Question 1

Does a zero market price mean there is no benefit to society from providing or maintaining these natural areas?
The existence of consumer surplus means that there will be a benefit to society from these areas.

Accepted Answer

The answer of Does a zero market price mean there...

Question 2

Gayle decides that she would pay as much as $3000 for a new laptop computer. She buys the computer and realises a consumer surplus of $700. How much did Gayle pay for her computer?

Accepted Answer

A)  $700 
B)  $2300 
C)  $3000 
D)  $3700

Question 3

Table C
 
-Use the information in the Table C to fill in the blanks of TableD.
Table D

Accepted Answer

The answer of Table C
 
-Use the information in the...

Question 4

Graph 7-4
 
-In Graph 7-4, at the market-clearing equilibrium, total surplus is represented by the area:

Accepted Answer

A)  A + B + C 
B)  A + B + D + F 
C)  A + B + C + D + E + F 
D)  A + B + C + D + E + F + G + H

Question 5

Which of the following would be true of the seller's cost?

Accepted Answer

A)  the seller would be eager to sell her services at a price higher than her cost 
B)  the seller would refuse to sell her services at a price lower than her cost 
C)  the seller would be indifferent about selling her services at a price equal to her cost 
D)  all of the above are true

Question 6

Economists believe that government control of markets is most often the best way to organise economic activity because they lead to an efficient allocation of resources.

Accepted Answer

A) True 
 B)False

Question 7

Out-of-pocket expenses plus the value of the seller's own resources used in production are considered to be:

Accepted Answer

A)  the seller's total revenue 
B)  the seller's consumer surplus 
C)  producer surplus 
D)  the cost of production

Question 8

Graph 7-1
 
-Refer to Graph 7-1. What area represents producer surplus when the price is P1?

Accepted Answer

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

Question 9

What are the economic arguments in favour of allowing ticket scalping?

Accepted Answer

The answer of What are the economic arguments in favour...

Question 10

When a market is in equilibrium but too high for some consumers:

Accepted Answer

A)  the government will intervene to set the correct prices 
B)  the price determines which buyers and sellers participate in the market, and those unable to afford the good will opt out 
C)  those buyers who value the good less than the price choose to buy the good 
D)  those sellers whose costs are more than the price choose to produce and sell the good

Question 11

If you pay a price exactly equal to your willingness to pay, then:

Accepted Answer

A)  your willingness to pay is less than your consumer surplus 
B) . your consumer surplus is negative 
C)  you have no consumer surplus 
D)  you place little value on the good

Question 12

Lee can sell coffee at $1 per cup. The market equilibrium price of coffee is $2.50. Suppose Lee sells 200 cups of coffee. The producer surplus captured by Lee is $500.

Accepted Answer

A) True 
 B)False

Question 13

Graph 7-5
 
-In Graph 7-5, at the quantity Q2:

Accepted Answer

A)  the market is in equilibrium 
B)  willingness to pay is greater than willingness to sell 
C)  consumer surplus plus producer surplus is maximised 
D)  willingness to pay is less than willingness to sell

Question 14

Amy buys a new dog for $150. She receives consumer surplus of $100 on her purchase. Her willingness to pay is:

Accepted Answer

A)  $50 
B)  $100 
C)  $150 
D)  $250

Question 15

The total surplus in a market equals:

Accepted Answer

A)  the value to buyers plus the amount paid by buyers 
B)  the amount received by sellers less the costs of sellers 
C)  the value to buyers less the costs of sellers 
D)  zero, because producer and consumer surplus cancel each other out

Question 16

Table 7-7
  Antonio's Pizza
 
-Based on Table 7-7, if Fred and Frieda are the only buyers in the pizza market, and Antonio's is the only seller, what is the:
a. market equilibrium price?
b. market equilibrium quantity?
c. total consumer surplus at the market equilibrium?
d. total producer surplus at the market equilibrium?
e. total benefit to society of this market?

Accepted Answer

The answer of Table 7-7
  Antonio's Pizza
 
-Based on...

Question 17

Cameron visits a sporting goods store to buy a new set of golf clubs. He is willing to pay $750 for the clubs but buys them on sale for $525. Cameron's consumer surplus from the purchase is:

Accepted Answer

A)  $225 
B)  $525 
C)  $750 
D)  $1275

Question 18

Graph 7-4
 
-In Graph 7-4, the equilibrium (market-clearing) price is:

Accepted Answer

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

Question 19

Pollution and other externalities, while bothersome, do not interfere with efficiency.

Accepted Answer

A) True 
 B)False

Question 20

Table 7-1
This table refers to five possible buyers' willingness to pay for good Z.
 
-Refer to Table 7-1. Which of the following is NOT true?

Accepted Answer

A)  the table is the demand schedule for good Z 
B)  the demand schedule represented by the table shows the willingness to pay of the marginal buyer 
C)  at a price of $4.00, total consumer surplus in the market will be $9.00 
D)  when the price is $3.50, each person will have a positive consumer surplus

Exam 7: Consumers, Producers and the Efficiency of Markets

Does a zero market price mean there is no benefit to society from providing or maintaining these natural areas? The existence of consumer surplus means that there will be a benefit to society from these areas.

Gayle decides that she would pay as much as $3000 for a new laptop computer. She buys the computer and realises a consumer surplus of $700. How much did Gayle pay for her computer?

Table C -Use the information in the Table C to fill in the blanks of TableD. Table D

Graph 7-4 -In Graph 7-4, at the market-clearing equilibrium, total surplus is represented by the area:

Which of the following would be true of the seller's cost?

Economists believe that government control of markets is most often the best way to organise economic activity because they lead to an efficient allocation of resources.

Out-of-pocket expenses plus the value of the seller's own resources used in production are considered to be:

Graph 7-1 -Refer to Graph 7-1. What area represents producer surplus when the price is P₁?

What are the economic arguments in favour of allowing ticket scalping?

When a market is in equilibrium but too high for some consumers:

If you pay a price exactly equal to your willingness to pay, then:

Lee can sell coffee at $1 per cup. The market equilibrium price of coffee is $2.50. Suppose Lee sells 200 cups of coffee. The producer surplus captured by Lee is $500.

Graph 7-5 -In Graph 7-5, at the quantity Q₂:

Amy buys a new dog for $150. She receives consumer surplus of $100 on her purchase. Her willingness to pay is:

The total surplus in a market equals:

Cameron visits a sporting goods store to buy a new set of golf clubs. He is willing to pay $750 for the clubs but buys them on sale for $525. Cameron's consumer surplus from the purchase is:

Graph 7-4 -In Graph 7-4, the equilibrium (market-clearing) price is:

Pollution and other externalities, while bothersome, do not interfere with efficiency.

Table 7-1 This table refers to five possible buyers' willingness to pay for good Z. -Refer to Table 7-1. Which of the following is NOT true?

Exam 7: Consumers, Producers and the Efficiency of Markets

Does a zero market price mean there is no benefit to society from providing or maintaining these natural areas? The existence of consumer surplus means that there will be a benefit to society from these areas.

Gayle decides that she would pay as much as $3000 for a new laptop computer. She buys the computer and realises a consumer surplus of $700. How much did Gayle pay for her computer?

Table C -Use the information in the Table C to fill in the blanks of TableD. Table D

Graph 7-4 -In Graph 7-4, at the market-clearing equilibrium, total surplus is represented by the area:

Which of the following would be true of the seller's cost?

Economists believe that government control of markets is most often the best way to organise economic activity because they lead to an efficient allocation of resources.

Out-of-pocket expenses plus the value of the seller's own resources used in production are considered to be:

Graph 7-1 -Refer to Graph 7-1. What area represents producer surplus when the price is P1?

What are the economic arguments in favour of allowing ticket scalping?

When a market is in equilibrium but too high for some consumers:

If you pay a price exactly equal to your willingness to pay, then:

Lee can sell coffee at $1 per cup. The market equilibrium price of coffee is $2.50. Suppose Lee sells 200 cups of coffee. The producer surplus captured by Lee is $500.

Graph 7-5 -In Graph 7-5, at the quantity Q2:

Amy buys a new dog for $150. She receives consumer surplus of $100 on her purchase. Her willingness to pay is:

The total surplus in a market equals:

Cameron visits a sporting goods store to buy a new set of golf clubs. He is willing to pay $750 for the clubs but buys them on sale for $525. Cameron's consumer surplus from the purchase is:

Graph 7-4 -In Graph 7-4, the equilibrium (market-clearing) price is:

Pollution and other externalities, while bothersome, do not interfere with efficiency.

Table 7-1 This table refers to five possible buyers' willingness to pay for good Z. -Refer to Table 7-1. Which of the following is NOT true?

Graph 7-1 -Refer to Graph 7-1. What area represents producer surplus when the price is P₁?

Graph 7-5 -In Graph 7-5, at the quantity Q₂: