Question 1

Figure 7-14  
-Refer to Figure 7-14. At the equilibrium price, producer surplus is

Accepted Answer

A) $800. 
B) $400. 
C) $450. 
D) $900. 
A) $800. 
B) $400. 
C) $450. 
D) $900.

Question 2

Welfare economics is the study of the welfare system.

Accepted Answer

A) True 
 B)False

Question 3

Figure 7-31  
-Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the increase in producer surplus to the producers supplying units at the initial $25 price?

Accepted Answer

The increase in prod

Question 4

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. 
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 5

Figure 7-32  
-Refer to Figure 7-32. How much are consumer surplus, producer surplus, and total surplus at the market equilibrium price?

Accepted Answer

.Consumer surplus is

Question 6

Figure 7-34  
-Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the government removed the price ceiling, by how much would total producer surplus increase for those producers entering the market after the price ceiling is removed?

Accepted Answer

When the price ceiling is remo

Question 7

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

Accepted Answer

A) consumer has consumer surplus of $5 if he buys the good. 
B) consumer does not purchase the good. 
C) price of the good will rise due to market forces. 
D) market is out of equilibrium. 
A) consumer has consumer surplus of $5 if he buys the good. 
B) consumer does not purchase the good. 
C) price of the good will rise due to market forces. 
D) market is out of equilibrium.

Question 8

Figure 7-12  
-Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the additional producer surplus to initial producers?

Accepted Answer

A) $15,000 
B) $3,750 
C) $7,500 
D) $30,000 
A) $15,000 
B) $3,750 
C) $7,500 
D) $30,000

Question 9

Figure 7-32  
-Refer to Figure 7-32. At what price will total surplus be maximized in this market?

Accepted Answer

.Total surplus will

Question 10

Scenario 7-2
Suppose market demand and market supply are given by the equations:  
-Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to   
By how much does total consumer surplus increase as a result of this supply shift?

Accepted Answer

Total consumer surplus prior t

Question 11

Figure 7-4  
-Refer to Figure 7-4. Which area represents consumer surplus at a price of P1?

Accepted Answer

A) BDF 
B) AFG 
C) ABDG 
D) ABC 
A) BDF 
B) AFG 
C) ABDG 
D) ABC

Question 12

Table 7-10
The following table represents the costs of five possible sellers.
Seller
Cost
Abby
$1,600
Bobby
$1,300
Dianne
$1,100
Evaline
$900
Carlos
$800
-Refer to Table 7-10. If the market price is $1,000, the producer surplus in the market is

Accepted Answer

A) $1000. 
B) $300. 
C) $1,700. 
D) $700. 
A) $1000. 
B) $300. 
C) $1,700. 
D) $700.

Question 13

Figure 7-22  
-Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus due to new producers entering the market would be

Accepted Answer

A) $400. 
B) $800. 
C) $1,200. 
D) $900. 
A) $400. 
B) $800. 
C) $1,200. 
D) $900.

Question 14

Efficiency in a market is achieved when

Accepted Answer

A) a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. 
B) the sum of producer surplus and consumer surplus is maximized. 
C) all firms are producing the good at the same low cost per unit. 
D) no buyer is willing to pay more than the equilibrium price for any unit of the good. 
A) a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. 
B) the sum of producer surplus and consumer surplus is maximized. 
C) all firms are producing the good at the same low cost per unit. 
D) no buyer is willing to pay more than the equilibrium price for any unit of the good.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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) Markets are usually a good way to organize economic activity. 
C) Trade can make everyone better off. 
D) A country's standard of living depends on its ability to produce goods and services. 
A) The cost of something is what you give up to get it. 
B) Markets are usually a good way to organize economic activity. 
C) Trade can make everyone better off. 
D) A country's standard of living depends on its ability to produce goods and services.

Question 17

Table 7-18
The following table shows the cost of producing a good for the only four producers in a market.  
-Refer to Table 7-18. If these four producers bid in an auction to supply one unit to a consumer, at what price will the good be sold?

Accepted Answer

The good w

Question 18

Figure 7-10  
-Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

Accepted Answer

A) BCG 
B) ACH 
C) ABGD 
D) AHGB 
A) BCG 
B) ACH 
C) ABGD 
D) AHGB

Question 19

Figure 7-16  
-Refer to Figure 7-16. Suppose the price of the good is $400. Then, on the first unit of the good that is sold, producer surplus amounts to

Accepted Answer

A) $200. 
B) $300. 
C) $400. 
D) $450. 
A) $200. 
B) $300. 
C) $400. 
D) $450.

Question 20

When there is a technological advance in the pork industry, consumer surplus in that market will

Accepted Answer

A) increase. 
B) decrease. 
C) not change, since technology affects producers and not consumers. 
D) not change, since consumers' willingness to pay is unaffected by the technological advance. 
A) increase. 
B) decrease. 
C) not change, since technology affects producers and not consumers. 
D) not change, since consumers' willingness to pay is unaffected by the technological advance.

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

Figure 7-14 -Refer to Figure 7-14. At the equilibrium price, producer surplus is

Welfare economics is the study of the welfare system.

Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the increase in producer surplus to the producers supplying units at the initial $25 price?

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

Figure 7-32 -Refer to Figure 7-32. How much are consumer surplus, producer surplus, and total surplus at the market equilibrium price?

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the government removed the price ceiling, by how much would total producer surplus increase for those producers entering the market after the price ceiling is removed?

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the additional producer surplus to initial producers?

Figure 7-32 -Refer to Figure 7-32. At what price will total surplus be maximized in this market?

Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to By how much does total consumer surplus increase as a result of this supply shift?

Figure 7-4 -Refer to Figure 7-4. Which area represents consumer surplus at a price of P1?

Table 7-10 The following table represents the costs of five possible sellers. Seller Cost Abby $1,600 Bobby $1,300 Dianne $1,100 Evaline $900 Carlos $800 -Refer to Table 7-10. If the market price is $1,000, the producer surplus in the market is

Figure 7-22 -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus due to new producers entering the market would be

Efficiency in a market is achieved when

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

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

Table 7-18 The following table shows the cost of producing a good for the only four producers in a market. -Refer to Table 7-18. If these four producers bid in an auction to supply one unit to a consumer, at what price will the good be sold?

Figure 7-10 -Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

Figure 7-16 -Refer to Figure 7-16. Suppose the price of the good is $400. Then, on the first unit of the good that is sold, producer surplus amounts to

When there is a technological advance in the pork industry, consumer surplus in that market will

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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