Question 1

If the demand for leather decreases, producer surplus in the leather market

Accepted Answer

A)   increases.
B)   decreases.
C)   remains the same.
D)   may increase, decrease, or remain the same.E) A) and C)
F) None of the above

Question 2

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. If Firm A produces a monitor that Cassie buys but David does not, then the market outcome illustrates which of the following principles?
i. Free markets allocate the supply of goods to the buyers who value them most highly, as measured by their willingness to pay.
ii. Free markets allocate the demand for goods to the sellers who can produce them at the least cost.

Accepted Answer

A)   i)  only
B)   ii)  only
C)   both i)  and ii) 
D)   neither i)  nor ii) E) All of the above
F) B) and C)

Question 3

Figure 7-19 
-Refer to Figure 7-19. At the equilibrium price, producer surplus is

Accepted Answer

A)   $300.
B)   $150.
C)   $450.
D)   $125.E) B) and C)
F) A) and B)

Question 4

Producer surplus is the

Accepted Answer

A)   area under the supply curve to the left of the amount sold.
B)   amount a seller is paid minus the cost of production.
C)   area between the supply and demand curves, above the equilibrium price.
D)   cost to sellers of participating in a market.E) A) and B)
F) All of the above

Question 5

Figure 7-9 
-Refer to Figure 7-9. If the price of the good is $9.50, then producer surplus is

Accepted Answer

A)   $3.00.
B)   $6.50.
C)   $10.50.
D)   $8.50.E) C) and D)
F) A) and B)

Question 6

Table 7-11
The following table represents the costs of five possible sellers.
-Refer to Table 7-11. If the market price is $1,000, the producer surplus in the market is

Accepted Answer

A)   $1000.
B)   $300.
C)   $1,700.
D)   $700.E) C) and D)
F) B) and D)

Question 7

A seller's willingness to sell is

Accepted Answer

A)   measured by the seller's cost of production.
B)   related to her supply curve, just as a buyer's willingness to buy is related to his demand curve.
C)   less than the price received if producer surplus is a positive number.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 8

Table 7-19
The following table shows the cost of producing a good for the only four producers in a market.
 
-Refer to Table 7-19. If the market equilibrium price is $28, what is total producer surplus in the market?

Accepted Answer

Total prod...

Question 9

Welfare economics is the study of

Accepted Answer

A)   the well-being of less fortunate people.
B)   welfare programs in the United States.
C)   how the allocation of resources affects economic well-being.
D)   the effect of income redistribution on work effort.E) All of the above
F) A) and D)

Question 10

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be

Accepted Answer

A)   $3.
B)   $8.
C)   $5.
D)   $11.E) A) and B)
F) A) and C)

Question 11

When policymakers are considering a particular action, they can use consumer surplus as an)

Accepted Answer

A)   objective measure of the benefits to buyers as determined by policymakers.
B)   measure of the benefits to buyers as the buyers perceive them.
C)   potentially flawed measure of the benefits to buyers if the buyers are not rational.
D)   Both b)  and c)  are correct.E) A) and B)
F) None of the above

Question 12

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound,

Accepted Answer

A)   Henry experiences an increase in consumer surplus, but Janine does not.
B)   Janine experiences an increase in consumer surplus, but Henry does not.
C)   both Janine and Henry experience an increase in consumer surplus.
D)   neither Janine nor Henry experiences an increase in consumer surplus.E) B) and C)
F) C) and D)

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 limitedE) C) and D)
F) B) and C)

Question 14

Economists tend to see ticket scalping as

Accepted Answer

A)   a way for a few to profit without producing anything of value.
B)   an inequitable interference in the orderly process of ticket distribution.
C)   a way of increasing the efficiency of ticket distribution.
D)   an unproductive activity which should be made illegal everywhere.E) None of the above
F) B) and C)

Question 15

Figure 7-10 
-Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

Accepted Answer

A)   BCG
B)   ACH
C)   DGH
D)   AHGBE) B) and C)
F) C) and D)

Question 16

Figure 7-23 
-Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

Accepted Answer

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

Question 17

Total surplus is

Accepted Answer

A)   equal to consumer surplus minus producer surplus.
B)   equal to the total value to buyers minus the total cost to sellers.
C)   equal to consumers' willingness to pay plus producers' cost.
D)   greater than the sum of consumer surplus plus producer surplus.E) A) and B)
F) C) and D)

Question 18

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 19

Market failure is the inability of

Accepted Answer

A)   buyers to interact harmoniously with sellers in the market.
B)   a market to establish an equilibrium price.
C)   buyers to place a value on the good or service.
D)   some unregulated markets to allocate resources efficiently.E) B) and D)
F) All of the above

Question 20

Table 7-1
 
-Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?

Accepted Answer

A)   Calvin
B)   Calvin and Sam
C)   Calvin, Sam, and Andrew
D)   Calvin, Sam, Andrew, and LoriE) A) and C)
F) All of the above

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

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,000, the producer surplus in the market is

Correct Answer
verified

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound,

Correct Answer
verified

Correct Answer
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Total surplus is

Correct Answer
verified

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be

Correct Answer
verified

Market failure is the inability of

Correct Answer
verified

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

A seller's willingness to sell is

Correct Answer
verified

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 7-23 -Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

Correct Answer
verified

Economists tend to see ticket scalping as

Correct Answer
verified

Welfare economics is the study of

Correct Answer
verified

When policymakers are considering a particular action, they can use consumer surplus as an)

Correct Answer
verified

Table 7-1 -Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?

Correct Answer
verified

Figure 7-19 -Refer to Figure 7-19. At the equilibrium price, producer surplus is

Correct Answer
verified

If the demand for leather decreases, producer surplus in the leather market

Correct Answer
verified

Figure 7-10 -Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

Correct Answer
verified

Producer surplus is the

Correct Answer
verified

Table 7-19 The following table shows the cost of producing a good for the only four producers in a market. -Refer to Table 7-19. If the market equilibrium price is $28, what is total producer surplus in the market?

Correct Answer
verified
Total prod...
View Answer

Figure 7-9 -Refer to Figure 7-9. If the price of the good is $9.50, then producer surplus is

Correct Answer
verified

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

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,000, the producer surplus in the market is

Correct AnswerverifiedShow Answer

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Total surplus is

Correct AnswerverifiedShow Answer

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be

Correct AnswerverifiedShow Answer

Market failure is the inability of

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

A seller's willingness to sell is

Correct AnswerverifiedShow 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 7-23 -Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

Correct AnswerverifiedShow Answer

Economists tend to see ticket scalping as

Correct AnswerverifiedShow Answer

Welfare economics is the study of

Correct AnswerverifiedShow Answer

When policymakers are considering a particular action, they can use consumer surplus as an)

Correct AnswerverifiedShow Answer

Table 7-1 -Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?

Correct AnswerverifiedShow Answer

Figure 7-19 -Refer to Figure 7-19. At the equilibrium price, producer surplus is

Correct AnswerverifiedShow Answer

If the demand for leather decreases, producer surplus in the leather market

Correct AnswerverifiedShow Answer

Figure 7-10 -Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

Correct AnswerverifiedShow Answer

Producer surplus is the

Correct AnswerverifiedShow Answer

Table 7-19 The following table shows the cost of producing a good for the only four producers in a market. -Refer to Table 7-19. If the market equilibrium price is $28, what is total producer surplus in the market?

Correct AnswerverifiedTotal prod...View AnswerShow Answer

Figure 7-9 -Refer to Figure 7-9. If the price of the good is $9.50, then producer surplus is

Correct AnswerverifiedShow Answer

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Total prod...
View Answer

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