Question 1

Figure 7-10 
-Refer to Figure 7-10. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Accepted Answer

A)   BCG
B)   ACH
C)   DGH
D)   ABGDE) A) and B)
F) C) and D)

Question 2

The maximum price that a buyer will pay for a good is called

Accepted Answer

A)   consumer surplus.
B)   willingness to pay.
C)   equilibrium.
D)   efficiency.E) B) and C)
F) A) and B)

Question 3

Which of the following is correct?

Accepted Answer

A)   Consumer surplus refers to a situation in which there are more buyers than sellers in a market.
B)   Producer surplus refers to a situation in which there are more sellers than buyers in a market.
C)   Total surplus is measured as the area below the demand curve and above the supply curve, up to the equilibrium quantity.
D)   All of the above are correct.E) None of the above
F) C) and D)

Question 4

Figure 7-18 
-Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

Accepted Answer

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

Question 5

Producer surplus is the cost of production minus the amount a seller is paid.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

Figure 7-24 
-Refer to Figure 7-24. At equilibrium, producer surplus is measured by the area

Accepted Answer

A)   ABD.
B)   ABF.
C)   CDI.
D)   BDF.E) B) and D)
F) C) and D)

Question 8

Figure 7-24 
-Refer to Figure 7-24. If 10 units of the good are produced and sold, then

Accepted Answer

A)   the marginal cost to sellers exceeds the marginal value to buyers.
B)   producer surplus is maximized.
C)   total surplus is minimized.
D)   the marginal value to buyers exceeds the marginal cost to sellers.E) C) and D)
F) B) and C)

Question 9

A seller's willingness to sell is

Accepted Answer

A)   measured by the seller's cost of production.
B)   related to her supply curve, just as a buyer's willingness to buy is related to his demand curve.
C)   less than the price received if producer surplus is a positive number.
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 10

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. If the market price of an orange is $0.70, then the market quantity of oranges demanded per day is

Accepted Answer

A)   5.
B)   6.
C)   4.
D)   7.E) B) and D)
F) All of the above

Question 11

Consumer surplus is

Accepted Answer

A)   the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
B)   the amount a buyer is willing to pay for a good minus the cost of producing the good.
C)   the amount by which the quantity supplied of a good exceeds the quantity demanded of the good.
D)   a buyer's willingness to pay for a good plus the price of the good.E) A) and B)
F) A) and C)

Question 12

Figure 7-23 
-Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

Accepted Answer

A)   A+B+C.
B)   A+B+D+F.
C)   A+B+C+D+H+F.
D)   A+B+C+D+H+F+G+I.E) A) and C)
F) None of the above

Question 13

The lower the price, the lower the consumer surplus, all else equal.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following will cause a decrease in producer surplus?

Accepted Answer

A)   the imposition of a binding price ceiling in the market
B)   an increase in the number of buyers of the good
C)   income increases and buyers consider the good to be normal
D)   the price of a complement decreasesE) All of the above
F) A) and B)

Question 15

Market power and externalities are examples of

Accepted Answer

A)   laissez-faire economics.
B)   public policy.
C)   market failure.
D)   welfare economics.E) All of the above
F) A) and D)

Question 16

Figure 7-4 
-Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Accepted Answer

A)   BDF
B)   AFG
C)   BCGD
D)   ABCE) B) and D)
F) None of the above

Question 17

An example of normative analysis is studying

Accepted Answer

A)   how market forces produce equilibrium.
B)   surpluses and shortages.
C)   whether equilibrium outcomes are socially desirable.
D)   income distributions.E) B) and D)
F) None of the above

Question 18

The "invisible hand" refers to

Accepted Answer

A)   the marketplace guiding the self-interests of market participants into promoting general economic well-being.
B)   the fact that social planners sometimes have to intervene, even in perfectly competitive markets, to make those markets more efficient.
C)   the equality that results from market forces allocating the goods produced in the market.
D)   the automatic maximization of consumer surplus in free markets.E) A) and B)
F) All of the above

Question 19

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?

Accepted Answer

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

Question 20

Figure 7-6 
-Refer to Figure 7-6. If the government imposes a price floor of $110 in this market, then consumer surplus will decrease by

Accepted Answer

A)   $200.
B)   $400.
C)   $600.
D)   $800.E) A) and D)
F) A) and C)

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

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?

Correct Answer
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A seller's willingness to sell is

Correct Answer
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Correct Answer
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Consumer surplus is

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

Correct Answer
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The maximum price that a buyer will pay for a good is called

Correct Answer
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Figure 7-6 -Refer to Figure 7-6. If the government imposes a price floor of $110 in this market, then consumer surplus will decrease by

Correct Answer
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Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Correct Answer
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Producer surplus is the cost of production minus the amount a seller is paid.

Correct Answer
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Which of the following will cause a decrease in producer surplus?

Correct Answer
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The lower the price, the lower the consumer surplus, all else equal.

Correct Answer
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Figure 7-18 -Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

Correct Answer
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Figure 7-23 -Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

Correct Answer
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The "invisible hand" refers to

Correct Answer
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Which of the following is correct?

Correct Answer
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Figure 7-24 -Refer to Figure 7-24. If 10 units of the good are produced and sold, then

Correct Answer
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Market power and externalities are examples of

Correct Answer
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Figure 7-10 -Refer to Figure 7-10. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Correct Answer
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An example of normative analysis is studying

Correct Answer
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Figure 7-24 -Refer to Figure 7-24. At equilibrium, producer surplus is measured by the area

Correct Answer
verified

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

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?

Correct AnswerverifiedShow Answer

A seller's willingness to sell is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Consumer surplus is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The maximum price that a buyer will pay for a good is called

Correct AnswerverifiedShow Answer

Figure 7-6 -Refer to Figure 7-6. If the government imposes a price floor of $110 in this market, then consumer surplus will decrease by

Correct AnswerverifiedShow Answer

Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Correct AnswerverifiedShow Answer

Producer surplus is the cost of production minus the amount a seller is paid.

Correct AnswerverifiedShow Answer

Which of the following will cause a decrease in producer surplus?

Correct AnswerverifiedShow Answer

The lower the price, the lower the consumer surplus, all else equal.

Correct AnswerverifiedShow Answer

Figure 7-18 -Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

Correct AnswerverifiedShow Answer

Figure 7-23 -Refer to Figure 7-23. At equilibrium, total surplus is represented by the area

Correct AnswerverifiedShow Answer

The "invisible hand" refers to

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Figure 7-24 -Refer to Figure 7-24. If 10 units of the good are produced and sold, then

Correct AnswerverifiedShow Answer

Market power and externalities are examples of

Correct AnswerverifiedShow Answer

Figure 7-10 -Refer to Figure 7-10. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Correct AnswerverifiedShow Answer

An example of normative analysis is studying

Correct AnswerverifiedShow Answer

Figure 7-24 -Refer to Figure 7-24. At equilibrium, producer surplus is measured by the area

Correct AnswerverifiedShow Answer

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