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Figure 7-8 Figure 7-8 -Refer to Figure 7-8.Which area represents producer surplus when the price is P2? A) BCG B) ACH C) ABGD D) AHGB -Refer to Figure 7-8.Which area represents producer surplus when the price is P2?


A) BCG
B) ACH
C) ABGD
D) AHGB

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

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Consumer surplus equals the


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) C) and D)

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Cost is a measure of the


A) seller's willingness to sell.
B) seller's producer surplus.
C) producer shortage.
D) seller's willingness to buy.

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

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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.If the market price of an orange increases from $0.60 to $1.05,then consumer surplus A) increases by $2.90. B) decreases by $2.25. C) decreases by $2.70. D) decreases by $3.85. -Refer to Table 7-5.If the market price of an orange increases from $0.60 to $1.05,then consumer surplus


A) increases by $2.90.
B) decreases by $2.25.
C) decreases by $2.70.
D) decreases by $3.85.

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

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Which of the following events would increase producer surplus?


A) Sellers' costs stay the same and the price of the good increases.
B) Sellers' costs increase and the price of the good stays the same.
C) Sellers' costs increase and the price of the good decreases.
D) All of the above are correct.

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

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Inefficiency can be caused in a market by the presence of


A) market power.
B) externalities.
C) imperfectly competitive markets.
D) All of the above are correct.

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

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Consumer surplus is


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

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

A) True
B) False

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Figure 7-22 Figure 7-22 -Refer to Figure 7-22.At the quantity Q3, A) the market is in equilibrium. B) consumer surplus is maximized. C) the sum of consumer surplus and producer surplus is maximized. D) the marginal value to buyers is less than the marginal cost to sellers. -Refer to Figure 7-22.At the quantity Q3,


A) the market is in equilibrium.
B) consumer surplus is maximized.
C) the sum of consumer surplus and producer surplus is maximized.
D) the marginal value to buyers is less than the marginal cost to sellers.

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

Correct Answer

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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. 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? A) $21 B) $26 C) $51 D) $61 -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?


A) $21
B) $26
C) $51
D) $61

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

Correct Answer

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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.If the market price of an orange is $0.70,then the market quantity of oranges demanded per day is A) 5. B) 6. C) 7. D) 9. -Refer to Table 7-5.If the market price of an orange is $0.70,then the market quantity of oranges demanded per day is


A) 5.
B) 6.
C) 7.
D) 9.

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

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Figure 7-13 Figure 7-13 -Refer to Figure 7-13.If the price of the good is $500,then producer surplus amounts to A) $450. B) $575. C) $700. D) $800. -Refer to Figure 7-13.If the price of the good is $500,then producer surplus amounts to


A) $450.
B) $575.
C) $700.
D) $800.

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

Correct Answer

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Figure 7-13 Figure 7-13 -Refer to Figure 7-13.Producer surplus amounts to $300 if the price of the good is A) $300. B) $350. C) $400. D) $450. -Refer to Figure 7-13.Producer surplus amounts to $300 if the price of the good is


A) $300.
B) $350.
C) $400.
D) $450.

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

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The cost of production plus producer surplus is the price a seller is paid.

A) True
B) False

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Table 7-10 Table 7-10 -Refer to Table 7-10.You and your best friend want to hire a professional photographer to take pictures of your two families.The table shows the costs of the four potential sellers in the local photography market.You and your friend agree to offer $500 for each session.Who accepts the offer,and what is the total producer surplus in the market? A) LeBron and Kobe; $500 B) Kevin and Steve; $500 C) LeBron and Kobe; $300 D) Kevin and Steve; $150 -Refer to Table 7-10.You and your best friend want to hire a professional photographer to take pictures of your two families.The table shows the costs of the four potential sellers in the local photography market.You and your friend agree to offer $500 for each session.Who accepts the offer,and what is the total producer surplus in the market?


A) LeBron and Kobe; $500
B) Kevin and Steve; $500
C) LeBron and Kobe; $300
D) Kevin and Steve; $150

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

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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.Which of the following graphs represents the market supply curve? A) B) C) D) -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.Which of the following graphs represents the market supply curve?


A) 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.Which of the following graphs represents the market supply curve? A) B) C) D)
B) 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.Which of the following graphs represents the market supply curve? A) B) C) D)
C) 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.Which of the following graphs represents the market supply curve? A) B) C) D)
D)
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.Which of the following graphs represents the market supply curve? A) B) C) D)

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

Correct Answer

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Figure 7-20 Figure 7-20 -Refer to Figure 7-20.The equilibrium allocation of resources is A) efficient because total surplus is maximized at the equilibrium. B) efficient because consumer surplus is maximized at the equilibrium. C) inefficient because consumer surplus is larger than producer surplus at the equilibrium. D) inefficient because total surplus is maximized when 10 units of output are produced and sold. -Refer to Figure 7-20.The equilibrium allocation of resources is


A) efficient because total surplus is maximized at the equilibrium.
B) efficient because consumer surplus is maximized at the equilibrium.
C) inefficient because consumer surplus is larger than producer surplus at the equilibrium.
D) inefficient because total surplus is maximized when 10 units of output are produced and sold.

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

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A demand curve reflects each of the following except the


A) willingness to pay of all buyers in the market.
B) value each buyer in the market places on the good.
C) highest price buyers are willing to pay for each quantity.
D) ability of buyers to obtain the quantity they desire.

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

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Producer surplus is


A) represented on a graph by the area below the demand curve and above the supply curve.
B) the amount a seller is paid minus the cost of production.
C) also referred to as excess supply.
D) All of the above are correct.

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

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Figure 7-2 Figure 7-2 -Refer to Figure 7-2.When the price rises from P1 to P2,which of the following statements is not true? A) The buyers who still buy the good are worse off because they now pay more. B) Some buyers leave the market because they are not willing to buy the good at the higher price. C) Buyers place a higher value on the good after the price increase. D) Consumer surplus in the market falls. -Refer to Figure 7-2.When the price rises from P1 to P2,which of the following statements is not true?


A) The buyers who still buy the good are worse off because they now pay more.
B) Some buyers leave the market because they are not willing to buy the good at the higher price.
C) Buyers place a higher value on the good after the price increase.
D) Consumer surplus in the market falls.

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

Correct Answer

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