Question 1

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. 
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.

Question 2

Figure 7-30  
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Accepted Answer

Consumers entering t

Question 3

Figure 7-21  
-Refer to Figure 7-21. When the price is P1, area C represents

Accepted Answer

A) total benefit. 
B) producer surplus. 
C) consumer surplus. 
D) None of the above is correct. 
A) total benefit. 
B) producer surplus. 
C) consumer surplus. 
D) None of the above is correct.

Question 4

If John's willingness to pay for a good is $20 and the price of the good is $15, how much is John's consumer surplus from purchasing the good?

Accepted Answer

Consumer s

Question 5

Table 7-1  
-Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product?

Accepted Answer

A) Calvin 
B) Calvin and Sam 
C) Calvin, Sam, and Andrew 
D) Calvin, Sam, Andrew, and Lori 
A) Calvin 
B) Calvin and Sam 
C) Calvin, Sam, and Andrew 
D) Calvin, Sam, Andrew, and Lori

Question 6

Economists generally believe that, although there may be advantages to society from ticket-scalping, the costs to society of this activity outweigh the benefits.

Accepted Answer

A) True 
 B)False

Question 7

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's consumer surplus is

Accepted Answer

A) $500. 
B) $3,000. 
C) $3,500. 
D) $6,500. 
A) $500. 
B) $3,000. 
C) $3,500. 
D) $6,500.

Question 8

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is

Accepted Answer

A) $800. 
B) $300. 
C) $200. 
D) $500. 
A) $800. 
B) $300. 
C) $200. 
D) $500.

Question 9

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is

Accepted Answer

A) $150. 
B) $200. 
C) $350. 
D) $550. 
A) $150. 
B) $200. 
C) $350. 
D) $550.

Question 10

Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will

Accepted Answer

A) decrease, and producer surplus in the industry will decrease. 
B) increase, and producer surplus in the industry will increase. 
C) decrease, and producer surplus in the industry will increase. 
D) increase, and producer surplus in the industry will decrease. 
A) decrease, and producer surplus in the industry will decrease. 
B) increase, and producer surplus in the industry will increase. 
C) decrease, and producer surplus in the industry will increase. 
D) increase, and producer surplus in the industry will decrease.

Question 11

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 the market price is $28, which producers will supply units in the market?

Accepted Answer

The answer of Table 7-18
The following table shows the cost...

Question 12

All else equal, a decrease in demand will cause an increase in producer surplus.

Accepted Answer

A) True 
 B)False

Question 13

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to

Accepted Answer

A) only existing customers who now get lower prices on the gowns they were already planning to purchase. 
B) only new customers who enter the market because of the lower prices. 
C) both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. 
D) Consumer surplus does not increase; it decreases. 
A) only existing customers who now get lower prices on the gowns they were already planning to purchase. 
B) only new customers who enter the market because of the lower prices. 
C) both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. 
D) Consumer surplus does not increase; it decreases.

Question 14

Ronnie operates a lawn-care service. On each day, the cost of mowing the first lawn is $15, the cost of mowing the second lawn is $25, and the cost of mowing the third lawn is $40. His producer surplus on the first three lawns of the day is $100. If Ronnie charges all customers the same price for lawn mowing, that price is

Accepted Answer

A) $20. 
B) $60. 
C) $80. 
D) $180. 
A) $20. 
B) $60. 
C) $80. 
D) $180.

Question 15

Table 7-16  
-Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, total surplus will be

Accepted Answer

A) $42. 
B) $48. 
C) $54. 
D) $60. 
A) $42. 
B) $48. 
C) $54. 
D) $60.

Question 16

Table 7-9
The only four consumers in a market have the following willingness to pay for a good:  
-Refer to Table 7-9. If there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Accepted Answer

A) $0 or slightly more. 
B) $3 or slightly less. 
C) $4 or slightly more. 
D) $8 or slightly less. 
A) $0 or slightly more. 
B) $3 or slightly less. 
C) $4 or slightly more. 
D) $8 or slightly less.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Figure 7-11  
-Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus due to new producers entering the market?

Accepted Answer

A) $625 
B) $2,500 
C) $3,125 
D) $5,625 
A) $625 
B) $2,500 
C) $3,125 
D) $5,625

Question 19

Figure 7-15  
-Refer to Figure 7-15. When the price is P1, producer surplus is

Accepted Answer

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

Question 20

Table 7-9
The only four consumers in a market have the following willingness to pay for a good:  
-Refer to Table 7-9. If the market price for the good is $20, who will purchase the good?

Accepted Answer

A) Danita only 
B) Carolyn and Danita only 
C) Ashleigh, Barb, and Carolyn only 
D) All four buyers would purchase the good. 
A) Danita only 
B) Carolyn and Danita only 
C) Ashleigh, Barb, and Carolyn only 
D) All four buyers would purchase the good.

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

Total surplus in a market will increase when the government

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Figure 7-21 -Refer to Figure 7-21. When the price is P1, area C represents

If John's willingness to pay for a good is $20 and the price of the good is $15, how much is John's consumer surplus from purchasing the good?

Table 7-1 -Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product?

Economists generally believe that, although there may be advantages to society from ticket-scalping, the costs to society of this activity outweigh the benefits.

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's consumer surplus is

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is

Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will

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 the market price is $28, which producers will supply units in the market?

All else equal, a decrease in demand will cause an increase in producer surplus.

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to

Table 7-16 -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, total surplus will be

Table 7-9 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-9. If there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

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

Figure 7-11 -Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus due to new producers entering the market?

Figure 7-15 -Refer to Figure 7-15. When the price is P1, producer surplus is

Table 7-9 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-9. If the market price for the good is $20, who will purchase the good?

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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