22. If 40 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 sellers is greater than the marginal value to buyers. 
D) producer surplus would be greater than consumer surplus.

Question 17

A seller's willingness to sell is

Accepted Answer

A) measured by the seller's cost of production. 
B) related to her supply curve, just as a buyer's willingness to buy is related to his demand curve. 
C) less than the price received if producer surplus is a positive number. 
D) All of the above are correct.

Question 18

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.

Question 19

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window-cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $100.

Accepted Answer

A) True 
 B)False

Question 20

An example of normative analysis is studying

Accepted Answer

A) how market forces produce equilibrium. 
B) surpluses and shortages. 
C) whether equilibrium outcomes are socially desirable. 
D) income distributions.

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

Table 7-16 -Refer to Table 7-16. At a price of $2.00, total surplus is

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase for those consumers who enter the market after the price floor is removed?

Consumer surplus is the

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total consumer surplus in this market at the new equilibrium price?

Total surplus in a market is equal to

Figure 7-18 -Refer to Figure 7-18. Total surplus amounts to $500 if consumer surplus amounts to

If the cost of producing sofas decreases, then consumer surplus in the sofa market will

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

Figure 7-27 -Refer to Figure 7-27. Sellers whose costs are less than the equilibrium price are represented by which line segment?

The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate

Figure 7-1 -Refer to Figure 7-1. The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software?

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

Figure 7-22 -Refer to Figure 7-22. If 40 units of the good are bought and sold, then

A seller's willingness to sell is

An example of positive analysis is studying

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window-cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $100.

An example of normative analysis is studying