Question 1

Which of the following is correct?

Accepted Answer

A)  Efficiency deals with the size of the economic pie, and equality deals with how fairly the pie is sliced.
B)  Equality can be judged on positive grounds whereas efficiency requires normative judgments.
C)  Efficiency is more difficult to evaluate than equality.
D)  Equality and efficiency are both maximized in a society when total surplus is maximized.E) A) and D)
F) A) and C)

Question 2

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

Question 3

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?

Accepted Answer

A)  For the three individuals together, consumer surplus amounts to $35.
B)  Having bought the cell phone, Kristen is better off than she would have been had she not bought it.
C)  Had the price of the cell phone been $95 rather than $80, Katie and Kendra definitely would have been buyers and Kristen definitely would not have been a buyer.
D)  The fact that all three individuals paid $80 for the same type of cell phone indicates that each one placed the same value on that cell phone.E) C) and D)
F) A) and C)

Question 4

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

Accepted Answer

A) True 
 B)False

Question 5

Table 7-7 
-Refer to Table 7-7. You are selling extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. Which of the following graphs represents the market demand curve?

Accepted Answer

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

Question 6

Figure 7-33 
-Refer to Figure 7-33. How much is total producer surplus in this market at the equilibrium price?

Accepted Answer

Total producer surpl...

Question 7

Consumer surplus is

Accepted Answer

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

Question 8

Table 7-7 
-Refer to Table 7-7. You have two essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the two tickets. Who makes the winning bids, and what do they offer to pay for the tickets?

Accepted Answer

A)  Michael and Earvin; more than $350 but less than or equal to $400
B)  Michael and Earvin; more than $400 but less than or equal to $500
C)  Earvin and Larry; more than $300 but less than or equal to $350
D)  Larry and Charles; less than $300E) A) and D)
F) A) and B)

Question 9

In a market, the marginal buyer is the buyer

Accepted Answer

A)  whose willingness to pay is higher than that of all other buyers and potential buyers.
B)  whose willingness to pay is lower than that of all other buyers and potential buyers.
C)  who is willing to buy exactly one unit of the good.
D)  who would be the first to leave the market if the price were any higher.E) C) and D)
F) A) and B)

Question 10

Figure 7-8 
-Refer to Figure 7-8. If the government imposes a price ceiling of $80 in this market, then, assuming those with the highest willingness to pay purchase the good, consumer surplus will be

Accepted Answer

A)  $900.
B)  $1,200.
C)  $1,500.
D)  $1,600.E) A) and D)
F) A) and C)

Question 11

Corn chips and potato chips are substitutes. Good weather that sharply increases the corn harvest would

Accepted Answer

A)  increase consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips.
B)  increase consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips.
C)  decrease consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips.
D)  decrease consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips.E) A) and D)
F) B) and D)

Question 12

Figure 7-33 
-Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total producer surplus in this market at the new equilibrium price?

Accepted Answer

Total producer surpl...

Question 13

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

Accepted Answer

A)  A.
B)  A+B+C.
C)  D+H+F.
D)  A+B+C+D+H+F.E) B) and C)
F) A) and B)

Question 14

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Accepted Answer

A) True 
 B)False

Question 15

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to

Accepted Answer

A)  $4.
B)  $16.
C)  $20.
D)  $36.E) None of the above
F) A) and C)

Question 16

Total surplus in a market will increase when the government

Accepted Answer

A)  imposes a binding price floor or a binding price ceiling on that market.
B)  imposes a tax on that market.
C)  Both a and b are correct.
D)  Neither a nor b is correct.E) A) and C)
F) None of the above

Question 17

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?

Accepted Answer

Total producer surplus with the price fl...

Question 18

Figure 7-34 
-Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total producer surplus assuming those producers with the lowest cost are the ones who supply the market?

Accepted Answer

Total producer surpl...

Question 19

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $35.

Accepted Answer

A) True 
 B)False

Question 20

Producer surplus equals

Accepted Answer

A)  Value to buyers - Amount paid by buyers.
B)  Amount received by sellers - Costs of sellers.
C)  Value to buyers - Costs of sellers.
D)  Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers.E) None of the above
F) All of the above

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

Figure 7-34 -Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total producer surplus assuming those producers with the lowest cost are the ones who supply the market?

Correct Answer
verified
Total producer surpl...
View Answer

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to

Correct Answer
verified

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?

Correct Answer
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Correct Answer
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Total producer surplus with the price fl...
View Answer

In a market, the marginal buyer is the buyer

Correct Answer
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Figure 7-8 -Refer to Figure 7-8. If the government imposes a price ceiling of $80 in this market, then, assuming those with the highest willingness to pay purchase the good, consumer surplus will be

Correct Answer
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Which of the following is correct?

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

Correct Answer
verified

Correct Answer
verified

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $35.

Correct Answer
verified

Corn chips and potato chips are substitutes. Good weather that sharply increases the corn harvest would

Correct Answer
verified

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Correct Answer
verified

Correct Answer
verified

Total surplus in a market will increase when the government

Correct Answer
verified

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

Correct Answer
verified

Figure 7-33 -Refer to Figure 7-33. How much is total producer surplus in this market at the equilibrium price?

Correct Answer
verified
Total producer surpl...
View Answer

Producer surplus equals

Correct Answer
verified

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

Correct Answer
verified

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total producer surplus in this market at the new equilibrium price?

Correct Answer
verified
Total producer surpl...
View Answer

Consumer surplus is

Correct Answer
verified

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

Figure 7-34 -Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total producer surplus assuming those producers with the lowest cost are the ones who supply the market?

Correct AnswerverifiedTotal producer surpl...View AnswerShow Answer

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to

Correct AnswerverifiedShow Answer

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedTotal producer surplus with the price fl...View AnswerShow Answer

In a market, the marginal buyer is the buyer

Correct AnswerverifiedShow Answer

Figure 7-8 -Refer to Figure 7-8. If the government imposes a price ceiling of $80 in this market, then, assuming those with the highest willingness to pay purchase the good, consumer surplus will be

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $35.

Correct AnswerverifiedShow Answer

Corn chips and potato chips are substitutes. Good weather that sharply increases the corn harvest would

Correct AnswerverifiedShow Answer

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Total surplus in a market will increase when the government

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 7-33 -Refer to Figure 7-33. How much is total producer surplus in this market at the equilibrium price?

Correct AnswerverifiedTotal producer surpl...View AnswerShow Answer

Producer surplus equals

Correct AnswerverifiedShow Answer

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

Correct AnswerverifiedShow Answer

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total producer surplus in this market at the new equilibrium price?

Correct AnswerverifiedTotal producer surpl...View AnswerShow Answer

Consumer surplus is

Correct AnswerverifiedShow Answer

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Total producer surpl...
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Total producer surplus with the price fl...
View Answer

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Total producer surpl...
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Total producer surpl...
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