Question 1

Which of the following is not equal to total surplus?

Accepted Answer

A)   consumer surplus - producer surplus
B)   buyers' willingness to pay ­ sellers' costs
C)   value to buyers - amount paid by buyers + amount received by sellers - cost to sellers
D)   value to buyers - cost to sellersE) A) and D)
F) None of the above

Question 2

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) All of the above
F) A) and C) C

Question 3

Corn chips and potato chips are substitutes. Good weather that sharply increases the corn harvest would

Accepted Answer

A)   increase consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips.
B)   increase consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips.
C)   decrease consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips.
D)   decrease consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips.E) B) and C)
F) A) and C)

Question 4

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit . We know that

Accepted Answer

A)   the equilibrium price of good x is somewhere between $35 and $40.
B)   the equilibrium quantity of good x exceeds 500 units.
C)   500 units is not an efficient quantity of good x.
D)   All of the above are correct.E) None of the above
F) A) and C)

Question 5

Figure 7-16 
-Refer to Figure 7-16. 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) A) and B)
F) A) and C)

Question 6

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

Question 7

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

Question 8

Figure 7-26 
-Refer to Figure 7-26. If the government imposes a price floor of $90 in this market, then consumer surplus will be

Accepted Answer

A)   $225.
B)   $450.
C)   $975.
D)   $1,350E) B) and C)
F) B) and D)

Question 9

Figure 7-19 
-Refer to Figure 7-19. At the equilibrium price, total surplus is

Accepted Answer

A)   $125.
B)   $450.
C)   $250.
D)   $500.E) None of the above
F) B) and C)

Question 10

Table 7-6
For each of three potential buyers of apples, the table displays the willingness to pay for the first three apples of the day. Assume Xavier, Yadier, and Zavi are the only three buyers of apples, and only three apples can be supplied per day.
 
-Refer to Table 7-6. If the market price of an apple is $1.40, then the market quantity of apples demanded per day is

Accepted Answer

A)   1.
B)   2.
C)   3.
D)   4.E) B) and C)
F) C) and D)

Question 11

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. If Firm B produces a monitor that David buys, then the market outcome illustrates which of the following principles? i)  Free markets allocate the supply of goods to the buyers who value them most highly, as measured by their willingness to pay.
Ii)  Free markets allocate the demand for goods to the sellers who can produce them at the least cost.

Accepted Answer

A)   i)  only
B)   ii)  only
C)   both i)  and ii) 
D)   neither i)  nor ii) E) C) and D)
F) A) and C)

Question 12

Figure 7-33 
-Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?

Accepted Answer

Total surp...

Question 13

Suppose the market demand curve for a good passes through the point quantity demanded = 100, price = $25) . If there are five buyers in the market, then

Accepted Answer

A)   the marginal buyer's willingness to pay for the 100th unit of the good is $25.
B)   the sum of the five buyers' willingness to pay for the 100th unit of the good is $25.
C)   the average of the five buyers' willingness to pay for the 100th unit of the good is $25.
D)   all of the five buyers are willing to pay at least $25 for the 100th unit of the good.E) A) and B)
F) A) and D)

Question 14

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?

Accepted Answer

A)   Firm A produces a monitor that Cassie buys. David does not purchase a monitor.
B)   Firm A produces a monitor that David buys.
C)   Firm B produces a monitor that Cassie buys. David does not purchase a monitor.
D)   Firm B produces a monitor that David buys.E) A) and C)
F) A) and D)

Question 15

The area below the demand curve and above the supply curve measures the producer surplus in a market.

Accepted Answer

A) True 
 B)False

Question 16

Total surplus = Value to buyers - Costs to sellers.

Accepted Answer

A) True 
 B)False

Question 17

Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then the new producer surplus will be

Accepted Answer

A)   $200.
B)   $100.
C)   $125.
D)   $250.E) B) and D)
F) C) and D) B

Question 18

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

Accepted Answer

A)   $6.
B)   $2.
C)   $8.
D)   $4.E) B) and D)
F) B) and C) C

Question 19

An example of positive analysis is studying

Accepted Answer

A)   how market forces produce equilibrium.
B)   whether equilibrium outcomes are fair.
C)   whether equilibrium outcomes are socially desirable.
D)   if income distributions are fair.E) B) and D)
F) All of the above

Question 20

Willingness to pay

Accepted Answer

A)   measures the value that a buyer places on a good.
B)   is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept.
C)   is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept.
D)   is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.E) B) and D)
F) A) and B)

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

Which of the following is not equal to total surplus?

Correct Answer
verified

Producer surplus equals the

Correct Answer
verified
C

Corn chips and potato chips are substitutes. Good weather that sharply increases the corn harvest would

Correct Answer
verified

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit . We know that

Correct Answer
verified

Figure 7-16 -Refer to Figure 7-16. 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

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

Correct Answer
verified

Market power refers to the

Correct Answer
verified

Figure 7-26 -Refer to Figure 7-26. If the government imposes a price floor of $90 in this market, then consumer surplus will be

Correct Answer
verified

Figure 7-19 -Refer to Figure 7-19. At the equilibrium price, total surplus is

Correct Answer
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Correct Answer
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Correct Answer
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Figure 7-33 -Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?

Correct Answer
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Total surp...
View Answer

Suppose the market demand curve for a good passes through the point quantity demanded = 100, price = $25) . If there are five buyers in the market, then

Correct Answer
verified

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?

Correct Answer
verified

The area below the demand curve and above the supply curve measures the producer surplus in a market.

Correct Answer
verified

Total surplus = Value to buyers - Costs to sellers.

Correct Answer
verified

Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then the new producer surplus will be

Correct Answer
verified
B

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

Correct Answer
verified
C

An example of positive analysis is studying

Correct Answer
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Willingness to pay

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

Which of the following is not equal to total surplus?

Correct AnswerverifiedShow Answer

Producer surplus equals the

Correct AnswerverifiedC

Corn chips and potato chips are substitutes. Good weather that sharply increases the corn harvest would

Correct AnswerverifiedShow Answer

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit . We know that

Correct AnswerverifiedShow Answer

Figure 7-16 -Refer to Figure 7-16. 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

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

Correct AnswerverifiedShow Answer

Market power refers to the

Correct AnswerverifiedShow Answer

Figure 7-26 -Refer to Figure 7-26. If the government imposes a price floor of $90 in this market, then consumer surplus will be

Correct AnswerverifiedShow Answer

Figure 7-19 -Refer to Figure 7-19. At the equilibrium price, total surplus is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 7-33 -Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?

Correct AnswerverifiedTotal surp...View AnswerShow Answer

Suppose the market demand curve for a good passes through the point quantity demanded = 100, price = $25) . If there are five buyers in the market, then

Correct AnswerverifiedShow Answer

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?

Correct AnswerverifiedShow Answer

The area below the demand curve and above the supply curve measures the producer surplus in a market.

Correct AnswerverifiedShow Answer

Total surplus = Value to buyers - Costs to sellers.

Correct AnswerverifiedShow Answer

Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then the new producer surplus will be

Correct AnswerverifiedB

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

Correct AnswerverifiedC

An example of positive analysis is studying

Correct AnswerverifiedShow Answer

Willingness to pay

Correct AnswerverifiedShow Answer

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C

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Total surp...
View Answer

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B

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C

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