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Table 7-10 Table 7-10 -Refer to Table 7-10.You want to hire a professional photographer to take pictures of your family.The table shows the costs of the four potential sellers in the local photography market.You take bids from the sellers.Who offers the winning bid,and what does he offer to charge for the photography session? A) Steve; more than $400 but less than $450 B) Steve; $399 C) LeBron; more than $700 D) LeBron; more than $600 but less than $700 -Refer to Table 7-10.You want to hire a professional photographer to take pictures of your family.The table shows the costs of the four potential sellers in the local photography market.You take bids from the sellers.Who offers the winning bid,and what does he offer to charge for the photography session?


A) Steve; more than $400 but less than $450
B) Steve; $399
C) LeBron; more than $700
D) LeBron; more than $600 but less than $700

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

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Figure 7-21 Figure 7-21 -Refer to Figure 7-21.Sellers whose costs are greater than the equilibrium price are represented by segment A) AC. B) CK. C) BC. D) CH. -Refer to Figure 7-21.Sellers whose costs are greater than the equilibrium price are represented by segment


A) AC.
B) CK.
C) BC.
D) CH.

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

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Figure 7-1 Figure 7-1 -Refer to Figure 7-1.If the price of the good is $200,then A) consumer surplus is $150. B) consumer surplus is $650. C) producer surplus is $650. D) producer surplus is $750. -Refer to Figure 7-1.If the price of the good is $200,then


A) consumer surplus is $150.
B) consumer surplus is $650.
C) producer surplus is $650.
D) producer surplus is $750.

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

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Connie can clean windows in large office buildings at a cost of $1 per window.The market price for window-cleaning services is $3 per window.If Connie cleans 100 windows,her producer surplus is $200.

A) True
B) False

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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


A) $0.95.
B) $1.15.
C) $1.30.
D) $1.85.

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

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Figure 7-13 Figure 7-13 -Refer to Figure 7-13.If the price of the good is $600,then producer surplus amounts to A) $650. B) $800. C) $900. D) $1,000. -Refer to Figure 7-13.If the price of the good is $600,then producer surplus amounts to


A) $650.
B) $800.
C) $900.
D) $1,000.

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

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When there is a technological advance in the pork industry,consumer surplus in that market will


A) increase.
B) decrease.
C) not change, since technology affects producers and not consumers.
D) not change, since consumers' willingness to pay is unaffected by the technological advance.

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

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Suppose that the equilibrium price in the market for widgets is $5.If a law reduced the maximum legal price for widgets to $4,


A) any possible increase in consumer surplus would be larger than the loss of producer surplus.
B) any possible increase in consumer surplus would be smaller than the loss of producer surplus.
C) the resulting increase in producer surplus would be larger than any possible loss of consumer surplus.
D) the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus.

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

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Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

A) True
B) False

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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 Alex, Barb, and Carlos 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 Alex, Barb, and Carlos 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 gain in consumer surplus when the price of an orange decreases from $1.05 to $0.75? A) Allison B) Bob C) Charisse D) Allison and Bob experience the same gain in consumer surplus, and Charisse's gain is zero. -Refer to Table 7-5.Who experiences the largest gain in consumer surplus when the price of an orange decreases from $1.05 to $0.75?


A) Allison
B) Bob
C) Charisse
D) Allison and Bob experience the same gain in consumer surplus, and Charisse's gain is zero.

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

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

A) True
B) False

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Figure 7-3 Figure 7-3 -Refer to Figure 7-3.Which area represents the increase in consumer surplus when the price falls from P1 to P2? A) ABD B) ACG C) DFG D) BCGD -Refer to Figure 7-3.Which area represents the increase in consumer surplus when the price falls from P1 to P2?


A) ABD
B) ACG
C) DFG
D) BCGD

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

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If an allocation of resources is efficient,then


A) consumer surplus is maximized.
B) producer surplus is maximized.
C) all potential gains from trade among buyers are sellers are being realized.
D) the allocation achieves equality as well.

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

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If a consumer places a value of $20 on a particular good and if the price of the good is $25,then the


A) consumer has consumer surplus of $5 if he buys the good.
B) consumer does not purchase the good.
C) price of the good will rise due to market forces.
D) market is out of equilibrium.

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

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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 price of Vanilla Coke is $6.90,who will purchase the good? A) all five individuals B) Megan, Mallory and Audrey C) David, Laura and Megan D) David and Laura -Refer to Table 7-2.If the price of Vanilla Coke is $6.90,who will purchase the good?


A) all five individuals
B) Megan, Mallory and Audrey
C) David, Laura and Megan
D) David and Laura

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

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Figure 7-20 Figure 7-20 -Refer to Figure 7-20.At equilibrium,total surplus is A) $36. B) $72. C) $108. D) $144. -Refer to Figure 7-20.At equilibrium,total surplus is


A) $36.
B) $72.
C) $108.
D) $144.

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

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


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

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Which of the following statements is not correct?


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 C)
F) B) and C)

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Figure 7-6 Figure 7-6 -Refer to Figure 7-6.What is the consumer surplus if the price is $100? A) $2,500 B) $5,000 C) $10,000 D) $20,000 -Refer to Figure 7-6.What is the consumer surplus if the price is $100?


A) $2,500
B) $5,000
C) $10,000
D) $20,000

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

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Figure 7-2 Figure 7-2 -Refer to Figure 7-2.Area C represents the A) decrease in consumer surplus that results from a downward-sloping demand curve. B) consumer surplus to new consumers who enter the market when the price falls from P2 to P1. C) increase in producer surplus when quantity sold increases from Q2 to Q1. D) decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2. -Refer to Figure 7-2.Area C represents the


A) decrease in consumer surplus that results from a downward-sloping demand curve.
B) consumer surplus to new consumers who enter the market when the price falls from P2 to P1.
C) increase in producer surplus when quantity sold increases from Q2 to Q1.
D) decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2.

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

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