Question 1

Figure 7-26 
-Refer to Figure 7-26. If the government imposes a price floor of $90 in this market, then consumer surplus will be

Accepted Answer

A)   $225.
B)   $450.
C)   $975.
D)   $1,350E) C) and D)
F) A) and B)

Question 2

Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15. Chuck values the dog show at

Accepted Answer

A)   $5.
B)   $15.
C)   $20.
D)   $35.E) A) and C)
F) B) and C)

Question 3

Total surplus in a market can be measured as the area below the supply curve plus the area above the demand curve, up to the point of equilibrium.

Accepted Answer

A) True 
 B)False

Question 4

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Accepted Answer

A)   Dallas's consumer surplus would be unaffected.
B)   Dallas's consumer surplus would increase.
C)   Dallas's consumer surplus would decrease.
D)   Dallas would be wise to buy fewer strawberries than before.E) B) and C)
F) A) and D)

Question 5

Figure 7-11 
-Refer to Figure 7-11. 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)   $5,625E) None of the above
F) A) and B)

Question 6

Figure 7-31 
-Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the increase in producer surplus to the producers supplying units at the initial $25 price?

Accepted Answer

The increase in prod...

Question 7

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) None of the above

Question 8

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.E) A) and B)
F) A) and C)

Question 9

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) C) and D)

Question 10

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.E) A) and C)
F) All of the above

Question 11

Table 7-17 
-Refer to Table 7-17. The equilibrium price is

Accepted Answer

A)   $10.00.
B)   $8.00.
C)   $6.00.
D)   $4.00.E) B) and C)
F) B) and D)

Question 12

Table 7-14
The only four producers in a market have the following costs: 
-Refer to Table 7-14. If Abbey, Bev, and Carl sell the good, and the resulting producer surplus is $55 altogether, then the price must have been

Accepted Answer

A)   $40.
B)   $50.
C)   $60.
D)   $70.E) B) and C)
F) A) and C)

Question 13

The cost of production plus producer surplus is the price a seller is paid.

Accepted Answer

A) True 
 B)False

Question 14

Figure 7-27 
-Refer to Figure 7-27. If the government mandated a price increase from P1 to a higher price, then

Accepted Answer

A)   total surplus would decrease.
B)   consumer surplus would increase.
C)   total surplus would increase, since producer surplus would increase.
D)   total surplus would remain unchanged.E) A) and B)
F) B) and C)

Question 15

If the United States legally allowed for a market in transplant organs, it is estimated that one kidney would sell for at least $100,000.

Accepted Answer

A) True 
 B)False

Question 16

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 marketE) A) and C)
F) C) and D)

Question 17

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

Accepted Answer

A)   maximizes costs of the seller.
B)   maximizes tax revenue for the government.
C)   maximizes the combined welfare of buyers and sellers.
D)   minimizes the expenditure of buyers.E) B) and D)
F) B) and C)

Question 18

Total surplus measures the

Accepted Answer

A)   loss to buyers from paying higher prices plus the benefit to sellers from receiving lower prices.
B)   buyers' willingness to pay less the sellers' costs.
C)   fairness of the distribution of resources in society.
D)   value to the government of goods and services sold in society.E) All of the above
F) None of the above

Question 19

Which of the following is not equal to total surplus?

Accepted Answer

A)   consumer surplus - producer surplus
B)   buyers' willingness to pay ­ sellers' costs
C)   value to buyers - amount paid by buyers + amount received by sellers - cost to sellers
D)   value to buyers - cost to sellersE) A) and B)
F) A) and C)

Question 20

Which of the following statements is not correct?

Accepted Answer

A)   A seller would be eager to sell her product at a price higher than her cost.
B)   A seller would refuse to sell her product at a price lower than her cost.
C)   A seller would be indifferent about selling her product at a price equal to her cost.
D)   Since sellers cannot set the price for their product, they must be willing to sell their product at any price.E) None of the above
F) A) and B)

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

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

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

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

Correct Answer
verified

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

Correct Answer
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Figure 7-26 -Refer to Figure 7-26. If the government imposes a price floor of $90 in this market, then consumer surplus will be

Correct Answer
verified

The cost of production plus producer surplus is the price a seller is paid.

Correct Answer
verified

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

Correct Answer
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Which of the following is not equal to total surplus?

Correct Answer
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Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the increase in producer surplus to the producers supplying units at the initial $25 price?

Correct Answer
verified
The increase in prod...
View Answer

Total surplus measures the

Correct Answer
verified

Total surplus in a market can be measured as the area below the supply curve plus the area above the demand curve, up to the point of equilibrium.

Correct Answer
verified

Figure 7-27 -Refer to Figure 7-27. If the government mandated a price increase from P1 to a higher price, then

Correct Answer
verified

Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15. Chuck values the dog show at

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

If the United States legally allowed for a market in transplant organs, it is estimated that one kidney would sell for at least $100,000.

Correct Answer
verified

Table 7-14 The only four producers in a market have the following costs: -Refer to Table 7-14. If Abbey, Bev, and Carl sell the good, and the resulting producer surplus is $55 altogether, then the price must have been

Correct Answer
verified

Table 7-17 -Refer to Table 7-17. The equilibrium price is

Correct Answer
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Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Correct Answer
verified

Figure 7-11 -Refer to Figure 7-11. 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?

Correct Answer
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Correct Answer
verified

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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

Correct AnswerverifiedShow Answer

Figure 7-26 -Refer to Figure 7-26. If the government imposes a price floor of $90 in this market, then consumer surplus will be

Correct AnswerverifiedShow Answer

The cost of production plus producer surplus is the price a seller is paid.

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

Which of the following is not equal to total surplus?

Correct AnswerverifiedShow Answer

Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the increase in producer surplus to the producers supplying units at the initial $25 price?

Correct AnswerverifiedThe increase in prod...View AnswerShow Answer

Total surplus measures the

Correct AnswerverifiedShow Answer

Total surplus in a market can be measured as the area below the supply curve plus the area above the demand curve, up to the point of equilibrium.

Correct AnswerverifiedShow Answer

Figure 7-27 -Refer to Figure 7-27. If the government mandated a price increase from P1 to a higher price, then

Correct AnswerverifiedShow Answer

Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15. Chuck values the dog show at

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

If the United States legally allowed for a market in transplant organs, it is estimated that one kidney would sell for at least $100,000.

Correct AnswerverifiedShow Answer

Table 7-14 The only four producers in a market have the following costs: -Refer to Table 7-14. If Abbey, Bev, and Carl sell the good, and the resulting producer surplus is $55 altogether, then the price must have been

Correct AnswerverifiedShow Answer

Table 7-17 -Refer to Table 7-17. The equilibrium price is

Correct AnswerverifiedShow Answer

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Correct AnswerverifiedShow Answer

Figure 7-11 -Refer to Figure 7-11. 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?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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The increase in prod...
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