Question 1

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Accepted Answer

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

Question 2

Economists typically measure efficiency using

Accepted Answer

A)   the price paid by buyers.
B)   the quantity supplied by sellers.
C)   total surplus.
D)   profits to firms.E) A) and D)
F) B) and D)

Question 3

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

Accepted Answer

A)   the imposition of a binding price ceiling in the market
B)   an increase in the number of buyers of the good
C)   income increases and buyers consider the good to be normal
D)   the price of a complement decreasesE) A) and D)
F) B) and C)

Question 4

If Darby values a soccer ball at $50,and she pays $40 for it,her consumer surplus is $90.

Accepted Answer

A) True 
 B)False

Question 5

An example of positive analysis is studying

Accepted Answer

A)   how market forces produce equilibrium.
B)   whether equilibrium outcomes are fair.
C)   whether equilibrium outcomes are socially desirable.
D)   if income distributions are fair.E) C) and D)
F) B) and C)

Question 6

Total surplus is equal to

Accepted Answer

A)   value to buyers - profit to sellers.
B)   value to buyers - cost to sellers.
C)   consumer surplus x producer surplus.
D)   (consumer surplus + producer surplus)  x equilibrium quantity.E) All of the above
F) A) and B)

Question 7

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

Accepted Answer

A) True 
 B)False

Question 8

Figure 7-15
 
-Refer to Figure 7-15.At the equilibrium price,producer surplus is

Accepted Answer

A)   $80.
B)   $100.
C)   $120.
D)   $135.E) A) and B)
F) B) and D)

Question 9

Suppose the demand for peaches decreases.What will happen to producer surplus in the market for peaches?

Accepted Answer

A)   It increases.
B)   It decreases.
C)   It remains unchanged.
D)   It may increase, decrease, or remain unchanged.E) C) and D)
F) B) and C)

Question 10

Figure 7-21
 
-Refer to Figure 7-21.Buyers who value this good less than the equilibrium price are represented by which line segment?

Accepted Answer

A)   AC.
B)   CK.
C)   BC.
D)   CH.E) A) and D)
F) A) and B)

Question 11

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' willingnesses 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) A) and B)
F) A) and D)

Question 12

Figure 7-15
 
-Refer to Figure 7-15.If the government imposes a price ceiling of $60 in this market,then total surplus will be

Accepted Answer

A)   $187.50.
B)   $212.50.
C)   $250.00.
D)   $266.67.E) None of the above
F) All of the above

Question 13

Table 7-6
 
-Refer to Table 7-6.You have an extra ticket to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament.The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game.You hold an auction to sell the ticket.Who makes the winning bid,and what does he offer to pay for the ticket?

Accepted Answer

A)   Michael; $501
B)   Michael; more than $400 but less than or equal to $500
C)   Earvin; $400
D)   Earvin; more than $350 but less than or equal to $400E) A) and B)
F) B) and D)

Question 14

The Surgeon General announces that eating apples promotes healthy teeth.As a result,the equilibrium price of apples

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) None of the above
F) A) and B)

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

Which of the following will cause an increase in producer surplus?

Accepted Answer

A)   the imposition of a binding price ceiling in the market
B)   buyers expect the price of the good to be lower next month
C)   the price of a substitute increases
D)   income increases and buyers consider the good to be inferiorE) A) and C)
F) C) and D)

Question 17

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) C) and D)
F) All of the above

Question 18

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

Accepted Answer

A)   ACG.
B)   AFG.
C)   KBG.
D)   CFG.E) A) and B)
F) C) and D)

Question 19

Consumer surplus is

Accepted Answer

A)   the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
B)   the amount a buyer is willing to pay for a good minus the cost of producing the good.
C)   the amount by which the quantity supplied of a good exceeds the quantity demanded of the good.
D)   a buyer's willingness to pay for a good plus the price of the good.E) All of the above
F) A) and B)

Question 20

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175,the price of the tickets is $625.

Accepted Answer

A) True 
 B)False

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

The Surgeon General announces that eating apples promotes healthy teeth.As a result,the equilibrium price of apples

Correct Answer
verified

Suppose the demand for peaches decreases.What will happen to producer surplus in the market for peaches?

Correct Answer
verified

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.

Correct Answer
verified

An example of positive analysis is studying

Correct Answer
verified

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

Correct Answer
verified

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

Correct Answer
verified

Total surplus is equal to

Correct Answer
verified

Which of the following will cause an increase in producer surplus?

Correct Answer
verified

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

Correct Answer
verified

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Correct Answer
verified

Consumer surplus is

Correct Answer
verified

Correct Answer
verified

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175,the price of the tickets is $625.

Correct Answer
verified

Total surplus measures the

Correct Answer
verified

Figure 7-21 -Refer to Figure 7-21.Buyers who value this good less than the equilibrium price are represented by which line segment?

Correct Answer
verified

Economists typically measure efficiency using

Correct Answer
verified

Figure 7-15 -Refer to Figure 7-15.At the equilibrium price,producer surplus is

Correct Answer
verified

Figure 7-15 -Refer to Figure 7-15.If the government imposes a price ceiling of $60 in this market,then total surplus will be

Correct Answer
verified

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

If Darby values a soccer ball at $50,and she pays $40 for it,her consumer surplus is $90.

Correct Answer
verified

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

The Surgeon General announces that eating apples promotes healthy teeth.As a result,the equilibrium price of apples

Correct AnswerverifiedShow Answer

Suppose the demand for peaches decreases.What will happen to producer surplus in the market for peaches?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

An example of positive analysis is studying

Correct AnswerverifiedShow Answer

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Total surplus is equal to

Correct AnswerverifiedShow Answer

Which of the following will cause an increase in producer surplus?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Correct AnswerverifiedShow Answer

Consumer surplus is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175,the price of the tickets is $625.

Correct AnswerverifiedShow Answer

Total surplus measures the

Correct AnswerverifiedShow Answer

Figure 7-21 -Refer to Figure 7-21.Buyers who value this good less than the equilibrium price are represented by which line segment?

Correct AnswerverifiedShow Answer

Economists typically measure efficiency using

Correct AnswerverifiedShow Answer

Figure 7-15 -Refer to Figure 7-15.At the equilibrium price,producer surplus is

Correct AnswerverifiedShow Answer

Figure 7-15 -Refer to Figure 7-15.If the government imposes a price ceiling of $60 in this market,then total surplus will be

Correct AnswerverifiedShow Answer

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

If Darby values a soccer ball at $50,and she pays $40 for it,her consumer surplus is $90.

Correct AnswerverifiedShow Answer

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