Question 1

Figure 7-5 
-Refer to Figure 7-5. If the price of the good is $12, then consumer surplus is

Accepted Answer

A)   $11.
B)   $9.
C)   $13.
D)   $16.E) B) and D)
F) A) and B)

Question 2

All else equal, a decrease in demand will cause an increase in producer surplus.

Accepted Answer

A) True 
 B)False

Question 3

Welfare economics is the study of

Accepted Answer

A)   taxes and subsidies.
B)   how technology is best put to use in the production of goods and services.
C)   government welfare programs for needy people.
D)   how the allocation of resources affects economic well-being.E) B) and C)
F) A) and D)

Question 4

Figure 7-34 
-Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total consumer surplus?

Accepted Answer

Total consumer surpl...

Question 5

If the government removes a binding price ceiling in a market, then the producer surplus in that market will increase.

Accepted Answer

A) True 
 B)False

Question 6

Figure 7-15 
-Refer to Figure 7-15. When the price is P2, producer surplus is

Accepted Answer

A)   A.
B)   A+C.
C)   A+B+C.
D)   D+G.E) A) and D)
F) A) and B)

Question 7

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.E) B) and D)
F) B) and C)

Question 8

When a buyer's willingness to pay for a good is equal to the price of the good, the

Accepted Answer

A)   buyer's consumer surplus for that good is maximized.
B)   buyer will buy as much of the good as the buyer's budget allows.
C)   price of the good exceeds the value that the buyer places on the good.
D)   buyer is indifferent between buying the good and not buying it.E) All of the above
F) None of the above

Question 9

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.E) B) and C)
F) None of the above

Question 10

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 11

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
 
-Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Accepted Answer

A)   $0 or slightly more.
B)   $10 or slightly less.
C)   $30 or slightly more.
D)   $45 or slightly less.E) B) and D)
F) None of the above

Question 12

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's willingness to pay is

Accepted Answer

A)   $500.
B)   $3,000.
C)   $3,500.
D)   $6,500.E) A) and D)
F) A) and B)

Question 13

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

Accepted Answer

A)   supply and demand are both limited.
B)   supply is limited and demand is not limited.
C)   supply is limited and demand is not limited.
D)   supply and demand are both not limited.E) None of the above
F) All of the above

Question 14

Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market.

Accepted Answer

A) True 
 B)False

Question 15

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is

Accepted Answer

A)   $650.
B)   $150.
C)   $250.
D)   $400.E) None of the above
F) A) and C)

Question 16

Figure 7-26 
-Refer to Figure 7-26. At the equilibrium price, consumer surplus is

Accepted Answer

A)   $600.
B)   $900.
C)   $1,500.
D)   $1,800.E) A) and D)
F) A) and C)

Question 17

David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is

Accepted Answer

A)   $-15.
B)   $20.
C)   $30.
D)   $75.E) B) and C)
F) B) and D)

Question 18

Table 7-17
 
-Refer to Table 7-17. 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.E) B) and C)
F) C) and D)

Question 19

For any given quantity, the price on a demand curve represents the marginal buyer's willingness to pay.

Accepted Answer

A) True 
 B)False

Question 20

Many economists believe that restrictions against ticket scalping result in each of the following except

Accepted Answer

A)   a smaller audience for cultural and sporting events.
B)   shorter lines at cultural and sporting events.
C)   less tax revenue for the state.
D)   an increase in ticket prices.E) All of the above
F) B) and C)

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

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's willingness to pay is

Correct Answer
verified

Figure 7-26 -Refer to Figure 7-26. At the equilibrium price, consumer surplus is

Correct Answer
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Figure 7-15 -Refer to Figure 7-15. When the price is P2, producer surplus is

Correct Answer
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Many economists believe that restrictions against ticket scalping result in each of the following except

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

Correct Answer
verified

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Correct Answer
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Table 7-17 -Refer to Table 7-17. At a price of $2.00, total surplus is

Correct Answer
verified

Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market.

Correct Answer
verified

If the government removes a binding price ceiling in a market, then the producer surplus in that market will increase.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Figure 7-34 -Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total consumer surplus?

Correct Answer
verified
Total consumer surpl...
View Answer

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

Correct Answer
verified

Figure 7-5 -Refer to Figure 7-5. If the price of the good is $12, then consumer surplus is

Correct Answer
verified

When a buyer's willingness to pay for a good is equal to the price of the good, the

Correct Answer
verified

Correct Answer
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For any given quantity, the price on a demand curve represents the marginal buyer's willingness to pay.

Correct Answer
verified

Welfare economics is the study of

Correct Answer
verified

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is

Correct Answer
verified

All else equal, a decrease in demand will cause an increase in producer surplus.

Correct Answer
verified

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

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's willingness to pay is

Correct AnswerverifiedShow Answer

Figure 7-26 -Refer to Figure 7-26. At the equilibrium price, consumer surplus is

Correct AnswerverifiedShow Answer

Figure 7-15 -Refer to Figure 7-15. When the price is P2, producer surplus is

Correct AnswerverifiedShow Answer

Many economists believe that restrictions against ticket scalping result in each of the following except

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Correct AnswerverifiedShow Answer

Table 7-17 -Refer to Table 7-17. At a price of $2.00, total surplus is

Correct AnswerverifiedShow Answer

Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market.

Correct AnswerverifiedShow Answer

If the government removes a binding price ceiling in a market, then the producer surplus in that market will increase.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 7-34 -Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total consumer surplus?

Correct AnswerverifiedTotal consumer surpl...View AnswerShow Answer

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

Correct AnswerverifiedShow Answer

Figure 7-5 -Refer to Figure 7-5. If the price of the good is $12, then consumer surplus is

Correct AnswerverifiedShow Answer

When a buyer's willingness to pay for a good is equal to the price of the good, the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For any given quantity, the price on a demand curve represents the marginal buyer's willingness to pay.

Correct AnswerverifiedShow Answer

Welfare economics is the study of

Correct AnswerverifiedShow Answer

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is

Correct AnswerverifiedShow Answer

All else equal, a decrease in demand will cause an increase in producer surplus.

Correct AnswerverifiedShow Answer

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Total consumer surpl...
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