Question 1

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is

Accepted Answer

A) $650. 
B) $150. 
C) $250. 
D) $400. 
A) $650. 
B) $150. 
C) $250. 
D) $400.

Question 2

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Accepted Answer

A) True 
 B)False

Question 3

When a buyer's willingness to pay for a good is equal to the price of the good, the

Accepted Answer

A) buyer's consumer surplus for that good is maximized. 
B) buyer will buy as much of the good as the buyer's budget allows. 
C) price of the good exceeds the value that the buyer places on the good. 
D) buyer is indifferent between buying the good and not buying it. 
A) buyer's consumer surplus for that good is maximized. 
B) buyer will buy as much of the good as the buyer's budget allows. 
C) price of the good exceeds the value that the buyer places on the good. 
D) buyer is indifferent between buying the good and not buying it.

Question 4

One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of

Accepted Answer

A) factor markets. 
B) energy markets. 
C) welfare economics. 
D) labor economics. 
A) factor markets. 
B) energy markets. 
C) welfare economics. 
D) labor economics.

Question 5

Figure 7-13  
-Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producers in the market?

Accepted Answer

A) $1,200 
B) $2,400 
C) $3,600 
D) $4,800 
A) $1,200 
B) $2,400 
C) $3,600 
D) $4,800

Question 6

Producer surplus is

Accepted Answer

A) measured using the demand curve for a good. 
B) always a negative number for sellers in a competitive market. 
C) the amount a seller is paid minus the cost of production. 
D) the opportunity cost of production minus the cost of producing goods that go unsold. 
A) measured using the demand curve for a good. 
B) always a negative number for sellers in a competitive market. 
C) the amount a seller is paid minus the cost of production. 
D) the opportunity cost of production minus the cost of producing goods that go unsold.

Question 7

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 change?

Accepted Answer

Total producer surplus with th

Question 8

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 change in producer surplus?

Accepted Answer

A) Producer surplus increases by $3,125. 
B) Producer surplus increases by $5,625. 
C) Producer surplus decreases by $3,125. 
D) Producer surplus decreases by $5,625. 
A) Producer surplus increases by $3,125. 
B) Producer surplus increases by $5,625. 
C) Producer surplus decreases by $3,125. 
D) Producer surplus decreases by $5,625.

Question 9

Producer surplus directly measures

Accepted Answer

A) the well-being of society as a whole. 
B) the well-being of buyers and sellers. 
C) the well-being of sellers. 
D) sellers' willingness to sell. 
A) the well-being of society as a whole. 
B) the well-being of buyers and sellers. 
C) the well-being of sellers. 
D) sellers' willingness to sell.

Question 10

On a graph, the area below a demand curve and above the price measures

Accepted Answer

A) producer surplus. 
B) consumer surplus. 
C) deadweight loss. 
D) willingness to pay. 
A) producer surplus. 
B) consumer surplus. 
C) deadweight loss. 
D) willingness to pay.

Question 11

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

Accepted Answer

A) 40. 
B) 200. 
C) 8. 
D) 50. 
A) 40. 
B) 200. 
C) 8. 
D) 50.

Question 12

Total surplus is

Accepted Answer

A) equal to consumer surplus minus producer surplus. 
B) equal to the total value to buyers minus the total cost to sellers. 
C) equal to consumers' willingness to pay plus producers' cost. 
D) greater than the sum of consumer surplus plus producer surplus. 
A) equal to consumer surplus minus producer surplus. 
B) equal to the total value to buyers minus the total cost to sellers. 
C) equal to consumers' willingness to pay plus producers' cost. 
D) greater than the sum of consumer surplus plus producer surplus.

Question 13

Total surplus is

Accepted Answer

A) the total cost to sellers of providing the good minus the total value of the good to buyers. 
B) the total value of the good to buyers minus the cost to sellers of providing the good. 
C) the difference between consumer surplus and sellers' cost. 
D) always smaller than producer surplus. 
A) the total cost to sellers of providing the good minus the total value of the good to buyers. 
B) the total value of the good to buyers minus the cost to sellers of providing the good. 
C) the difference between consumer surplus and sellers' cost. 
D) always smaller than producer surplus.

Question 14

Figure 7-15  
-Refer to Figure 7-15. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Accepted Answer

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

Question 15

Total surplus in a market can be measured as the area below the supply curve plus the area above the demand curve, up to the point of equilibrium.

Accepted Answer

A) True 
 B)False

Question 16

Figure 7-29  
-Refer to Figure 7-29. Which of the following statements is correct?

Accepted Answer

A) The market is in equilibrium at Q1. 
B) At Q2, the cost to sellers exceeds the value to buyers. 
C) At Q4, the value to buyers is less than the cost to sellers. 
D) At Q3, the market is producing too much output. 
A) The market is in equilibrium at Q1. 
B) At Q2, the cost to sellers exceeds the value to buyers. 
C) At Q4, the value to buyers is less than the cost to sellers. 
D) At Q3, the market is producing too much output.

Question 17

Table 7-11
The only four producers in a market have the following costs:
Seller
Cost
Evan
$50
Selena
$100
Angie
$150
Kris
$200
-Refer to Table 7-11. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Accepted Answer

A) $200. 
B) $300. 
C) $450. 
D) $600. 
A) $200. 
B) $300. 
C) $450. 
D) $600.

Question 18

Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field.  
-Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, what will be the selling price?

Accepted Answer

A) slightly more than $20. 
B) slightly more than $25. 
C) slightly more than $50. 
D) slightly more than $60. 
A) slightly more than $20. 
B) slightly more than $25. 
C) slightly more than $50. 
D) slightly more than $60.

Question 19

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

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

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

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

When a buyer's willingness to pay for a good is equal to the price of the good, the

One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of

Figure 7-13 -Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producers in the market?

Producer surplus is

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 change?

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 change in producer surplus?

Producer surplus directly measures

On a graph, the area below a demand curve and above the price measures

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

Total surplus is

Total surplus is

Figure 7-15 -Refer to Figure 7-15. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Total surplus in a market can be measured as the area below the supply curve plus the area above the demand curve, up to the point of equilibrium.

Figure 7-29 -Refer to Figure 7-29. Which of the following statements is correct?

Table 7-11 The only four producers in a market have the following costs: Seller Cost Evan $50 Selena $100 Angie $150 Kris $200 -Refer to Table 7-11. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, what will be the selling price?

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

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

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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