Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

Inefficiency exists in an economy when a good is

Accepted Answer

A) being produced with less than all available resources. 
B) not distributed fairly among buyers. 
C) not being produced by the lowest-cost producers. 
D) being consumed by buyers who value it most highly. 
A) being produced with less than all available resources. 
B) not distributed fairly among buyers. 
C) not being produced by the lowest-cost producers. 
D) being consumed by buyers who value it most highly. C

Question 3

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. Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40?

Accepted Answer

A) Allison 
B) Bob 
C) Charisse 
D) All three individuals experience the same loss of consumer surplus. 
A) Allison 
B) Bob 
C) Charisse 
D) All three individuals experience the same loss of consumer surplus. A

Question 4

Figure 7-15  
-Refer to Figure 7-15. When the price falls from P2 to P1, producer surplus

Accepted Answer

A) decreases by an amount equal to C. 
B) decreases by an amount equal to A+B. 
C) decreases by an amount equal to A+C. 
D) increases by an amount equal to A+B. 
A) decreases by an amount equal to C. 
B) decreases by an amount equal to A+B. 
C) decreases by an amount equal to A+C. 
D) increases by an amount equal to A+B.

Question 5

Tammy loves donuts. The table shown reflects the value Tammy places on each donut she eats:   
a.Use this information to construct Tammy's demand curve for donuts.
b.If the price of donuts is $0.20, how many donuts will Tammy buy?
c.Show Tammy's consumer surplus on your graph. How much consumer surplus would she have at a price of $0.20?
d.If the price of donuts rose to $0.40, how many donuts would she purchase now? What would happen to Tammy's consumer surplus? Show this change on your graph.

Accepted Answer

a. @#IMG-DLM& b.At a price of $0.20, Tammy would b

Question 6

Figure 7-21  
-Refer to Figure 7-21. Which area represents total surplus in the market when the price is P1?

Accepted Answer

A) A+B 
B) B+C 
C) C+D 
D) A+B+C+D 
A) A+B 
B) B+C 
C) C+D 
D) A+B+C+D

Question 7

Table 7-8
During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase.  
-Refer to Table 7-8. The price that Chad paid for a latte on the second day is

Accepted Answer

A) $0.25 less than the amount he paid on the first day. 
B) $1.00 less than the amount he paid on the first day. 
C) $1.50 less than the amount he paid on the first day. 
D) $0.50 less than the amount he paid on the first day. 
A) $0.25 less than the amount he paid on the first day. 
B) $1.00 less than the amount he paid on the first day. 
C) $1.50 less than the amount he paid on the first day. 
D) $0.50 less than the amount he paid on the first day.

Question 8

Figure 7-28  
-Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers

Accepted Answer

A) and the marginal cost to sellers are both P2. 
B) is P2, and the marginal cost to sellers is P3. 
C) and the marginal cost to sellers are both P3. 
D) is P3, and the marginal cost to sellers is P2. 
A) and the marginal cost to sellers are both P2. 
B) is P2, and the marginal cost to sellers is P3. 
C) and the marginal cost to sellers are both P3. 
D) is P3, and the marginal cost to sellers is P2.

Question 9

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

Question 10

Figure 7-1  
-Refer to Figure 7-1. If the price of the good is $200, then

Accepted Answer

A) consumer surplus is $150. 
B) consumer surplus is $650. 
C) producer surplus is $650. 
D) producer surplus is $750. 
A) consumer surplus is $150. 
B) consumer surplus is $650. 
C) producer surplus is $650. 
D) producer surplus is $750.

Question 11

Consumer surplus

Accepted Answer

A) is closely related to the supply curve for a product. 
B) is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward-sloping line. 
C) is measured using the demand curve for a product. 
D) does not reflect economic well-being in most markets. 
A) is closely related to the supply curve for a product. 
B) is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward-sloping line. 
C) is measured using the demand curve for a product. 
D) does not reflect economic well-being in most markets.

Question 12

Figure 7-32  
-Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is consumer surplus?

Accepted Answer

Consumer s

Question 13

Table 7-12
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
Seller
Cost
Marcia
$200
Jan
$250
Cindy
$350
Greg
$400
Peter
$700
Bobby
$800
-Refer to Table 7-12. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. The bids are required to be rounded to the nearest dollar. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. Your parents have given you $450 to spend on piano lessons. You believe that the sellers with higher opportunity costs offer higher quality lessons. You want the highest quality lessons that you can afford, but you can spend any remaining money on dinner with friends. From whom will you take lessons, and how much money will you spend?

Accepted Answer

A) Peter; $450 
B) Cindy; $450 
C) Greg; $401 
D) Cindy; $401 
A) Peter; $450 
B) Cindy; $450 
C) Greg; $401 
D) Cindy; $401

Question 14

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

Accepted Answer

A) True 
 B)False

Question 15

If the government allowed a free market for transplant organs such as kidneys to exist, the

Accepted Answer

A) shortage of organs would be eliminated, and there would be no surplus of organs. 
B) shortage of organs would be eliminated, but a surplus of organs would develop. 
C) shortage of organs would persist. 
D) overall well-being of society would remain unchanged. 
A) shortage of organs would be eliminated, and there would be no surplus of organs. 
B) shortage of organs would be eliminated, but a surplus of organs would develop. 
C) shortage of organs would persist. 
D) overall well-being of society would remain unchanged.

Question 16

Figure 7-5  
-Refer to Figure 7-5. If the price of the good is $6, then consumer surplus is

Accepted Answer

A) $16. 
B) $24. 
C) $30. 
D) $36. 
A) $16. 
B) $24. 
C) $30. 
D) $36.

Question 17

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 18

Table 7-15
The following table represents the costs of five possible sellers.
Seller
Cost ($)
Quentin
10
Ruby
30
Sandra
60
Thomas
100
Ursula
150
-Refer to Table 7-15. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?

Accepted Answer

A) $90 
B) $110 
C) $130 
D) $140 
A) $90 
B) $110 
C) $130 
D) $140

Question 19

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $90.

Accepted Answer

A) True 
 B)False

Question 20

Figure 7-16  
-Refer to Figure 7-16. Sellers will be unwilling to sell more than

Accepted Answer

A) 1 unit of the good if its price is below $200. 
B) 2 units of the good if its price is below $450. 
C) 3 units of the good if its price is below $700. 
D) All of the above are correct. 
A) 1 unit of the good if its price is below $200. 
B) 2 units of the good if its price is below $450. 
C) 3 units of the good if its price is below $700. 
D) All of the above are correct.

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

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

Inefficiency exists in an economy when a good is

Figure 7-15 -Refer to Figure 7-15. When the price falls from P2 to P1, producer surplus

Figure 7-21 -Refer to Figure 7-21. Which area represents total surplus in the market when the price is P1?

Table 7-8 During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase. -Refer to Table 7-8. The price that Chad paid for a latte on the second day is

Figure 7-28 -Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers

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

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $200, then

Consumer surplus

Figure 7-32 -Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is consumer surplus?

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

If the government allowed a free market for transplant organs such as kidneys to exist, the

Figure 7-5 -Refer to Figure 7-5. If the price of the good is $6, then consumer surplus is

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

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $90.

Figure 7-16 -Refer to Figure 7-16. Sellers will be unwilling to sell more than

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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