Question 1

If there is an increase in supply, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus:

Accepted Answer

A)  will increase. 
B)  will decrease. 
C)  will remain the same. 
D)  may change, but we can't tell how. 
A)  will increase. 
B)  will decrease. 
C)  will remain the same. 
D)  may change, but we can't tell how. A

Question 2

The total surplus generated in the market for blackberries is the total net gain to consumers in that market.

Accepted Answer

A) True 
 B)False  False

Question 3

When there is a positive amount of total surplus in a market, it means that the cost of producing the good is zero.

Accepted Answer

A) True 
 B)False  False

Question 4

If the demand curve for ice cream is downward-sloping and the supply of it decreases, there is _____ in consumer surplus.

Accepted Answer

A)  an increase 
B)  a decrease 
C)  no change 
D)  It's impossible to tell what will happen to consumer surplus. 
A)  an increase 
B)  a decrease 
C)  no change 
D)  It's impossible to tell what will happen to consumer surplus.

Question 5

Use the following to answer questions:
Figure: Change in the Total Surplus  
-(Figure: Change in Total Surplus) Look at the figure Change in Total Surplus. Which of the following areas represent the change in total surplus when the price falls from P2 to P3?

Accepted Answer

A)  A, B, and C 
B)  B and C 
C)  B, C, D, and E 
D)  C and E 
A)  A, B, and C 
B)  B and C 
C)  B, C, D, and E 
D)  C and E

Question 6

Mark and Rasheed are at the bookstore buying new calculators for the semester. Mark is willing to pay $75 and Rasheed is willing to pay $100 for a graphing calculator. The price for a calculator at the bookstore is $65. How much is Mark's individual consumer surplus?

Accepted Answer

A)  $10 
B)  $25 
C)  $35 
D)  $75 
A)  $10 
B)  $25 
C)  $35 
D)  $75

Question 7

Assuming that the supply curve of cupcakes is upward-sloping and demand for cupcakes decreases, there is a(n) _____ in _____ surplus.

Accepted Answer

A)  increase; producer 
B)  increase; consumer 
C)  increase; total 
D)  decrease; producer 
A)  increase; producer 
B)  increase; consumer 
C)  increase; total 
D)  decrease; producer

Question 8

Which of the following is a key factor in the effectiveness of well-functioning markets?

Accepted Answer

A)  outcomes that are equitable for consumers and producers 
B)  the role of the government to deliver economic signals to consumers and producers 
C)  a significant degree of government intervention to maximize efficiency 
D)  your right to use and dispose of your private property as you see fit 
A)  outcomes that are equitable for consumers and producers 
B)  the role of the government to deliver economic signals to consumers and producers 
C)  a significant degree of government intervention to maximize efficiency 
D)  your right to use and dispose of your private property as you see fit

Question 9

Maximum total surplus in the market for chocolate occurs when:

Accepted Answer

A)  total net gain to producers is minimized. 
B)  all consumers who value chocolate can buy chocolate. 
C)  all producers can sell their chocolate. 
D)  the market is in equilibrium. 
A)  total net gain to producers is minimized. 
B)  all consumers who value chocolate can buy chocolate. 
C)  all producers can sell their chocolate. 
D)  the market is in equilibrium.

Question 10

Use the following to answer questions:
Figure: Consumer Surplus II  
-(Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the price of the good decreases from $2 to $1, consumer surplus will increase by:

Accepted Answer

A)  $5. 
B)  $10. 
C)  $25. 
D)  $35. 
A)  $5. 
B)  $10. 
C)  $25. 
D)  $35.

Question 11

The total consumer surplus for good X can be calculated in all ways EXCEPT as:

Accepted Answer

A)  the sum of the individual consumer surpluses for all buyers of X. 
B)  the area below the demand curve for X and above the price of X. 
C)  the area bounded by the demand curve for X and the two axes. 
D)  the sum, for all buyers of X, of the difference between what each buyer is willing to pay for X and the amount actually paid. 
A)  the sum of the individual consumer surpluses for all buyers of X. 
B)  the area below the demand curve for X and above the price of X. 
C)  the area bounded by the demand curve for X and the two axes. 
D)  the sum, for all buyers of X, of the difference between what each buyer is willing to pay for X and the amount actually paid.

Question 12

Use the following to answer questions:
Figure: Producer Surplus II  
-(Figure: Producer Surplus II) Look at the figure Producer Surplus II. At a price of P2, producer surplus equals the area:

Accepted Answer

A)  LMK. 
B)  P1K0. 
C)  P2M0. 
D)  P2P1KM. 
A)  LMK. 
B)  P1K0. 
C)  P2M0. 
D)  P2P1KM.

Question 13

Use the following to answer questions:  
-(Table: Firm's Willingness) The table Firm's Willingness explains the relation between the number of reports a firm is willing to produce and the lowest price it is willing to accept to prepare those reports. Which of the following market prices would result in four reports being produced?

Accepted Answer

A)  $2 
B)  $6 
C)  $8 
D)  $11 
A)  $2 
B)  $6 
C)  $8 
D)  $11

Question 14

Use the following to answer questions:  
-(Table: Firm's Willingness) The table Firm's Willingness explains the relation between the number of reports a firm is willing to produce and the lowest price it is willing to accept to prepare those reports. If the price of reports is $15, how many reports will the firm produce, and what will the producer surplus be?

Accepted Answer

A)  one; $0 
B)  three; $23 
C)  five; $0 
D)  five; $33 
A)  one; $0 
B)  three; $23 
C)  five; $0 
D)  five; $33

Question 15

Use the following to answer question:  
-(Table: Quantity Supplied and Quantity Demanded) Using the table Quantity Supplied and Quantity Demanded, if this market is in equilibrium and the demand and supply curves are linear, then the value of consumer surplus is:

Accepted Answer

A)  $1,225. 
B)  $2,450. 
C)  $4,900. 
D)  $1,500. 
A)  $1,225. 
B)  $2,450. 
C)  $4,900. 
D)  $1,500.

Question 16

Use the following to answer question:
Figure: Monthly Demand for Ice Cream Cones  
-(Figure: Monthly Demand for Ice Cream Cones) The graph Monthly Demand for Ice Cream Cones shows one individual's monthly demand for ice cream cones. At $5 per cone, this individual will consume 10 cones in a month. How much consumer surplus does this consumer receive?

Accepted Answer

A)  $100 
B)  $50 
C)  $150 
D)  $500 
A)  $100 
B)  $50 
C)  $150 
D)  $500

Question 17

Use the following to answer questions:
Figure: Consumer Surplus II  
-(Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the price of the good increases from $3 to $4, consumer surplus will decrease by:

Accepted Answer

A)  $5. 
B)  $10. 
C)  $15. 
D)  $20. 
A)  $5. 
B)  $10. 
C)  $15. 
D)  $20.

Question 18

Use the following to answer questions:
Figure: Consumer and Producer Surplus  
-(Figure: Consumer and Producer Surplus) Look at the figure Consumer and Producer Surplus. An increase in supply will:

Accepted Answer

A)  increase consumer surplus. 
B)  decrease producer surplus. 
C)  increase total surplus. 
D)  increase consumer surplus and total surplus. 
A)  increase consumer surplus. 
B)  decrease producer surplus. 
C)  increase total surplus. 
D)  increase consumer surplus and total surplus.

Question 19

Which of the following statements is (are) TRUE about market failures? I. Property rights are clearly defined.
II) Information is available to all decision makers.
III) External costs are not considered in production decisions by producers.

Accepted Answer

A)  I 
B)  I and II 
C)  III 
D)  I, II, and III 
A)  I 
B)  I and II 
C)  III 
D)  I, II, and III

Question 20

The lack of property rights and inaccuracy of prices as economic signals often lead to:

Accepted Answer

A)  too much competition in markets. 
B)  an increase in consumer surplus and a decrease in producer surplus. 
C)  an increase in total surplus. 
D)  market failure. 
A)  too much competition in markets. 
B)  an increase in consumer surplus and a decrease in producer surplus. 
C)  an increase in total surplus. 
D)  market failure.

If there is an increase in supply, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus:

The total surplus generated in the market for blackberries is the total net gain to consumers in that market.

When there is a positive amount of total surplus in a market, it means that the cost of producing the good is zero.

If the demand curve for ice cream is downward-sloping and the supply of it decreases, there is _____ in consumer surplus.

Use the following to answer questions: Figure: Change in the Total Surplus -(Figure: Change in Total Surplus) Look at the figure Change in Total Surplus. Which of the following areas represent the change in total surplus when the price falls from P₂ to P₃?

Mark and Rasheed are at the bookstore buying new calculators for the semester. Mark is willing to pay $75 and Rasheed is willing to pay $100 for a graphing calculator. The price for a calculator at the bookstore is $65. How much is Mark's individual consumer surplus?

Assuming that the supply curve of cupcakes is upward-sloping and demand for cupcakes decreases, there is a(n) _ in _ surplus.

Which of the following is a key factor in the effectiveness of well-functioning markets?

Maximum total surplus in the market for chocolate occurs when:

Use the following to answer questions: Figure: Consumer Surplus II -(Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the price of the good decreases from $2 to $1, consumer surplus will increase by:

The total consumer surplus for good X can be calculated in all ways EXCEPT as:

Use the following to answer questions: Figure: Producer Surplus II -(Figure: Producer Surplus II) Look at the figure Producer Surplus II. At a price of P₂, producer surplus equals the area:

Use the following to answer question: -(Table: Quantity Supplied and Quantity Demanded) Using the table Quantity Supplied and Quantity Demanded, if this market is in equilibrium and the demand and supply curves are linear, then the value of consumer surplus is:

Use the following to answer questions: Figure: Consumer Surplus II -(Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the price of the good increases from $3 to $4, consumer surplus will decrease by:

Use the following to answer questions: Figure: Consumer and Producer Surplus -(Figure: Consumer and Producer Surplus) Look at the figure Consumer and Producer Surplus. An increase in supply will:

Which of the following statements is (are) TRUE about market failures? I. Property rights are clearly defined. II) Information is available to all decision makers. III) External costs are not considered in production decisions by producers.

The lack of property rights and inaccuracy of prices as economic signals often lead to:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 4: Consumer and Producer Surplus

If there is an increase in supply, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus:

The total surplus generated in the market for blackberries is the total net gain to consumers in that market.

When there is a positive amount of total surplus in a market, it means that the cost of producing the good is zero.

If the demand curve for ice cream is downward-sloping and the supply of it decreases, there is _____ in consumer surplus.

Use the following to answer questions: Figure: Change in the Total Surplus -(Figure: Change in Total Surplus) Look at the figure Change in Total Surplus. Which of the following areas represent the change in total surplus when the price falls from P2 to P3?

Mark and Rasheed are at the bookstore buying new calculators for the semester. Mark is willing to pay $75 and Rasheed is willing to pay $100 for a graphing calculator. The price for a calculator at the bookstore is $65. How much is Mark's individual consumer surplus?

Assuming that the supply curve of cupcakes is upward-sloping and demand for cupcakes decreases, there is a(n) _____ in _____ surplus.

Which of the following is a key factor in the effectiveness of well-functioning markets?

Maximum total surplus in the market for chocolate occurs when:

Use the following to answer questions: Figure: Consumer Surplus II -(Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the price of the good decreases from $2 to $1, consumer surplus will increase by:

The total consumer surplus for good X can be calculated in all ways EXCEPT as:

Use the following to answer questions: Figure: Producer Surplus II -(Figure: Producer Surplus II) Look at the figure Producer Surplus II. At a price of P2, producer surplus equals the area:

Use the following to answer question: -(Table: Quantity Supplied and Quantity Demanded) Using the table Quantity Supplied and Quantity Demanded, if this market is in equilibrium and the demand and supply curves are linear, then the value of consumer surplus is:

Use the following to answer questions: Figure: Consumer Surplus II -(Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the price of the good increases from $3 to $4, consumer surplus will decrease by:

Use the following to answer questions: Figure: Consumer and Producer Surplus -(Figure: Consumer and Producer Surplus) Look at the figure Consumer and Producer Surplus. An increase in supply will:

Which of the following statements is (are) TRUE about market failures? I. Property rights are clearly defined. II) Information is available to all decision makers. III) External costs are not considered in production decisions by producers.

The lack of property rights and inaccuracy of prices as economic signals often lead to:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Use the following to answer questions: Figure: Change in the Total Surplus -(Figure: Change in Total Surplus) Look at the figure Change in Total Surplus. Which of the following areas represent the change in total surplus when the price falls from P₂ to P₃?

Assuming that the supply curve of cupcakes is upward-sloping and demand for cupcakes decreases, there is a(n) _ in _ surplus.

Use the following to answer questions: Figure: Producer Surplus II -(Figure: Producer Surplus II) Look at the figure Producer Surplus II. At a price of P₂, producer surplus equals the area: