Question 1

Table 7-10
The following table represents the costs of five possible sellers.
Seller
Cost
Abby
$1,600
Bobby
$1,300
Dianne
$1,100
Evaline
$900
Carlos
$800
-Refer to Table 7-10. If the market price is $1,400, the combined total cost of all participating sellers is

Accepted Answer

A) $5,700. 
B) $1,500. 
C) $1,400. 
D) $4,100.

Question 2

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 3

If the government allowed a free market in organs for transplant there would be

Accepted Answer

A) a decrease in the shortage of organs for transplant. 
B) a decrease in producer surplus. 
C) an decrease in consumer surplus 
D) an increase in the waiting period for transplant organs.

Question 4

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.

Question 5

Which of the following will cause an increase in consumer surplus?

Accepted Answer

A) an increase in the production cost of the good 
B) a technological improvement in the production of the good 
C) a decrease in the number of sellers of the good 
D) the imposition of a binding price floor in the market

Question 6

Table 7-7 
-Refer to Table 7-7. You have an extra ticket to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the ticket. Who makes the winning bid, and what does he offer to pay for the ticket?

Accepted Answer

A) Michael; $501 
B) Michael; more than $400 but less than or equal to $500 
C) Earvin; $400 
D) Earvin; more than $350 but less than or equal to $400

Question 7

Welfare economics is the study of

Accepted Answer

A) the well-being of less fortunate people. 
B) welfare programs in the United States. 
C) how the allocation of resources affects economic well-being. 
D) the effect of income redistribution on work effort.

Question 8

If the demand for leather decreases, producer surplus in the leather market

Accepted Answer

A) increases. 
B) decreases. 
C) remains the same. 
D) may increase, decrease, or remain the same.

Question 9

Table 7-9
The only four consumers in a market have the following willingness to pay for a good: 
-Refer to Table 7-9. If there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the good will sell for

Accepted Answer

A) $12 or slightly less 
B) $15 or slightly more 
C) $19 or slightly more 
D) $27 or slightly less

Question 10

Market power and externalities are examples of

Accepted Answer

A) laissez-faire economics. 
B) public policy. 
C) market failure. 
D) welfare economics.

Question 11

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

Accepted Answer

A) $2.00 each. 
B) $0.50 each. 
C) $3.50 each. 
D) $5.00 each.

Question 12

Figure 7-23 
-Refer to Figure 7-23. The equilibrium price is

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P4.

Question 13

Scenario 7-2
Suppose market demand and market supply are given by the equations: 
-Refer to Scenario 7-2. How much is total consumer surplus at the equilibrium price in this market?

Accepted Answer

The answer of Scenario 7-2
Suppose market demand and market supply...

Question 14

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

Accepted Answer

A) the imposition of a binding price ceiling in the market 
B) an increase in the number of buyers of the good 
C) income increases and buyers consider the good to be normal 
D) the price of a complement decreases

Question 15

Figure 7-25 
-Refer to Figure 7-25. At the equilibrium price, total surplus is

Accepted Answer

A) $288. 
B) $576. 
C) $1,152. 
D) $2,304.

Question 16

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.

Question 17

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

Accepted Answer

A) total surplus. 
B) producer surplus. 
C) consumer surplus. 
D) profits.

Question 18

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. 
-Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good?

Accepted Answer

A) all five individuals 
B) Megan, Mallory and Audrey 
C) David, Laura and Megan 
D) David and Laura

Question 19

Figure 7-23 
-Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

Accepted Answer

A) A+B+C. 
B) A+B+D+F. 
C) A+B+C+D+H+F. 
D) A+B+C+D+H+F+G+I.

Question 20

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.

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

Table 7-10 The following table represents the costs of five possible sellers. Seller Cost Abby $1,600 Bobby $1,300 Dianne $1,100 Evaline $900 Carlos $800 -Refer to Table 7-10. If the market price is $1,400, the combined total cost of all participating sellers is

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

If the government allowed a free market in organs for transplant there would be

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

Which of the following will cause an increase in consumer surplus?

Welfare economics is the study of

If the demand for leather decreases, producer surplus in the leather market

Table 7-9 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-9. If there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the good will sell for

Market power and externalities are examples of

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

Figure 7-23 -Refer to Figure 7-23. The equilibrium price is

Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. How much is total consumer surplus at the equilibrium price in this market?

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

Figure 7-25 -Refer to Figure 7-25. At the equilibrium price, total surplus is

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

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

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good?

Figure 7-23 -Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

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