Question 1

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.Which of the following statements is correct?

Accepted Answer

A)   Neither Bob's consumer surplus nor Charisse's consumer surplus can exceed Allison's consumer surplus,for any price of an orange.
B)   All three individuals will buy at least one orange only if the price of an orange is less than $0.25.
C)   If the price of an orange is $0.60,then consumer surplus is $4.90.
D)   All of the above are correct.

Question 2

Which of the Ten Principles of Economics does welfare economics explain more fully?

Accepted Answer

A)   The cost of something is what you give up to get it.
B)   Rational people think at the margin.
C)   Markets are usually a good way to organize economic activity.
D)   People respond to incentives.

Question 3

Which of the following is not correct?

Accepted Answer

A)   Market power can cause markets to be inefficient.
B)   When the decisions of buyers and sellers affect nonparticipants,markets may be inefficient.
C)   The tools of welfare economics cannot help economists when markets are inefficient.
D)   Externalities can cause markets to be inefficient.

Question 4

The marginal seller is the seller

Accepted Answer

A)   for whom the marginal cost of producing one more unit of output is the lowest among all sellers,and the marginal buyer is the buyer for whom the marginal benefit of one more unit of the good is the highest among all buyers.
B)   who supplies the smallest quantity of the good among all sellers,and the marginal buyer is the buyer who demands the smallest quantity of the good among all buyers.
C)   who would leave the market first if the price were any lower,and the marginal buyer is the buyer who would leave the market first if the price were any higher.
D)   who has the largest producer surplus,and the marginal buyer is the buyer who has the largest consumer surplus.

Question 5

Figure 7-19 
-Refer to Figure 7-19.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.

Question 6

Table 7-7
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-7.If the market price is $1,000,the producer surplus in the market is

Accepted Answer

A)   $700.
B)   $750.
C)   $2,250.
D)   $3,700.

Question 7

Figure 7-13 
-Refer to Figure 7-13.Suppose the price of the good is $450.Then,on the first unit of the good that is sold,producer surplus is

Accepted Answer

A)   $250,and on the second unit of the good that is sold,producer surplus is $100.
B)   $250,and on the second unit of the good that is sold,producer surplus is $150.
C)   $350,and on the second unit of the good that is sold,producer surplus is $100.
D)   $350,and on the second unit of the good that is sold,producer surplus is $150.

Question 8

If the government imposes a binding price floor in a market,then the consumer surplus in that market will decrease.

Accepted Answer

A) True 
 B)False

Question 9

Donald produces nails at a cost of $350 per ton.If he sells the nails for $500 per ton,his producer surplus is

Accepted Answer

A)   $150.
B)   $350.
C)   $500.
D)   $850.

Question 10

Consumer surplus is the

Accepted Answer

A)   amount of a good consumers get without paying anything.
B)   amount a consumer pays minus the amount the consumer is willing to pay.
C)   amount a consumer is willing to pay minus the amount the consumer actually pays.
D)   value of a good to a consumer.

Question 11

Total surplus is represented by the area below the

Accepted Answer

A)   demand curve and above the price.
B)   price and up to the point of equilibrium.
C)   demand curve and above the supply curve,up to the equilibrium quantity.
D)   demand curve and above the horizontal axis,up to the equilibrium quantity.

Question 12

PlayStations and PlayStation games are complementary goods.A technological advance in the production of PlayStations will

Accepted Answer

A)   increase consumer surplus in the market for PlayStations and decrease producer surplus in the market for PlayStation games.
B)   increase consumer surplus in the market for PlayStations and increase producer surplus in the market for PlayStation games.
C)   decrease consumer surplus in the market for PlayStations and increase producer surplus in the market for PlayStation games.
D)   decrease consumer surplus in the market for PlayStations and decrease producer surplus in the market for PlayStation games.

Question 13

Suppose that the market price for pizzas increases.The increase in producer surplus comes from the benefit of the higher prices to

Accepted Answer

A)   only existing sellers who now receive higher prices on the pizzas they were already selling.
B)   only new sellers who enter the market because of the higher prices.
C)   both existing sellers who now receive higher prices on the pizzas they were already selling and new sellers who enter the market because of the higher prices.
D)   Producer surplus does not increase; it decreases.

Question 14

Table 7-1
 
-Refer to Table 7-1.If the price of the product is $51,then who would be willing to purchase the product?

Accepted Answer

A)   Lori
B)   Lori and Audrey
C)   Lori,Audrey,and Zach
D)   no one

Question 15

The Surgeon General announces that eating chocolate increases tooth decay.As a result,the equilibrium price of chocolate

Accepted Answer

A)   increases,and producer surplus increases.
B)   increases,and producer surplus decreases.
C)   decreases,and producer surplus increases.
D)   decreases,and producer surplus decreases.

Question 16

Jeff decides that he would pay as much as $3,000 for a new laptop computer.He buys the computer and realizes consumer surplus of $700.How much did Jeff pay for his computer?

Accepted Answer

A)   $700
B)   $2,300
C)   $3,000
D)   $3,700

Question 17

If the demand for light bulbs increases,producer surplus in the market for light bulbs

Accepted Answer

A)   increases.
B)   decreases.
C)   remains the same.
D)   may increase,decrease,or remain the same.

Question 18

Figure 7-19 
-Refer to Figure 7-19.The efficient price-quantity combination is

Accepted Answer

A)   P1 and Q1.
B)   P2 and Q2.
C)   P3 and Q1.
D)   P4 and 0.

Question 19

Which of the following is true when the price of a good or service rises?

Accepted Answer

A)   Buyers who were already buying the good or service are better off.
B)   Some buyers exit the market.
C)   The total consumer surplus in the market increases.
D)   The total value of purchases before and after the price change is the same.

Question 20

For any given quantity,the price on a demand curve represents the marginal buyer's willingness to pay.

Accepted Answer

A) True 
 B)False

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

Consumer surplus is the

Correct Answer
verified

Table 7-1 -Refer to Table 7-1.If the price of the product is $51,then who would be willing to purchase the product?

Correct Answer
verified

Donald produces nails at a cost of $350 per ton.If he sells the nails for $500 per ton,his producer surplus is

Correct Answer
verified

PlayStations and PlayStation games are complementary goods.A technological advance in the production of PlayStations will

Correct Answer
verified

The Surgeon General announces that eating chocolate increases tooth decay.As a result,the equilibrium price of chocolate

Correct Answer
verified

Suppose that the market price for pizzas increases.The increase in producer surplus comes from the benefit of the higher prices to

Correct Answer
verified

Which of the Ten Principles of Economics does welfare economics explain more fully?

Correct Answer
verified

Table 7-7 The following table represents the costs of five possible sellers. -Refer to Table 7-7.If the market price is $1,000,the producer surplus in the market is

Correct Answer
verified

If the demand for light bulbs increases,producer surplus in the market for light bulbs

Correct Answer
verified

Figure 7-19 -Refer to Figure 7-19.The efficient price-quantity combination is

Correct Answer
verified

Figure 7-19 -Refer to Figure 7-19.At equilibrium,total surplus is represented by the area

Correct Answer
verified

For any given quantity,the price on a demand curve represents the marginal buyer's willingness to pay.

Correct Answer
verified

Total surplus is represented by the area below the

Correct Answer
verified

Jeff decides that he would pay as much as $3,000 for a new laptop computer.He buys the computer and realizes consumer surplus of $700.How much did Jeff pay for his computer?

Correct Answer
verified

Correct Answer
verified

Figure 7-13 -Refer to Figure 7-13.Suppose the price of the good is $450.Then,on the first unit of the good that is sold,producer surplus is

Correct Answer
verified

If the government imposes a binding price floor in a market,then the consumer surplus in that market will decrease.

Correct Answer
verified

Which of the following is true when the price of a good or service rises?

Correct Answer
verified

The marginal seller is the seller

Correct Answer
verified

Which of the following is not correct?

Correct Answer
verified

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

Consumer surplus is the

Correct AnswerverifiedShow Answer

Table 7-1 -Refer to Table 7-1.If the price of the product is $51,then who would be willing to purchase the product?

Correct AnswerverifiedShow Answer

Donald produces nails at a cost of $350 per ton.If he sells the nails for $500 per ton,his producer surplus is

Correct AnswerverifiedShow Answer

PlayStations and PlayStation games are complementary goods.A technological advance in the production of PlayStations will

Correct AnswerverifiedShow Answer

The Surgeon General announces that eating chocolate increases tooth decay.As a result,the equilibrium price of chocolate

Correct AnswerverifiedShow Answer

Suppose that the market price for pizzas increases.The increase in producer surplus comes from the benefit of the higher prices to

Correct AnswerverifiedShow Answer

Which of the Ten Principles of Economics does welfare economics explain more fully?

Correct AnswerverifiedShow Answer

Table 7-7 The following table represents the costs of five possible sellers. -Refer to Table 7-7.If the market price is $1,000,the producer surplus in the market is

Correct AnswerverifiedShow Answer

If the demand for light bulbs increases,producer surplus in the market for light bulbs

Correct AnswerverifiedShow Answer

Figure 7-19 -Refer to Figure 7-19.The efficient price-quantity combination is

Correct AnswerverifiedShow Answer

Figure 7-19 -Refer to Figure 7-19.At equilibrium,total surplus is represented by the area

Correct AnswerverifiedShow Answer

For any given quantity,the price on a demand curve represents the marginal buyer's willingness to pay.

Correct AnswerverifiedShow Answer

Total surplus is represented by the area below the

Correct AnswerverifiedShow Answer

Jeff decides that he would pay as much as $3,000 for a new laptop computer.He buys the computer and realizes consumer surplus of $700.How much did Jeff pay for his computer?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 7-13 -Refer to Figure 7-13.Suppose the price of the good is $450.Then,on the first unit of the good that is sold,producer surplus is

Correct AnswerverifiedShow Answer

If the government imposes a binding price floor in a market,then the consumer surplus in that market will decrease.

Correct AnswerverifiedShow Answer

Which of the following is true when the price of a good or service rises?

Correct AnswerverifiedShow Answer

The marginal seller is the seller

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

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