Question 1

Which of the following is correct?

Accepted Answer

A)  Efficiency deals with the size of the economic pie, and equality deals with how fairly the pie is sliced. 
B)  Equality can be judged on positive grounds whereas efficiency requires normative judgments. 
C)  Efficiency is more difficult to evaluate than equality. 
D)  Equality and efficiency are both maximized in a society when total surplus is maximized.

Question 2

Figure 7-19 
-Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

Accepted Answer

A)  $187.50. 
B)  $125.00. 
C)  $250.00. 
D)  $266.67.

Question 3

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 4

Table 7-17
 
-Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Accepted Answer

A)  $44. 
B)  $56. 
C)  $72. 
D)  $96.

Question 5

Figure 7-31 
-Refer to Figure 7-31. If the market equilibrium price is $35, how much is total producer surplus in this market?

Accepted Answer

The answer of Figure 7-31 
-Refer to Figure 7-31. If...

Question 6

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is likely to occur?

Accepted Answer

A)  The price of kidneys would rise to balance supply and demand. 
B)  The gains from trade would make both buyers and sellers better off. 
C)  Thousands of lives would be saved. 
D)  All of the above are correct.

Question 7

On a graph, the area below a demand curve and above the price measures

Accepted Answer

A)  producer surplus. 
B)  consumer surplus. 
C)  deadweight loss. 
D)  willingness to pay.

Question 8

Figure 7-23 
-Refer to Figure 7-23. If the price were P3, consumer surplus would be represented by the area

Accepted Answer

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

Question 9

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 increases from $0.80 to $1.05, then consumer surplus

Accepted Answer

A)  increases by $0.75. 
B)  decreases by $0.95. 
C)  decreases by $0.75. 
D)  decreases by $1.00.

Question 10

Figure 7-16 
-Refer to Figure 7-16. Suppose the price of the good is $450. Then, on the first unit of the good that is sold, producer surplus is

Accepted Answer

A)  $250, and on the second unit of the good that is sold, producer surplus is $100. 
B)  $250, and on the second unit of the good that is sold, producer surplus is $150. 
C)  $350, and on the second unit of the good that is sold, producer surplus is $100. 
D)  $350, and on the second unit of the good that is sold, producer surplus is $150.

Question 11

Figure 7-28 
-Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers

Accepted Answer

A)  and the marginal cost to sellers are both P2. 
B)  is P2, and the marginal cost to sellers is P3. 
C)  and the marginal cost to sellers are both P3. 
D)  is P3, and the marginal cost to sellers is P2.

Question 12

When demand increases so that market price increases, producer surplus increases because 1) producer surplus received by existing sellers increases, and 2) new sellers enter the market.

Accepted Answer

A) True 
 B)False

Question 13

Figure 7-1 
-Refer to Figure 7-1. If the price of the good is $150, then consumer surplus amounts to

Accepted Answer

A)  $150. 
B)  $200. 
C)  $250. 
D)  $300.

Question 14

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

Accepted Answer

A)  profits and costs to firms 
B)  consumer and producer surplus 
C)  the equilibrium price and quantity 
D)  incomes of and prices paid by buyers

Question 15

Figure 7-22 
-Refer to Figure 7-22. If the price decreases from $80 to $70 due to a shift in the supply curve, consumer surplus increases by

Accepted Answer

A)  $250. 
B)  $750. 
C)  $1000. 
D)  $500.

Question 16

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 17

Figure 7-15 
-Refer to Figure 7-15. When the price is P1, producer surplus is

Accepted Answer

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

Question 18

Tomato sauce and spaghetti noodles are complementary goods. A decrease in the price of tomatoes will

Accepted Answer

A)  increase consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles. 
B)  increase consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles. 
C)  decrease consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles. 
D)  decrease consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles.

Question 19

Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then producer surplus will

Accepted Answer

A)  $325. 
B)  $100. 
C)  $300. 
D)  $200.

Question 20

At the equilibrium price of a good, the good will be sold by those sellers

Accepted Answer

A)  whose cost is more than price. 
B)  whose cost is less than price. 
C)  that can produce the good. 
D)  enter the market first.

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

Which of the following is correct?

Figure 7-19 -Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

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

Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price is $35, how much is total producer surplus in this market?

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is likely to occur?

On a graph, the area below a demand curve and above the price measures

Figure 7-23 -Refer to Figure 7-23. If the price were P3, consumer surplus would be represented by the area

Figure 7-16 -Refer to Figure 7-16. Suppose the price of the good is $450. Then, on the first unit of the good that is sold, producer surplus is

Figure 7-28 -Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers

When demand increases so that market price increases, producer surplus increases because 1) producer surplus received by existing sellers increases, and 2) new sellers enter the market.

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $150, then consumer surplus amounts to

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

Figure 7-22 -Refer to Figure 7-22. If the price decreases from $80 to $70 due to a shift in the supply curve, consumer surplus increases by

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?

Figure 7-15 -Refer to Figure 7-15. When the price is P1, producer surplus is

Tomato sauce and spaghetti noodles are complementary goods. A decrease in the price of tomatoes will

Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then producer surplus will

At the equilibrium price of a good, the good will be sold by those sellers