Question 1

Figure 7-21 
-Refer to Figure 7-21. When the price is P1, area B+C represents

Accepted Answer

A)   total surplus.
B)   producer surplus.
C)   consumer surplus.
D)   None of the above is correct.E) All of the above
F) A) and B)

Question 2

Figure 7-24 
-Refer to Figure 7-24. If 6 units of the good are produced and sold, then

Accepted Answer

A)   efficiency is achieved in this market.
B)   the marginal value to buyers equals the marginal cost to sellers.
C)   the sum of consumer surplus and producer surplus is maximized.
D)   All of the above are correct.E) A) and C)
F) B) and D)

Question 3

Figure 7-24 
-Refer to Figure 7-24. The equilibrium allocation of resources is

Accepted Answer

A)   efficient because total surplus is maximized at the equilibrium.
B)   efficient because consumer surplus is maximized at the equilibrium.
C)   inefficient because consumer surplus is larger than producer surplus at the equilibrium.
D)   inefficient because producer surplus is not maximized.E) A) and D)
F) None of the above

Question 4

The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of

Accepted Answer

A)   market equilibrium.
B)   market power.
C)   externalities.
D)   laissez-faire.E) C) and D)
F) B) and C)

Question 5

Market power and externalities are examples of

Accepted Answer

A)   laissez-faire economics.
B)   public policy.
C)   market failure.
D)   welfare economics.E) C) and D)
F) None of the above

Question 6

Figure 7-32 
-Refer to Figure 7-32. At what price will total surplus be maximized in this market?

Accepted Answer

.Total surplus will ...

Question 7

If John's willingness to pay for a good is $20 and the price of the good is $15, how much is John's consumer surplus
from purchasing the good?

Accepted Answer

Consumer s...

Question 8

Inefficiency can be caused in a market by the presence of

Accepted Answer

A)   market power.
B)   externalities.
C)   imperfectly competitive markets.
D)   All of the above are correct.E) None of the above
F) A) and C)

Question 9

Figure 7-30 
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Accepted Answer

Consumers entering t...

Question 10

Table 7-9
During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase.
 
-Refer to Table 7-9. The price that Chad paid for a latte on the first day is

Accepted Answer

A)   $3.75.
B)   $6.25.
C)   $5.00.
D)   $5.50.E) B) and C)
F) None of the above

Question 11

Producer surplus directly measures

Accepted Answer

A)   the well-being of sellers.
B)   production costs.
C)   excess demand.
D)   unsold inventories.E) C) and D)
F) A) and B)

Question 12

Which of the Ten Principles of Economics does welfare economics explain more fully?

Accepted Answer

A)   The cost of something is what you give up to get it.
B)   Rational people think at the margin.
C)   Markets are usually a good way to organize economic activity.
D)   People respond to incentives.E) A) and B)
F) B) and D)

Question 13

Consumer surplus is

Accepted Answer

A)   a concept that helps us make normative statements about the desirability of market outcomes.
B)   represented on a graph by the area below the demand curve and above the price.
C)   a good measure of economic welfare if buyers' preferences are the primary concern.
D)   All of the above are correct.E) None of the above
F) A) and C)

Question 14

The lower the price, the lower the producer surplus, all else equal.

Accepted Answer

A) True 
 B)False

Question 15

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes

Accepted Answer

A)   increases, and the consumer surplus in the market for red wine increases.
B)   increases, and the consumer surplus in the market for red wine decreases.
C)   decreases, and the consumer surplus in the market for red wine increases.
D)   decreases, and the consumer surplus in the market for red wine decreases.E) B) and C)
F) A) and D)

Question 16

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 17

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. Which of the following statements is correct?

Accepted Answer

A)   Neither Bob's consumer surplus nor Charisse's consumer surplus can exceed Allison's consumer surplus, for any price of an orange.
B)   All three individuals will buy at least one orange only if the price of an orange is less than $0.25.
C)   If the price of an orange is $0.60, then consumer surplus is $4.90.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 18

Suppose that the equilibrium price in the market for tomatoes is $3 per pound. If a law reduced the maximum legal price for tomatoes to $2 per pound,

Accepted Answer

A)   any possible increase in consumer surplus would be larger than the loss of producer surplus.
B)   any possible increase in consumer surplus would be smaller than the loss of producer surplus.
C)   the resulting increase in producer surplus would be larger than any possible loss of consumer surplus.
D)   the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus.E) A) and B)
F) None of the above

Question 19

Figure 7-22 
-Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus due to new producers entering the market would be

Accepted Answer

A)   $400.
B)   $800.
C)   $1,200.
D)   $900.E) B) and C)
F) All of the above

Question 20

Economists say that a market where goods are not consumed by those valuing the goods most highly is

Accepted Answer

A)   laissez-faire..
B)   unequal.
C)   inefficient.
D)   rational.E) B) and D)
F) A) and D)

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

Figure 7-24 -Refer to Figure 7-24. If 6 units of the good are produced and sold, then

Correct Answer
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Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Correct Answer
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Consumers entering t...
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Figure 7-22 -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus due to new producers entering the market would be

Correct Answer
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Suppose that the equilibrium price in the market for tomatoes is $3 per pound. If a law reduced the maximum legal price for tomatoes to $2 per pound,

Correct Answer
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Figure 7-32 -Refer to Figure 7-32. At what price will total surplus be maximized in this market?

Correct Answer
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.Total surplus will ...
View Answer

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes

Correct Answer
verified

The lower the price, the lower the producer surplus, all else equal.

Correct Answer
verified

The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of

Correct Answer
verified

Market power and externalities are examples of

Correct Answer
verified

Inefficiency can be caused in a market by the presence of

Correct Answer
verified

Which of the Ten Principles of Economics does welfare economics explain more fully?

Correct Answer
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Consumer surplus is

Correct Answer
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Economists say that a market where goods are not consumed by those valuing the goods most highly is

Correct Answer
verified

Table 7-9 During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase. -Refer to Table 7-9. The price that Chad paid for a latte on the first day is

Correct Answer
verified

Correct Answer
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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.

Correct Answer
verified

Figure 7-21 -Refer to Figure 7-21. When the price is P1, area B+C represents

Correct Answer
verified

If John's willingness to pay for a good is $20 and the price of the good is $15, how much is John's consumer surplus from purchasing the good?

Correct Answer
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Consumer s...
View Answer

Figure 7-24 -Refer to Figure 7-24. The equilibrium allocation of resources is

Correct Answer
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Producer surplus directly measures

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

Figure 7-24 -Refer to Figure 7-24. If 6 units of the good are produced and sold, then

Correct AnswerverifiedShow Answer

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Correct AnswerverifiedConsumers entering t...View AnswerShow Answer

Figure 7-22 -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus due to new producers entering the market would be

Correct AnswerverifiedShow Answer

Suppose that the equilibrium price in the market for tomatoes is $3 per pound. If a law reduced the maximum legal price for tomatoes to $2 per pound,

Correct AnswerverifiedShow Answer

Figure 7-32 -Refer to Figure 7-32. At what price will total surplus be maximized in this market?

Correct Answerverified.Total surplus will ...View AnswerShow Answer

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes

Correct AnswerverifiedShow Answer

The lower the price, the lower the producer surplus, all else equal.

Correct AnswerverifiedShow Answer

The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of

Correct AnswerverifiedShow Answer

Market power and externalities are examples of

Correct AnswerverifiedShow Answer

Inefficiency can be caused in a market by the presence of

Correct AnswerverifiedShow Answer

Which of the Ten Principles of Economics does welfare economics explain more fully?

Correct AnswerverifiedShow Answer

Consumer surplus is

Correct AnswerverifiedShow Answer

Economists say that a market where goods are not consumed by those valuing the goods most highly is

Correct AnswerverifiedShow Answer

Table 7-9 During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase. -Refer to Table 7-9. The price that Chad paid for a latte on the first day is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Figure 7-21 -Refer to Figure 7-21. When the price is P1, area B+C represents

Correct AnswerverifiedShow Answer

If John's willingness to pay for a good is $20 and the price of the good is $15, how much is John's consumer surplus from purchasing the good?

Correct AnswerverifiedConsumer s...View AnswerShow Answer

Figure 7-24 -Refer to Figure 7-24. The equilibrium allocation of resources is

Correct AnswerverifiedShow Answer

Producer surplus directly measures

Correct AnswerverifiedShow Answer

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Consumers entering t...
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.Total surplus will ...
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Consumer s...
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