Question 1

Figure 7-14 
-Refer to Figure 7-14. Total surplus amounts to $800 if consumer surplus amounts to

Accepted Answer

A)  $450 and if the price of the good is $250.
B)  $450 and if the price of the good is $300.
C)  $350 and if the price of the good is $300.
D)  $250 and if the price of the good is $325.E) All of the above
F) B) and D)

Question 2

Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to

Accepted Answer

A)  only existing sellers who now receive higher prices on the pizzas they were already selling.
B)  only new sellers who enter the market because of the higher prices.
C)  both existing sellers who now receive higher prices on the pizzas they were already selling and new sellers who enter the market because of the higher prices.
D)  Producer surplus does not increase; it decreases.E) B) and C)
F) A) and D)

Question 3

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
   Buyer  Willingritis to Pay  Carlos $15 Quilena $25 Wilbur $35 Ming-la $45\begin{array} { | c | c | } \hline 	ext { Buyer } & 	ext { Willingritis to Pay } \\hline 	ext { Carlos } & \$ 15 \\hline 	ext { Quilena } & \$ 25 \\hline 	ext { Wilbur } & \$ 35 \\hline 	ext { Ming-la } & \$ 45 \\hline\end{array} Buyer  Carlos  Quilena  Wilbur  Ming-la ​ Willingritis to Pay $15$25$35$45​​ 
-Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the good will sell for

Accepted Answer

A)  $15 or slightly less.
B)  $25 or slightly more.
C)  $35 or slightly more.
D)  $45 or slightly less. E) All of the above
F) A) and B)

Question 4

Figure 7-2 
-Refer to Figure 7-2. When the price rises from P1 to P2, which of the following statements is not true?

Accepted Answer

A)  The buyers who still buy the good are worse off because they now pay more.
B)  Some buyers leave the market because they are not willing to buy the good at the higher price.
C)  Buyers place a higher value on the good after the price increase.
D)  Consumer surplus in the market falls.E) B) and C)
F) All of the above

Question 5

Coffee and tea are substitutes. Good weather that sharply increases the coffee bean harvest would

Accepted Answer

A)  increase consumer surplus in the market for coffee and decrease producer surplus in the market for tea.
B)  increase consumer surplus in the market for coffee and increase producer surplus in the market for tea.
C)  decrease consumer surplus in the market for coffee and increase producer surplus in the market for tea.
D)  decrease consumer surplus in the market for coffee and decrease producer surplus in the market for tea.E) A) and C)
F) A) and B)

Question 6

Table 7-8
The only four producers in a market have the following costs:
   Sallar  Cast  Evar $50 Selana $100 Angie $150 Kris $200\begin{array} { | c | c | } \hline 	ext { Sallar } & 	ext { Cast } \\hline 	ext { Evar } & \$ 50 \\hline 	ext { Selana } & \$ 100 \\hline 	ext { Angie } & \$ 150 \\hline 	ext { Kris } & \$ 200 \\hline\end{array} Sallar  Evar  Selana  Angie  Kris ​ Cast $50$100$150$200​​ 
-Refer to Table 7-8. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for

Accepted Answer

A)  $50 or slightly more.
B)  $100 or slightly less.
C)  $150 or slightly less.
D)  $200 or slightly more. E) B) and C)
F) C) and D)

Question 7

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that the equilibrium price in the market for widgets is $5. If a law reduced the maximum legal price for widgets to $4,

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) A) and C)

Question 9

Figure 7-13 
-Refer to Figure 7-13. Suppose the price of the good is $400. Then, on the first unit of the good that is sold, producer surplus amounts to

Accepted Answer

A)  $200.
B)  $300.
C)  $400.
D)  $450.E) B) and C)
F) A) and B)

Question 10

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) A) and B)
F) B) and D)

Question 11

Figure 7-9 
-Refer to Figure 7-9. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

Accepted Answer

A)  Producer surplus increases by $3,125.
B)  Producer surplus increases by $5,625.
C)  Producer surplus decreases by $3,125.
D)  Producer surplus decreases by $5,625.E) None of the above
F) A) and C)

Question 12

Which of the following statements is not correct about a market in equilibrium?

Accepted Answer

A)  The price determines which buyers and which sellers participate in the market.
B)  Those buyers who value the good more than the price choose to buy the good.
C)  Those sellers whose costs are less than the price choose to produce and sell the good.
D)  Consumer surplus will be equal to producer surplus.E) C) and D)
F) B) and C)

Question 13

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

Question 14

Consumer surplus in a market can be represented by the

Accepted Answer

A)  area below the demand curve and above the price.
B)  distance from the demand curve to the horizontal axis.
C)  distance from the demand curve to the vertical axis.
D)  area below the demand curve and above the horizontal axis.E) None of the above
F) A) and C)

Question 15

The maximum price that a buyer will pay for a good is called the

Accepted Answer

A)  cost.
B)  willingness to pay.
C)  equity.
D)  efficiency.E) All of the above
F) None of the above

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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) None of the above

Question 18

Table 7-6
   Buygr  Willingrins to Pay  Michad $500 Farvin $400 Larry $350 Charles $300\begin{array} { | l | c } \hline 	ext { Buygr } & 	ext { Willingrins to Pay } \\hline 	ext { Michad } & \$ 500 \\hline 	ext { Farvin } & \$ 400 \\hline 	ext { Larry } & \$ 350 \\hline 	ext { Charles } & \$ 300 \\hline\end{array} Buygr  Michad  Farvin  Larry  Charles ​ Willingrins to Pay $500$400$350$300​​ 
-Refer to Table 7-6. You have four essentially identical extra tickets 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 offer to sell the tickets for $400. How many tickets do you sell, and what is the total consumer surplus in the market?

Accepted Answer

A)  one ticket; $100
B)  two tickets; $100
C)  two tickets; $0
D)  three tickets; $0 E) B) and C)
F) B) and D)

Question 19

Inefficiency exists in an economy when a good is

Accepted Answer

A)  not being consumed by buyers who value it most highly.
B)  not distributed fairly among buyers.
C)  not produced because buyers do not value it very highly.
D)  being produced with less than all available resources.E) A) and D)
F) B) and C)

Question 20

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

Accepted Answer

A)  $150.
B)  $200.
C)  $250.
D)  $350.E) A) and B)
F) A) and C)

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

Which of the following statements is not correct about a market in equilibrium?

Correct Answer
verified

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

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

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

Correct Answer
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Market failure is the inability of

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

Correct Answer
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Figure 7-2 -Refer to Figure 7-2. When the price rises from P1 to P2, which of the following statements is not true?

Correct Answer
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Figure 7-15 -Refer to Figure 7-15. At the equilibrium price, consumer surplus is

Correct Answer
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Coffee and tea are substitutes. Good weather that sharply increases the coffee bean harvest would

Correct Answer
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Consumer surplus in a market can be represented by the

Correct Answer
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Correct Answer
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Correct Answer
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The maximum price that a buyer will pay for a good is called the

Correct Answer
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Figure 7-14 -Refer to Figure 7-14. Total surplus amounts to $800 if consumer surplus amounts to

Correct Answer
verified

Correct Answer
verified

Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to

Correct Answer
verified

Figure 7-9 -Refer to Figure 7-9. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

Correct Answer
verified

Suppose that the equilibrium price in the market for widgets is $5. If a law reduced the maximum legal price for widgets to $4,

Correct Answer
verified

Figure 7-13 -Refer to Figure 7-13. Suppose the price of the good is $400. Then, on the first unit of the good that is sold, producer surplus amounts to

Correct Answer
verified

Inefficiency exists in an economy when a good is

Correct Answer
verified

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

Which of the following statements is not correct about a market in equilibrium?

Correct AnswerverifiedShow Answer

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Market failure is the inability of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 7-2 -Refer to Figure 7-2. When the price rises from P1 to P2, which of the following statements is not true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Coffee and tea are substitutes. Good weather that sharply increases the coffee bean harvest would

Correct AnswerverifiedShow Answer

Consumer surplus in a market can be represented by the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The maximum price that a buyer will pay for a good is called the

Correct AnswerverifiedShow Answer

Figure 7-14 -Refer to Figure 7-14. Total surplus amounts to $800 if consumer surplus amounts to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to

Correct AnswerverifiedShow Answer

Figure 7-9 -Refer to Figure 7-9. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

Correct AnswerverifiedShow Answer

Suppose that the equilibrium price in the market for widgets is $5. If a law reduced the maximum legal price for widgets to $4,

Correct AnswerverifiedShow Answer

Figure 7-13 -Refer to Figure 7-13. Suppose the price of the good is $400. Then, on the first unit of the good that is sold, producer surplus amounts to

Correct AnswerverifiedShow Answer

Inefficiency exists in an economy when a good is

Correct AnswerverifiedShow Answer

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