Question 1

The marginal seller is the seller who

Accepted Answer

A)   cannot compete with the other sellers in the market.
B)   would leave the market first if the price were any lower.
C)   can produce at the lowest cost.
D)   has the largest producer surplus.E) None of the above
F) B) and C)

Question 2

As a result of a decrease in price,

Accepted Answer

A)   new buyers enter the market, increasing consumer surplus.
B)   new buyers enter the market, decreasing consumer surplus.
C)   existing buyers exit the market, increasing consumer surplus.
D)   existing buyers exit the market, decreasing consumer surplus.E) A) and C)
F) A) and D)

Question 3

Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is pleased since she paid $8,000 for the car but would have been willing to pay $11,000 for the car. Susie's consumer surplus is $2,000.

Accepted Answer

A) True 
 B)False

Question 4

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

Question 5

Moving production from a high-cost producer to a low-cost producer will

Accepted Answer

A)   lower total surplus.
B)   raise total surplus.
C)   lower producer surplus.
D)   raise producer surplus but lower consumer surplus.E) A) and B)
F) A) and D)

Question 6

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

Question 7

Figure 7-19 
-Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be

Accepted Answer

A)   $100.00 higher than it would be without the price floor.
B)   $50.00 lower than it would be without the price floor.
C)   $125.00 lower than it would be without the price floor.
D)   $62.50 lower than it would be without the price floor.E) B) and C)
F) C) and D)

Question 8

Total surplus

Accepted Answer

A)   can be used to measure a market's efficiency.
B)   is the sum of consumer and producer surplus.
C)   is the value to buyers minus the cost to sellers.
D)   All of the above are correct.E) C) and D)
F) A) and B)

Question 9

Figure 7-32 
-Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is consumer surplus?

Accepted Answer

Consumer s...

Question 10

Figure 7-24 
-Refer to Figure 7-24. At equilibrium, consumer surplus is measured by the area

Accepted Answer

A)   AHG.
B)   AFB.
C)   ABD.
D)   BDF.E) B) and C)
F) A) and D)

Question 11

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Accepted Answer

A) True 
 B)False

Question 12

Table 7-1
 
-Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product?

Accepted Answer

A)   Calvin
B)   Calvin and Sam
C)   Calvin, Sam, and Andrew
D)   Calvin, Sam, Andrew, and LoriE) B) and D)
F) B) and C)

Question 13

Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last tomato you bought this week, you paid a price exactly equal to your willingness to pay. Then

Accepted Answer

A)   you should buy more tomatoes before the end of the week.
B)   you already have bought too many tomatoes this week.
C)   your consumer surplus on the last tomato you bought is zero.
D)   your consumer surplus on all of the tomatoes you have bought this week is zero.E) B) and C)
F) A) and C)

Question 14

Figure 7-21 
-Refer to Figure 7-21. When the price is P1, area B+C represents

Accepted Answer

A)   total surplus.
B)   producer surplus.
C)   consumer surplus.
D)   None of the above is correct.E) None of the above
F) A) and C)

Question 15

Figure 7-26 
-Refer to Figure 7-26. At the equilibrium price, producer surplus is

Accepted Answer

A)   $600.
B)   $900.
C)   $1,200.
D)   $1,800.E) B) and D)
F) None of the above

Question 16

Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise

Accepted Answer

A)   buys the dishwasher, and on her purchase she experiences a consumer surplus of $150.
B)   buys the dishwasher, and on her purchase she experiences a consumer surplus of $-150.
C)   does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $150.
D)   does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $0.E) C) and D)
F) All of the above

Question 17

Figure 7-22 
-Refer to Figure 7-22. At the equilibrium price, consumer surplus is

Accepted Answer

A)   $1,000.
B)   $2,000.
C)   $3,500.
D)   $500.E) A) and C)
F) A) and D)

Question 18

Total surplus in a market is consumer surplus minus producer surplus.

Accepted Answer

A) True 
 B)False

Question 19

Table 7-13
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
 
-Refer to Table 7-13. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. The bids are required to be rounded to the nearest dollar. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. Your parents have given you $450 to spend on piano lessons. You believe that the sellers with higher opportunity costs offer higher quality lessons. You want the highest quality lessons that you can afford, but you can spend any remaining money on dinner with friends. From whom will you take lessons, and how much money will you spend?

Accepted Answer

A)   Peter; $450
B)   Cindy; $450
C)   Greg; $401
D)   Cindy; $401E) B) and C)
F) All of the above

Question 20

Refer to Table 7-12. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Accepted Answer

A)   $200.
B)   $300.
C)   $450.
D)   $600.E) None of the above
F) A) and B)

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

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 7-21 -Refer to Figure 7-21. When the price is P1, area B+C represents

Correct Answer
verified

As a result of a decrease in price,

Correct Answer
verified

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Correct Answer
verified

The marginal seller is the seller who

Correct Answer
verified

Figure 7-24 -Refer to Figure 7-24. At equilibrium, consumer surplus is measured by the area

Correct Answer
verified

Consumer surplus equals the

Correct Answer
verified

Total surplus

Correct Answer
verified

Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last tomato you bought this week, you paid a price exactly equal to your willingness to pay. Then

Correct Answer
verified

Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise

Correct Answer
verified

Figure 7-22 -Refer to Figure 7-22. At the equilibrium price, consumer surplus is

Correct Answer
verified

Refer to Table 7-12. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Correct Answer
verified

Figure 7-32 -Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is consumer surplus?

Correct Answer
verified
Consumer s...
View Answer

Table 7-1 -Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product?

Correct Answer
verified

Moving production from a high-cost producer to a low-cost producer will

Correct Answer
verified

Total surplus in a market is consumer surplus minus producer surplus.

Correct Answer
verified

Figure 7-19 -Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be

Correct Answer
verified

Figure 7-26 -Refer to Figure 7-26. At the equilibrium price, producer surplus is

Correct Answer
verified

Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is pleased since she paid $8,000 for the car but would have been willing to pay $11,000 for the car. Susie's consumer surplus is $2,000.

Correct Answer
verified

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

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 7-21 -Refer to Figure 7-21. When the price is P1, area B+C represents

Correct AnswerverifiedShow Answer

As a result of a decrease in price,

Correct AnswerverifiedShow Answer

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Correct AnswerverifiedShow Answer

The marginal seller is the seller who

Correct AnswerverifiedShow Answer

Figure 7-24 -Refer to Figure 7-24. At equilibrium, consumer surplus is measured by the area

Correct AnswerverifiedShow Answer

Consumer surplus equals the

Correct AnswerverifiedShow Answer

Total surplus

Correct AnswerverifiedShow Answer

Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last tomato you bought this week, you paid a price exactly equal to your willingness to pay. Then

Correct AnswerverifiedShow Answer

Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise

Correct AnswerverifiedShow Answer

Figure 7-22 -Refer to Figure 7-22. At the equilibrium price, consumer surplus is

Correct AnswerverifiedShow Answer

Refer to Table 7-12. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Correct AnswerverifiedShow Answer

Figure 7-32 -Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is consumer surplus?

Correct AnswerverifiedConsumer s...View AnswerShow Answer

Table 7-1 -Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product?

Correct AnswerverifiedShow Answer

Moving production from a high-cost producer to a low-cost producer will

Correct AnswerverifiedShow Answer

Total surplus in a market is consumer surplus minus producer surplus.

Correct AnswerverifiedShow Answer

Figure 7-19 -Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be

Correct AnswerverifiedShow Answer

Figure 7-26 -Refer to Figure 7-26. At the equilibrium price, producer surplus is

Correct AnswerverifiedShow Answer

Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is pleased since she paid $8,000 for the car but would have been willing to pay $11,000 for the car. Susie's consumer surplus is $2,000.

Correct AnswerverifiedShow Answer

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Consumer s...
View Answer

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