Question 1

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

Accepted Answer

A)   $600.
B)   $1,200.
C)   $1,500.
D)   $1,800.E) None of the above
F) A) and B)

Question 2

Consumer surplus is

Accepted Answer

A)   a concept that helps us make normative statements about the desirability of market outcomes.
B)   represented on a graph by the area below the demand curve and above the price.
C)   a good measure of economic welfare if buyers' preferences are the primary concern.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 3

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

Question 4

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $35.

Accepted Answer

A) True 
 B)False

Question 5

Figure 7-31 
-Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the producer surplus for the producers entering the market after the price increase?

Accepted Answer

The producer surplus...

Question 6

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

Accepted Answer

A)   $700
B)   $2,300
C)   $3,000
D)   $3,700E) B) and C)
F) A) and B)

Question 7

Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field.
 
-Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, what will be the selling price?

Accepted Answer

A)   slightly more than $20.
B)   slightly more than $25.
C)   slightly more than $50.
D)   slightly more than $60.E) A) and D)
F) A) and C)

Question 8

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175, the price of the tickets is $625.

Accepted Answer

A) True 
 B)False

Question 9

Table 7-12
The only four producers in a market have the following costs:
 
-Refer to Table 7-12. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for

Accepted Answer

A)   $50 or slightly more.
B)   $100 or slightly less.
C)   $150 or slightly less.
D)   $200 or slightly more.E) B) and D)
F) All of the above

Question 10

Kristi sells purses. Her cost is $35 per purse. On a certain day, she sells 12 purses, and her producer surplus for that day amounts to $180. Kristi sold each purse for

Accepted Answer

A)   $65.
B)   $50.
C)   $45.
D)   $53.E) None of the above
F) B) and D)

Question 11

Figure 7-30 
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

Accepted Answer

Consumer s...

Question 12

Table 7-16
The following table represents the costs of five possible sellers.
Seller Cost $) 
 
-Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?

Accepted Answer

A)   $90
B)   $110
C)   $130
D)   $140E) None of the above
F) A) and B)

Question 13

Which of the following statements is not correct?

Accepted Answer

A)   A seller would be eager to sell her product at a price higher than her cost.
B)   A seller would refuse to sell her product at a price lower than her cost.
C)   A seller would be indifferent about selling her product at a price equal to her cost.
D)   Since sellers cannot set the price for their product, they must be willing to sell their product at any price.E) A) and D)
F) None of the above

Question 14

Total surplus measures the

Accepted Answer

A)   loss to buyers from paying higher prices plus the benefit to sellers from receiving lower prices.
B)   buyers' willingness to pay less the sellers' costs.
C)   fairness of the distribution of resources in society.
D)   value to the government of goods and services sold in society.E) B) and C)
F) A) and D)

Question 15

When markets fail, public policy can potentially remedy the problem and increase economic efficiency.

Accepted Answer

A) True 
 B)False

Question 16

Figure 7-25 
-Refer to Figure 7-25. Suppose the government imposes a price floor of $28 in this market. If the sellers with the lowest cost are the ones who sell the good and the government does not purchase any excess units produced, then total surplus will be

Accepted Answer

A)   $400.
B)   $800.
C)   $1,120.
D)   $1,184.E) B) and C)
F) A) and B)

Question 17

Which of the following will cause no change in producer surplus?

Accepted Answer

A)   the imposition of a nonbinding price ceiling in the market
B)   buyers expect the price of a good to be higher next month
C)   the price of a substitute increases
D)   income increases and buyers consider the good to be inferiorE) C) and D)
F) B) and D)

Question 18

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

Question 19

Figure 7-31 
-Refer to Figure 7-31. If the market equilibrium price is $35, how much is total producer surplus in this market?

Accepted Answer

Total prod...

Question 20

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

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

Which of the following statements is not correct?

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Kristi sells purses. Her cost is $35 per purse. On a certain day, she sells 12 purses, and her producer surplus for that day amounts to $180. Kristi sold each purse for

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Table 7-16 The following table represents the costs of five possible sellers. Seller Cost $) -Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?

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

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Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

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Total surplus measures the

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Which of the following will cause no change in producer surplus?

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Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price is $35, how much is total producer surplus in this market?

Correct AnswerverifiedTotal prod...View AnswerShow 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

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

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

Correct AnswerverifiedConsumer s...View AnswerShow Answer

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, what will be the selling price?

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Consumer surplus is

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Consumer surplus is equal to the

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Figure 7-25 -Refer to Figure 7-25. Suppose the government imposes a price floor of $28 in this market. If the sellers with the lowest cost are the ones who sell the good and the government does not purchase any excess units produced, then total surplus will be

Correct AnswerverifiedShow Answer

When markets fail, public policy can potentially remedy the problem and increase economic efficiency.

Correct AnswerverifiedShow Answer

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $35.

Correct AnswerverifiedShow Answer

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175, the price of the tickets is $625.

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Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the producer surplus for the producers entering the market after the price increase?

Correct AnswerverifiedThe producer surplus...View AnswerShow Answer

Table 7-12 The only four producers in a market have the following costs: -Refer to Table 7-12. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for

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Total prod...
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Consumer s...
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The producer surplus...
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