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Figure 7-15 Figure 7-15 -Refer to Figure 7-15. When the price is P1, producer surplus is A) A. B) C. C) A+c. D) C+D. -Refer to Figure 7-15. When the price is P1, producer surplus is


A) A.
B) C.
C) A+c.
D) C+D.

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

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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) slightly more than $20. B) slightly more than $25. C) slightly more than $50. D) slightly more than $60. -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) slightly more than $20.
B) slightly more than $25.
C) slightly more than $50.
D) slightly more than $60.

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

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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. 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 consumer surplus amounts to A) $0.60. B) $1.20. C) $1.40. D) $3.40 -Refer to Table 7-6. If the market price of an apple is $1.40, then consumer surplus amounts to


A) $0.60.
B) $1.20.
C) $1.40.
D) $3.40

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

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The area below the price 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 equilibrium price, total surplus is A) $2,500. B) $1,000. C) $3,500. D) $7,000. -Refer to Figure 7-22. At the equilibrium price, total surplus is


A) $2,500.
B) $1,000.
C) $3,500.
D) $7,000.

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

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Abraham drinks Mountain Dew. He can buy as many cans of Mountain Dew as he wishes at a price of $0.55 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Abraham is rational in deciding how many cans to buy. His consumer surplus is


A) $0.50.
B) $0.60.
C) $0.70.
D) $1.00.

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

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Even though participants in the economy are motivated by self-interest, the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.

A) True
B) False

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Figure 7-20 Figure 7-20 -Refer to Figure 7-20. Total surplus can be measured as the area A) JNK. B) JNML. C) JRL. D) JNL. -Refer to Figure 7-20. Total surplus can be measured as the area


A) JNK.
B) JNML.
C) JRL.
D) JNL.

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

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You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?


A) $0
B) $10
C) $40
D) $50

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

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Table 7-15 Table 7-15 -Refer to Table 7-15. 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 take bids from the sellers. Who offers the two winning bids, and what do they offer to charge for the photography sessions? A) LeBron and Kobe; more than $450 but less than $600 B) Kevin and Steve; more than $450 but less than $600 C) LeBron and Kobe; more than $700 D) Kevin and Steve; less than $400 -Refer to Table 7-15. 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 take bids from the sellers. Who offers the two winning bids, and what do they offer to charge for the photography sessions?


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

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

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Table 7-12 The only four producers in a market have the following costs: Table 7-12 The only four producers in a market have the following costs: -Refer to Table 7-12. If Evan, Selena, Angie, and Kris sell the good, and the resulting producer surplus is $700, then the price must have been A) $200. B) $300. C) $500. D) $700. -Refer to Table 7-12. If Evan, Selena, Angie, and Kris sell the good, and the resulting producer surplus is $700, then the price must have been


A) $200.
B) $300.
C) $500.
D) $700.

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

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Inefficiency exists in an economy when a good is


A) not being consumed by buyers who value it most highly.
B) not distributed fairly among buyers.
C) not produced because buyers do not value it very highly.
D) being produced with less than all available resources.

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

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A seller is willing to sell a product only if the seller receives a price that is at least as great as the


A) seller's producer surplus.
B) seller's cost of production.
C) seller's profit.
D) average willingness to pay of buyers of the product.

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

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Suppose the demand for peaches decreases. What will happen to producer surplus in the market for peaches?


A) It increases.
B) It decreases.
C) It remains unchanged.
D) It may increase, decrease, or remain unchanged.

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

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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 D)
F) None of the above

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Figure 7-20 Figure 7-20 -Refer to Figure 7-20. For quantities less than M, the value to the marginal buyer is A) greater than the cost to the marginal seller, so increasing the quantity increases total surplus. B) less than the cost to the marginal seller, so increasing the quantity increases total surplus. C) greater than the cost to the marginal seller, so decreasing the quantity increases total surplus. D) less than the cost to the marginal seller, so decreasing the quantity increases total surplus. -Refer to Figure 7-20. For quantities less than M, the value to the marginal buyer is


A) greater than the cost to the marginal seller, so increasing the quantity increases total surplus.
B) less than the cost to the marginal seller, so increasing the quantity increases total surplus.
C) greater than the cost to the marginal seller, so decreasing the quantity increases total surplus.
D) less than the cost to the marginal seller, so decreasing the quantity increases total surplus.

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

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Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor. On a particular day, he is willing to tutor the first hour for $10, the second hour for $18, the third hour for $28, and the fourth hour for $40. Assume Allen is rational in deciding how many hours to tutor. His producer surplus is


A) $40.
B) $64.
C) $12.
D) $56.

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

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Figure 7-34 Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total producer surplus change, assuming the producers with the lowest cost were the ones supplying the market when the price floor was in place? -Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total producer surplus change, assuming the producers with the lowest cost were the ones supplying the market when the price floor was in place?

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Total producer surplus with the price fl...

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Which of the following statements is not correct about a market in equilibrium?


A) The price determines which buyers and which sellers participate in the market.
B) Those buyers who value the good more than the price choose to buy the good.
C) Those sellers whose costs are less than the price choose to produce and sell the good.
D) Consumer surplus will be equal to producer surplus.

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

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Figure 7-11 Figure 7-11 -Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers? A) $625 B) $2,500 C) $3,125 D) $5,625 -Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers?


A) $625
B) $2,500
C) $3,125
D) $5,625

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

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