Question 1

Figure 7-4 
-Refer to Figure 7-4.At the equilibrium price,consumer surplus is

Accepted Answer

A)   $200.
B)   $300.
C)   $500.
D)   $600.E) A) and B)
F) All of the above

Question 2

Suppose Bart,Benjamin,and Brent each purchase a particular type of electric pencil sharpener at a price of $20.Bart's willingness to pay was $22,Benjamin's willingness to pay was $25,and Brent's willingness to pay was $30.Which of the following statements is correct?

Accepted Answer

A)   Had the price of the pencil sharpener been $26 rather than $20,only Brent would have been a buyer.
B)   Brent's consumer surplus is the smallest of the three individual consumer surpluses.
C)   For the three individuals together,consumer surplus amounts to $60.
D)   The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener.E) B) and C)
F) A) and D)

Question 3

Consumer surplus equals the

Accepted Answer

A)   value to buyers minus the amount paid by buyers.
B)   value to buyers minus the cost to sellers.
C)   amount received by sellers minus the cost to sellers.
D)   amount received by sellers minus the amount paid by buyers.E) All of the above
F) None of the above

Question 4

Figure 7-16 
-Refer to Figure 7-16.The equilibrium price is

Accepted Answer

A)   P1.
B)   P2.
C)   P3.
D)   P4.E) A) and B)
F) A) and D)

Question 5

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 $100.

Accepted Answer

A) True 
 B)False

Question 6

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

Accepted Answer

A)   seller's producer surplus.
B)   sellers's cost of production.
C)   seller's profit.
D)   average willingness to pay of buyers of the product.E) A) and B)
F) None of the above

Question 7

Figure 7-19 
-Refer to Figure 7-19.At the quantity Q2,the marginal value to buyers

Accepted Answer

A)   and the marginal cost to sellers are both P2.
B)   is P2,and the marginal cost to sellers is P3.
C)   and the marginal cost to sellers are both P3.
D)   is P3,and the marginal cost to sellers is P2.E) All of the above
F) B) and C)

Question 8

At the equilibrium price of a good,the good will be purchased by those buyers who

Accepted Answer

A)   value the good more than price.
B)   value the good less than price.
C)   have the money to buy the good.
D)   consider the good a necessity.E) A) and D)
F) A) and C)

Question 9

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

Question 10

Karen sharpens knives in her spare time for extra income.Buyers of her service are willing to pay $2.50 per knife for as many knives as Karen is willing to sharpen.On a particular day,she is willing to sharpen the first knife for $1.75,the second knife for $2.25,the third knife for $2.75,and the fourth knife for $3.25.Assume Karen is rational in deciding how many knives to sharpen.Her producer surplus is

Accepted Answer

A)   $0.25.
B)   $0.50.
C)   $1.00.
D)   $1.75.E) B) and C)
F) A) and D)

Question 11

Figure 7-8 
-Refer to Figure 7-8.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) B) and D)
F) B) and C)

Question 12

Figure 7-14 
-Refer to Figure 7-14.Which area represents total surplus in the market when the price is P1?

Accepted Answer

A)   A+B
B)   B+C
C)   C+D
D)   A+B+C+DE) B) and D)
F) A) and B)

Question 13

In which of the following circumstances would a buyer be indifferent about buying a good?

Accepted Answer

A)   The amount of consumer surplus the buyer would experience as a result of buying the good is zero.
B)   The price of the good is equal to the buyer's willingness to pay for the good.
C)   The price of the good is equal to the value the buyer places on the good.
D)   All of the above are correct.E) B) and C)
F) All of the above

Question 14

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) A) and B)
F) A) and C)

Question 15

Suppose the demand for nachos increases.What will happen to producer surplus in the market for nachos?

Accepted Answer

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

Question 16

Table 7-8
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
 
-Refer to Table 7-8.You wish to purchase 10 piano lessons,so you take bids from each of the sellers.You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons.What bid will you accept?

Accepted Answer

A)   $351
B)   $251
C)   $249
D)   $199E) A) and D)
F) A) and B)

Question 17

All else equal,what happens to consumer surplus if the price of a good increases?

Accepted Answer

A)   Consumer surplus increases.
B)   Consumer surplus decreases.
C)   Consumer surplus is unchanged.
D)   Consumer surplus may increase,decrease,or remain unchanged.E) A) and B)
F) A) and C)

Question 18

If a market is allowed to move freely to its equilibrium price and quantity,then an increase in supply will

Accepted Answer

A)   increase consumer surplus.
B)   reduce consumer surplus.
C)   not affect consumer surplus.
D)   Any of the above are possible.E) C) and D)
F) All of the above

Question 19

Figure 7-12 
-Refer to Figure 7-12.At the equilibrium price,total surplus is

Accepted Answer

A)   $150.
B)   $200.
C)   $300.
D)   $500.E) B) and C)
F) None of the above

Question 20

Welfare economics explains which of the following in the market for DVDs?

Accepted Answer

A)   The government sets the price of DVDs;firms respond to the price by producing a specific level of output.
B)   The government sets the quantity of DVDs;firms respond to the quantity by charging a specific price.
C)   The market equilibrium price for DVDs maximizes the total welfare to DVD buyers and sellers.
D)   The market equilibrium price for DVDs maximizes consumer welfare but minimizes producer welfare.E) B) and C)
F) All of the above

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

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 $100.

Correct Answer
verified

Figure 7-14 -Refer to Figure 7-14.Which area represents total surplus in the market when the price is P1?

Correct Answer
verified

Suppose Bart,Benjamin,and Brent each purchase a particular type of electric pencil sharpener at a price of $20.Bart's willingness to pay was $22,Benjamin's willingness to pay was $25,and Brent's willingness to pay was $30.Which of the following statements is correct?

Correct Answer
verified

Welfare economics explains which of the following in the market for DVDs?

Correct Answer
verified

Correct Answer
verified

Figure 7-4 -Refer to Figure 7-4.At the equilibrium price,consumer surplus is

Correct Answer
verified

If a market is allowed to move freely to its equilibrium price and quantity,then an increase in supply will

Correct Answer
verified

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

Correct Answer
verified

At the equilibrium price of a good,the good will be purchased by those buyers who

Correct Answer
verified

Figure 7-19 -Refer to Figure 7-19.At the quantity Q2,the marginal value to buyers

Correct Answer
verified

Market power refers to the

Correct Answer
verified

Figure 7-8 -Refer to Figure 7-8.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

Consumer surplus equals the

Correct Answer
verified

In which of the following circumstances would a buyer be indifferent about buying a good?

Correct Answer
verified

All else equal,what happens to consumer surplus if the price of a good increases?

Correct Answer
verified

Figure 7-16 -Refer to Figure 7-16.The equilibrium price is

Correct Answer
verified

Figure 7-12 -Refer to Figure 7-12.At the equilibrium price,total surplus is

Correct Answer
verified

Suppose the demand for nachos increases.What will happen to producer surplus in the market for nachos?

Correct Answer
verified

Correct Answer
verified

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?

Correct Answer
verified

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

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 $100.

Correct AnswerverifiedShow Answer

Figure 7-14 -Refer to Figure 7-14.Which area represents total surplus in the market when the price is P1?

Correct AnswerverifiedShow Answer

Suppose Bart,Benjamin,and Brent each purchase a particular type of electric pencil sharpener at a price of $20.Bart's willingness to pay was $22,Benjamin's willingness to pay was $25,and Brent's willingness to pay was $30.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Welfare economics explains which of the following in the market for DVDs?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 7-4 -Refer to Figure 7-4.At the equilibrium price,consumer surplus is

Correct AnswerverifiedShow Answer

If a market is allowed to move freely to its equilibrium price and quantity,then an increase in supply will

Correct AnswerverifiedShow Answer

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

Correct AnswerverifiedShow Answer

At the equilibrium price of a good,the good will be purchased by those buyers who

Correct AnswerverifiedShow Answer

Figure 7-19 -Refer to Figure 7-19.At the quantity Q2,the marginal value to buyers

Correct AnswerverifiedShow Answer

Market power refers to the

Correct AnswerverifiedShow Answer

Figure 7-8 -Refer to Figure 7-8.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

Consumer surplus equals the

Correct AnswerverifiedShow Answer

In which of the following circumstances would a buyer be indifferent about buying a good?

Correct AnswerverifiedShow Answer

All else equal,what happens to consumer surplus if the price of a good increases?

Correct AnswerverifiedShow Answer

Figure 7-16 -Refer to Figure 7-16.The equilibrium price is

Correct AnswerverifiedShow Answer

Figure 7-12 -Refer to Figure 7-12.At the equilibrium price,total surplus is

Correct AnswerverifiedShow Answer

Suppose the demand for nachos increases.What will happen to producer surplus in the market for nachos?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified