Question 1

All else equal,an increase in supply will cause an increase in consumer surplus.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

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

Question 3

Which of the following events would increase producer surplus?

Accepted Answer

A)   Sellers' costs stay the same and the price of the good increases.
B)   Sellers' costs increase and the price of the good stays the same.
C)   Sellers' costs increase and the price of the good decreases.
D)   All of the above are correct.E) A) and D)
F) None of the above

Question 4

Producer surplus is the amount a seller is paid minus the cost of production.

Accepted Answer

A) True 
 B)False

Question 5

The current policy on kidney donation effectively sets a price ceiling of zero.

Accepted Answer

A) True 
 B)False

Question 6

Table 7-5
For each of three potential buyers of oranges,the table displays the willingness to pay for the first three oranges of the day.Assume Alex,Barb,and Carlos are the only three buyers of oranges,and only three oranges can be supplied per day.
 
-Refer to Table 7-5.If the market price of an orange increases from $0.60 to $1.05,total consumer surplus

Accepted Answer

A)   increases by $2.90.
B)   decreases by $2.25.
C)   decreases by $2.70.
D)   decreases by $3.85.E) All of the above
F) B) and C) B

Question 7

Figure 7-11 
-Refer to Figure 7-11.When the price rises from P1 to P2,which area represents the increase in producer surplus due to new producers entering the market?

Accepted Answer

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

Question 8

In a competitive market,sales go to those producers who are willing to supply the product at the lowest price.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

Table 7-5
For each of three potential buyers of oranges,the table displays the willingness to pay for the first three oranges of the day.Assume Alex,Barb,and Carlos are the only three buyers of oranges,and only three oranges can be supplied per day.
 
-Refer to Table 7-5.If the market price of an orange is $0.40,

Accepted Answer

A)   6 oranges are demanded per day,and total consumer surplus amounts to $4.45.
B)   6 oranges are demanded per day,and total consumer surplus amounts to $5.10.
C)   7 oranges are demanded per day,and total consumer surplus amounts to $5.35.
D)   7 oranges are demanded per day,and total consumer surplus amounts to $5.50.E) A) and B)
F) None of the above

Question 11

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
 
-Refer to Table 7-2.If the price of Vanilla Coke is $6.90,who will purchase the good?

Accepted Answer

A)   all five individuals
B)   Megan,Mallory and Audrey
C)   David,Laura and Megan
D)   David and LauraE) A) and B)
F) A) and C)

Question 12

Total surplus is

Accepted Answer

A)   the total cost to sellers of providing the good minus the total value of the good to buyers.
B)   the total value of the good to buyers minus the cost to sellers of providing the good.
C)   the difference between consumer surplus and sellers' cost.
D)   always smaller than producer surplus.E) B) and C)
F) C) and D)

Question 13

Welfare economics is the study of how

Accepted Answer

A)   the allocation of resources affects economic well-being.
B)   a price ceiling compares to a price floor.
C)   the government helps poor people.
D)   a consumer's optimal choice affects her demand curve.E) B) and C)
F) None of the above

Question 14

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
 
-Refer to Table 7-3.If the price is $30,then consumer surplus in the market is

Accepted Answer

A)   $20,and Wilbur and Ming-la purchase the good.
B)   $20,and Carlos and Quilana purchase the good.
C)   $30,and Wilbur and Ming-la purchase the good.
D)   $30,and Carlos and Quilana purchase the good.E) A) and C)
F) None of the above

Question 15

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

Accepted Answer

A)   $480.
B)   $640.
C)   $1,120.
D)   $1,280.E) A) and D)
F) B) and D) C

Question 16

If the price of oak lumber increases,what happens to consumer surplus in the market for oak cabinets?

Accepted Answer

A)   Consumer surplus increases.
B)   Consumer surplus decreases.
C)   Consumer surplus will not change consumer surplus;only producer surplus changes.
D)   Consumer surplus depends on what event led to the increase in the price of oak lumber.E) B) and C)
F) B) and D)

Question 17

The Surgeon General announces that eating chocolate increases tooth decay.As a result,the equilibrium price of chocolate

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

Question 18

Sarah buys a new MP3 player for $135.She receives consumer surplus of $25 on her purchase if her willingness to pay is

Accepted Answer

A)   $25.
B)   $110.
C)   $135.
D)   $160.E) B) and D)
F) B) and C)

Question 19

Table 7-5
For each of three potential buyers of oranges,the table displays the willingness to pay for the first three oranges of the day.Assume Alex,Barb,and Carlos are the only three buyers of oranges,and only three oranges can be supplied per day.
 
-Refer to Table 7-5.Which of the following statements is correct?

Accepted Answer

A)   Neither Barb's consumer surplus nor Carlos's consumer surplus can exceed Alex's consumer surplus,for any price of an orange.
B)   All three individuals will buy at least one orange only if the price of an orange is less than $0.25.
C)   If the price of an orange is $0.60,total consumer surplus is $4.90.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 20

Table 7-6
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-6.If the market price is $900,the combined total cost of all participating sellers is

Accepted Answer

A)   $3,700.
B)   $2,700.
C)   $2,250.
D)   $1,250.E) C) and D)
F) A) and D)

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

All else equal,an increase in supply will cause an increase in consumer surplus.

Correct Answer
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Figure 7-14 -Refer to Figure 7-14.Which area represents consumer surplus when the price is P1?

Correct Answer
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Which of the following events would increase producer surplus?

Correct Answer
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Producer surplus is the amount a seller is paid minus the cost of production.

Correct Answer
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The current policy on kidney donation effectively sets a price ceiling of zero.

Correct Answer
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Correct Answer
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B

Figure 7-11 -Refer to Figure 7-11.When the price rises from P1 to P2,which area represents the increase in producer surplus due to new producers entering the market?

Correct Answer
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In a competitive market,sales go to those producers who are willing to supply the product at the lowest price.

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

Correct Answer
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C

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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.If the price of Vanilla Coke is $6.90,who will purchase the good?

Correct Answer
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Total surplus is

Correct Answer
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Welfare economics is the study of how

Correct Answer
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Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3.If the price is $30,then consumer surplus in the market is

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

Correct Answer
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C

If the price of oak lumber increases,what happens to consumer surplus in the market for oak cabinets?

Correct Answer
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The Surgeon General announces that eating chocolate increases tooth decay.As a result,the equilibrium price of chocolate

Correct Answer
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Sarah buys a new MP3 player for $135.She receives consumer surplus of $25 on her purchase if her willingness to pay is

Correct Answer
verified

Correct Answer
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Table 7-6 The following table represents the costs of five possible sellers. -Refer to Table 7-6.If the market price is $900,the combined total cost of all participating sellers is

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

All else equal,an increase in supply will cause an increase in consumer surplus.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following events would increase producer surplus?

Correct AnswerverifiedShow Answer

Producer surplus is the amount a seller is paid minus the cost of production.

Correct AnswerverifiedShow Answer

The current policy on kidney donation effectively sets a price ceiling of zero.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

Figure 7-11 -Refer to Figure 7-11.When the price rises from P1 to P2,which area represents the increase in producer surplus due to new producers entering the market?

Correct AnswerverifiedShow Answer

In a competitive market,sales go to those producers who are willing to supply the product at the lowest price.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

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.If the price of Vanilla Coke is $6.90,who will purchase the good?

Correct AnswerverifiedShow Answer

Total surplus is

Correct AnswerverifiedShow Answer

Welfare economics is the study of how

Correct AnswerverifiedShow Answer

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3.If the price is $30,then consumer surplus in the market is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

If the price of oak lumber increases,what happens to consumer surplus in the market for oak cabinets?

Correct AnswerverifiedShow Answer

The Surgeon General announces that eating chocolate increases tooth decay.As a result,the equilibrium price of chocolate

Correct AnswerverifiedShow Answer

Sarah buys a new MP3 player for $135.She receives consumer surplus of $25 on her purchase if her willingness to pay is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 7-6 The following table represents the costs of five possible sellers. -Refer to Table 7-6.If the market price is $900,the combined total cost of all participating sellers is

Correct AnswerverifiedShow Answer

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B

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C

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C

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