Question 1

Figure 7-8 
-Refer to Figure 7-8.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) None of the above
F) B) and D)

Question 2

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 market price is $3.80,

Accepted Answer

A)   David's consumer surplus is $4.70 and total consumer surplus for the five individuals is $9.50.
B)   Megan's consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80.
C)   David,Laura,and Megan will be the only buyers of Vanilla Coke.
D)   the demand curve for Vanilla Coke,taking the five individuals into account,is horizontal.E) None of the above
F) C) and D)

Question 3

Caroline sharpens knives in her spare time for extra income.Buyers of her service are willing to pay $2.95 per knife for as many knives as Caroline is willing to sharpen.On a particular day,she is willing to sharpen the first knife for $2.00,the second knife for $2.25,the third knife for $2.75,and the fourth knife for $3.50.Assume Caroline is rational in deciding how many knives to sharpen.Her producer surplus is

Accepted Answer

A)   $0.95.
B)   $1.15.
C)   $1.30.
D)   $1.85.E) B) and C)
F) A) and B)

Question 4

All else equal,an increase in demand will always increase consumer surplus.

Accepted Answer

A) True 
 B)False

Question 5

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)   Markets are usually a good way to organize economic activity.
C)   Trade can make everyone better off.
D)   A country's standard of living depends on its ability to produce goods and services.E) B) and C)
F) A) and C)

Question 6

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

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

Question 7

Market power and externalities are examples of market failures.

Accepted Answer

A) True 
 B)False

Question 8

A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that

Accepted Answer

A)   both the value of MP3 players to consumers and the cost of producing MP3 players has increased.
B)   both the value of MP3 players to consumers and the cost of producing MP3 players has decreased.
C)   the value of MP3 players to consumers has decreased,and the cost of producing MP3 players has increased.
D)   the value of MP3 players to consumers has increased,and the cost of producing MP3 players has decreased.E) B) and D)
F) None of the above

Question 9

Figure 7-3 
-Refer to Figure 7-3.Which area represents consumer surplus at a price of P2?

Accepted Answer

A)   ABD
B)   ACG
C)   BCDF
D)   DFGE) C) and D)
F) B) and C)

Question 10

Figure 7-20 
-Refer to Figure 7-20.The equilibrium allocation of resources is

Accepted Answer

A)   efficient because total surplus is maximized at the equilibrium.
B)   efficient because consumer surplus is maximized at the equilibrium.
C)   inefficient because consumer surplus is larger than producer surplus at the equilibrium.
D)   inefficient because total surplus is maximized when 10 units of output are produced and sold.E) A) and D)
F) All of the above

Question 11

Consumer surplus is equal to the

Accepted Answer

A)   Value to buyers - Amount paid by buyers.
B)   Amount paid by buyers - Costs of sellers.
C)   Value to buyers - Costs of sellers.
D)   Value to buyers - Willingness to pay of buyers.E) B) and C)
F) B) and D)

Question 12

Chad is willing to pay $5.00 to get his first cup of morning latté.He buys a cup from a vendor selling latté for $3.75 per cup.Chad's consumer surplus is

Accepted Answer

A)   $8.75.
B)   $5.00.
C)   $3.75.
D)   $1.25.E) A) and B)
F) A) and C)

Question 13

Another way to think of the marginal seller is the seller who

Accepted Answer

A)   will accept the lowest price of any seller in the market.
B)   requires the highest price of any potential seller in the market.
C)   would leave the market first if the price were any lower.
D)   would leave the market last if the price falls.E) A) and C)
F) All of the above

Question 14

When the supply of a good increases and the demand for the good remains unchanged,consumer surplus

Accepted Answer

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

Question 15

Suppose Larry,Moe,and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

Accepted Answer

A)   a resistance price.
B)   willingness to pay.
C)   consumer surplus.
D)   producer surplus.E) C) and D)
F) A) and D)

Question 16

Economists generally believe that,although there may be advantages to society from ticket-scalping,the costs to society of this activity outweigh the benefits.

Accepted Answer

A) True 
 B)False

Question 17

Consumer surplus is a good measure of economic welfare if policymakers want to

Accepted Answer

A)   maximize total benefit.
B)   minimize deadweight loss.
C)   respect the preferences of sellers.
D)   respect the preferences of buyers.E) All of the above
F) A) and B)

Question 18

Producer 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) B) and C)
F) None of the above

Question 19

Answer each of the following questions about demand and consumer surplus.
a.
What is consumer surplus,and how is it measured?
b.
What is the relationship between the demand curve and the willingness to pay?
c.
Other things equal,what happens to consumer surplus if the price of a good falls? Why? Illustrate using a demand curve.
d.
In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand curve,what else must be considered to determine consumer surplus?

Accepted Answer

a. Consumer surplus measures the benefit...

Question 20

A consumer's willingness to pay directly measures

Accepted Answer

A)   the extent to which advertising and other external forces have influenced the consumer's preferences.
B)   the cost of a good to the buyer.
C)   how much a buyer values a good.
D)   consumer surplus.E) C) and D)
F) B) and D)

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

Figure 7-20 -Refer to Figure 7-20.The equilibrium allocation of resources is

Correct Answer
verified

Consumer surplus is a good measure of economic welfare if policymakers want to

Correct Answer
verified

Market power and externalities are examples of market failures.

Correct Answer
verified

Chad is willing to pay $5.00 to get his first cup of morning latté.He buys a cup from a vendor selling latté for $3.75 per cup.Chad's consumer surplus is

Correct Answer
verified

A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that

Correct Answer
verified

Another way to think of the marginal seller is the seller who

Correct Answer
verified

When the supply of a good increases and the demand for the good remains unchanged,consumer surplus

Correct Answer
verified

Correct Answer
verified
a. Consumer surplus measures the benefit...
View Answer

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

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.If the market price is $3.80,

Correct Answer
verified

Correct Answer
verified

A consumer's willingness to pay directly measures

Correct Answer
verified

Figure 7-3 -Refer to Figure 7-3.Which area represents consumer surplus at a price of P2?

Correct Answer
verified

Suppose Larry,Moe,and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

Correct Answer
verified

Economists generally believe that,although there may be advantages to society from ticket-scalping,the costs to society of this activity outweigh the benefits.

Correct Answer
verified

Consumer surplus is equal to the

Correct Answer
verified

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

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

Correct Answer
verified

Producer surplus equals the

Correct Answer
verified

All else equal,an increase in demand will always increase consumer surplus.

Correct Answer
verified

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

Figure 7-20 -Refer to Figure 7-20.The equilibrium allocation of resources is

Correct AnswerverifiedShow Answer

Consumer surplus is a good measure of economic welfare if policymakers want to

Correct AnswerverifiedShow Answer

Market power and externalities are examples of market failures.

Correct AnswerverifiedShow Answer

Chad is willing to pay $5.00 to get his first cup of morning latté.He buys a cup from a vendor selling latté for $3.75 per cup.Chad's consumer surplus is

Correct AnswerverifiedShow Answer

A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that

Correct AnswerverifiedShow Answer

Another way to think of the marginal seller is the seller who

Correct AnswerverifiedShow Answer

When the supply of a good increases and the demand for the good remains unchanged,consumer surplus

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Consumer surplus measures the benefit...View AnswerShow Answer

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

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 market price is $3.80,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A consumer's willingness to pay directly measures

Correct AnswerverifiedShow Answer

Figure 7-3 -Refer to Figure 7-3.Which area represents consumer surplus at a price of P2?

Correct AnswerverifiedShow Answer

Suppose Larry,Moe,and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

Correct AnswerverifiedShow Answer

Economists generally believe that,although there may be advantages to society from ticket-scalping,the costs to society of this activity outweigh the benefits.

Correct AnswerverifiedShow Answer

Consumer surplus is equal to the

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

Producer surplus equals the

Correct AnswerverifiedShow Answer

All else equal,an increase in demand will always increase consumer surplus.

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
a. Consumer surplus measures the benefit...
View 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