Question 1

Brock is willing to pay $400 for a new suit,but he is able to buy the suit for $350.His consumer surplus is

Accepted Answer

A)  $50. 
B)  $150. 
C)  $350. 
D)  $400.

Question 2

Answer each of the following questions about supply and producer surplus.
a.What is producer surplus,and how is it measured?
b.What is the relationship between the cost to sellers and the supply curve?
c.Other things equal,what happens to producer surplus when the price of a good rises? Illustrate your answer on a supply curve.

Accepted Answer

The answer of Answer each of the following questions about...

Question 3

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.

Question 4

Figure 7-9
 
-Refer to Figure 7-9.If the supply curve is S and the demand curve shifts from D to D',what is the change in producer surplus?

Accepted Answer

A)  Producer surplus increases by $3,125. 
B)  Producer surplus increases by $5,625. 
C)  Producer surplus decreases by $3,125. 
D)  Producer surplus decreases by $5,625.

Question 5

Table 7-11
 
-Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If the price is $4 but only 6 units are bought and sold,consumer surplus will be

Accepted Answer

A)  $21. 
B)  $28. 
C)  $36. 
D)  $42.

Question 6

Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

Accepted Answer

A) True 
 B)False

Question 7

Let P represent price; let Qˢ represent quantity supplied; and assume the equation of the supply curve is  .If 80 units of the good are produced and sold,then producer surplus amounts to $1,200.

Accepted Answer

A) True 
 B)False

Question 8

Figure 7-9
 
-Refer to Figure 7-9.If the supply curve is S and the demand curve shifts from D to D',what is the increase in producer surplus to existing producers?

Accepted Answer

A)  $625 
B)  $2,500 
C)  $3,125 
D)  $5,625

Question 9

Table 7-7
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-7.If the market price is $900,the combined total cost of all participating sellers is

Accepted Answer

A)  $3,700. 
B)  $2,700. 
C)  $2,250. 
D)  $1,250.

Question 10

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

Question 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

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 Alex, Barb, and Carlos 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 $0.40,then

Accepted Answer

A)  6 oranges are demanded per day, and consumer surplus amounts to $4.45. 
B)  6 oranges are demanded per day, and consumer surplus amounts to $5.10. 
C)  7 oranges are demanded per day, and consumer surplus amounts to $5.35. 
D)  7 oranges are demanded per day, and consumer surplus amounts to $5.50.

Question 14

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

Accepted Answer

A)  both the value of MP3 players to consumers and the cost of producing MP3 players has increased. 
B)  both the value of MP3 players to consumers and the cost of producing MP3 players has decreased. 
C)  the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased. 
D)  the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased.

Question 15

Figure 7-11
 
-Refer to Figure 7-11.At the equilibrium price,producer surplus is

Accepted Answer

A)  $200. 
B)  $400. 
C)  $450. 
D)  $900.

Question 16

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 Alex, Barb, and Carlos 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 $1.20,then the market quantity of oranges demanded per day is

Accepted Answer

A)  1. 
B)  2. 
C)  3. 
D)  4.

Question 17

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.

Question 18

If the government imposes a binding price floor in a market,then the consumer surplus in that market will increase.

Accepted Answer

A) True 
 B)False

Question 19

At any quantity,the price given by the supply curve shows the cost of the lowest-cost seller.

Accepted Answer

A) True 
 B)False

Question 20

Markets will always allocate resources efficiently.

Accepted Answer

A) True 
 B)False

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

Brock is willing to pay $400 for a new suit,but he is able to buy the suit for $350.His consumer surplus is

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

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S and the demand curve shifts from D to D',what is the change in producer surplus?

Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If the price is $4 but only 6 units are bought and sold,consumer surplus will be

Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

Let P represent price; let Qˢ represent quantity supplied; and assume the equation of the supply curve is .If 80 units of the good are produced and sold,then producer surplus amounts to $1,200.

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S and the demand curve shifts from D to D',what is the increase in producer surplus to existing producers?

Table 7-7 The following table represents the costs of five possible sellers. -Refer to Table 7-7.If the market price is $900,the combined total cost of all participating sellers is

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

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.

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

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

Figure 7-11 -Refer to Figure 7-11.At the equilibrium price,producer surplus is

The "invisible hand" refers to

If the government imposes a binding price floor in a market,then the consumer surplus in that market will increase.

At any quantity,the price given by the supply curve shows the cost of the lowest-cost seller.

Markets will always allocate resources efficiently.