Question 1

Connie can clean windows in large office buildings at a cost of $1 per window.The market price for window-cleaning services is $3 per window.If Connie cleans 100 windows,her producer surplus is $200.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Figure 7-20 
-Refer to Figure 7-20.At equilibrium,consumer surplus is measured by the area

Accepted Answer

A)   ACG.
B)   AFG.
C)   KBG.
D)   CFG.E) All of the above
F) B) and C)

Question 4

Figure 7-20 
-Refer to Figure 7-20.If 4 units of the good are produced and sold,then

Accepted Answer

A)   the cost to sellers exceeds the value to buyers.
B)   producer surplus is maximized.
C)   total surplus is minimized.
D)   the allocation of resources is inefficient.E) A) and B)
F) A) and C)

Question 5

Dawn's bridal boutique is having a sale on evening dresses.The increase in consumer surplus comes from the benefit of the lower prices to

Accepted Answer

A)   only existing customers who now get lower prices on the gowns they were already planning to purchase.
B)   only new customers who enter the market because of the lower prices.
C)   both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices.
D)   Consumer surplus does not increase; it decreases.E) A) and C)
F) A) and B)

Question 6

Total surplus in a market is equal to

Accepted Answer

A)   value to buyers - amount paid by buyers.
B)   amount received by sellers - costs of sellers.
C)   value to buyers - costs of sellers.
D)   amount received by sellers - amount paid by buyers.E) B) and D)
F) All of the above

Question 7

Figure 7-10 
-Refer to Figure 7-10.If the equilibrium price is $200,what is the producer surplus?

Accepted Answer

A)   $625
B)   $3,750
C)   $10,000
D)   $20,000E) A) and C)
F) A) and B)

Question 8

Figure 7-20 
-Refer to Figure 7-20.If 6 units of the good are produced and sold,then

Accepted Answer

A)   consumer surplus is maximized.
B)   producer surplus is maximized.
C)   the sum of consumer surplus and producer surplus is maximized.
D)   the marginal value to buyers exceeds the marginal cost to sellers.E) A) and B)
F) None of the above

Question 9

Figure 7-18 
-Refer to Figure 7-18.At the equilibrium price,consumer surplus is

Accepted Answer

A)   $480.
B)   $640.
C)   $1,120.
D)   $1,280.E) C) and D)
F) None of the above

Question 10

Figure 7-1 
-Refer to Figure 7-1.The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

Accepted Answer

A)   $200.
B)   $150.
C)   $125.
D)   $100.E) None of the above
F) C) and D)

Question 11

Efficiency in a market is achieved when

Accepted Answer

A)   a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs.
B)   the sum of producer surplus and consumer surplus is maximized.
C)   all firms are producing the good at the same low cost per unit.
D)   no buyer is willing to pay more than the equilibrium price for any unit of the good.E) A) and D)
F) B) and D)

Question 12

Jeff decides that he would pay as much as $2,000 for a new laptop computer.He buys the computer and realizes a consumer surplus of $300.How much did Jeff pay for his computer?

Accepted Answer

A)   $300.
B)   $1,700.
C)   $2,000.
D)   $2,300.E) All of the above
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) B) and D)
F) A) and D)

Question 14

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 15

Suppose you sell a kayak for $600,but you were willing to sell it for $450.The buyer was willing to pay $650.The total surplus is $200.

Accepted Answer

A) True 
 B)False

Question 16

Market power refers to the

Accepted Answer

A)   side effects that may occur in a market.
B)   government regulations imposed on the sellers in a market.
C)   ability of market participants to influence price.
D)   forces of supply and demand in determining equilibrium price.E) B) and C)
F) B) and D)

Question 17

Figure 7-17 
-Refer to Figure 7-17.When the price is P1,area A represents

Accepted Answer

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

Question 18

Figure 7-5 
-Refer to Figure 7-5.At the equilibrium price,consumer surplus is

Accepted Answer

A)   $200.
B)   $300.
C)   $500.
D)   $600.E) None of the above
F) C) and D)

Question 19

Consumer surplus measures the benefit to buyers of participating in a market.

Accepted Answer

A) True 
 B)False

Question 20

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
 
-Refer to Table 7-2.Which of the following is not true?

Accepted Answer

A)   At a price of $9.00,no buyer is willing to purchase Vanilla Coke.
B)   At a price of $5.50,Megan is indifferent between buying a case of Vanilla Coke and not buying one.
C)   At a price of $4.00,total consumer surplus in the market will be $9.00.
D)   All of the above are correct.E) All of the above
F) C) and D)

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

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

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Figure 7-20 -Refer to Figure 7-20.At equilibrium,consumer surplus is measured by the area

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Connie can clean windows in large office buildings at a cost of $1 per window.The market price for window-cleaning services is $3 per window.If Connie cleans 100 windows,her producer surplus is $200.

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Figure 7-1 -Refer to Figure 7-1.The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

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

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Figure 7-17 -Refer to Figure 7-17.When the price is P1,area A represents

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Dawn's bridal boutique is having a sale on evening dresses.The increase in consumer surplus comes from the benefit of the lower prices to

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Total surplus in a market is equal to

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Figure 7-18 -Refer to Figure 7-18.At the equilibrium price,consumer surplus is

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Figure 7-5 -Refer to Figure 7-5.At the equilibrium price,consumer surplus is

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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.

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Consumer surplus measures the benefit to buyers of participating in a market.

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Figure 7-10 -Refer to Figure 7-10.If the equilibrium price is $200,what is the producer surplus?

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Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2.Which of the following is not true?

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Figure 7-20 -Refer to Figure 7-20.If 6 units of the good are produced and sold,then

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Suppose you sell a kayak for $600,but you were willing to sell it for $450.The buyer was willing to pay $650.The total surplus is $200.

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Market power refers to the

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Efficiency in a market is achieved when

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Figure 7-20 -Refer to Figure 7-20.If 4 units of the good are produced and sold,then

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Jeff decides that he would pay as much as $2,000 for a new laptop computer.He buys the computer and realizes a consumer surplus of $300.How much did Jeff pay for his computer?

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