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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 Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. 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 Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40? A) Allison B) Bob C) Charisse D) All three individuals experience the same loss of consumer surplus. -Refer to Table 7-5. Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40?


A) Allison
B) Bob
C) Charisse
D) All three individuals experience the same loss of consumer surplus.

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

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Figure 7-21 Figure 7-21 -Refer to Figure 7-21. When the price is P1, area B+C represents A) total surplus. B) producer surplus. C) consumer surplus. D) None of the above is correct. -Refer to Figure 7-21. When the price is P1, area B+C represents


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

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

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A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it


A) maximizes both the total revenue for firms and the quantity supplied of the product.
B) maximizes the combined welfare of buyers and sellers.
C) minimizes costs and maximizes output.
D) minimizes the level of welfare payments.

E) All of the above
F) A) and B)

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Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is


A) $8,500.
B) $15,500.
C) $24,000.
D) $39,500.

E) A) and B)
F) B) and D)

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Figure 7-18 Figure 7-18 -Refer to Figure 7-18. If total surplus is $240 and consumer surplus is A) $100, then the price of the good is $130. B) $130, then the price of the good is $120. C) $160, then the price of the good is $100. D) $120, then the price of the good is $90. -Refer to Figure 7-18. If total surplus is $240 and consumer surplus is


A) $100, then the price of the good is $130.
B) $130, then the price of the good is $120.
C) $160, then the price of the good is $100.
D) $120, then the price of the good is $90.

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

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Market power and externalities are examples of


A) laissez-faire economics.
B) public policy.
C) market failure.
D) welfare economics.

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

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Total surplus


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

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


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

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Total surplus is equal to


A) value to buyers - profit to sellers.
B) value to buyers - cost to sellers.
C) consumer surplus x producer surplus.
D) (consumer surplus + producer surplus) x equilibrium quantity.

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

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Table 7-1 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? A) Calvin B) Calvin and Sam C) Calvin, Sam, and Andrew D) Calvin, Sam, Andrew, and Lori -Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product?


A) Calvin
B) Calvin and Sam
C) Calvin, Sam, and Andrew
D) Calvin, Sam, Andrew, and Lori

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

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If the United States changed its laws to allow for the legal sale of a kidney, which of the following is least likely to occur?


A) The supply of kidneys would increase.
B) The shortage of kidneys would decrease.
C) Many lives would be saved.
D) The allocation of kidneys would be fair.

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

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

A) True
B) False

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If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would


A) not reduce the shortage of organs.
B) benefit rich people but not poor people.
C) be inefficient because markets are not good at allocating scarce resources.
D) be inferior to a plan imposed by a benevolent dictator.

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

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Table 7-3 The only four consumers in a market have the following willingness to pay for a good: 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 there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the good will sell for A) $15 or slightly less. B) $25 or slightly more. C) $35 or slightly more. D) $45 or slightly less. -Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the good will sell for


A) $15 or slightly less.
B) $25 or slightly more.
C) $35 or slightly more.
D) $45 or slightly less.

E) B) and D)
F) All of the above

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Consumer surplus


A) is the amount of a good that a consumer can buy at a price below equilibrium price.
B) is the amount a consumer is willing to pay minus the amount the consumer actually pays.
C) is the number of consumers who are excluded from a market because of scarcity.
D) measures how much a seller values a good.

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

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When a buyer's willingness to pay for a good is equal to the price of the good, the


A) buyer's consumer surplus for that good is maximized.
B) buyer will buy as much of the good as the buyer's budget allows.
C) price of the good exceeds the value that the buyer places on the good.
D) buyer is indifferent between buying the good and not buying it.

E) All of the above
F) None of the above

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A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes


A) increases, and the consumer surplus in the market for red wine increases.
B) increases, and the consumer surplus in the market for red wine decreases.
C) decreases, and the consumer surplus in the market for red wine increases.
D) decreases, and the consumer surplus in the market for red wine decreases.

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

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Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. 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 $5.50, the consumer surplus in the market will be A) $3.00. B) $4.50. C) $15.50. D) $21.00. -Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be


A) $3.00.
B) $4.50.
C) $15.50.
D) $21.00.

E) A) and D)
F) B) and D)

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Table 7-12 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. Table 7-12 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-12. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market? A) $0 B) $300 C) $400 D) $700 -Refer to Table 7-12. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market?


A) $0
B) $300
C) $400
D) $700

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

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Table 7-19 Table 7-19 -Refer to Table 7-19. How much is total consumer surplus at the equilibrium price in this market? -Refer to Table 7-19. How much is total consumer surplus at the equilibrium price in this market?

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