Question 1

All else equal,what happens to consumer surplus if the price of a good decreases?

Accepted Answer

A)  Consumer surplus increases. 
B)  Consumer surplus decreases. 
C)  Consumer surplus is unchanged. 
D)  Consumer surplus may increase, decrease, or remain unchanged. 
A)  Consumer surplus increases. 
B)  Consumer surplus decreases. 
C)  Consumer surplus is unchanged. 
D)  Consumer surplus may increase, decrease, or remain unchanged. A

Question 2

Consumer surplus in a market can be represented by the

Accepted Answer

A)  area below the demand curve and above the price. 
B)  distance from the demand curve to the horizontal axis. 
C)  distance from the demand curve to the vertical axis. 
D)  area below the demand curve and above the horizontal axis. 
A)  area below the demand curve and above the price. 
B)  distance from the demand curve to the horizontal axis. 
C)  distance from the demand curve to the vertical axis. 
D)  area below the demand curve and above the horizontal axis. A

Question 3

Consumer surplus

Accepted Answer

A)  is the amount a buyer pays for a good minus the amount the buyer is willing to pay for it. 
B)  is represented on a supply-demand graph by the area below the price and above the demand curve. 
C)  measures the benefit sellers receive from participating in a market. 
D)  measures the benefit buyers receive from participating in a market. 
A)  is the amount a buyer pays for a good minus the amount the buyer is willing to pay for it. 
B)  is represented on a supply-demand graph by the area below the price and above the demand curve. 
C)  measures the benefit sellers receive from participating in a market. 
D)  measures the benefit buyers receive from participating in a market. D

Question 4

Producer surplus measures the

Accepted Answer

A)  benefits to sellers of participating in a market. 
B)  costs to sellers of participating in a market. 
C)  price that buyers are willing to pay for sellers' output of a good or service. 
D)  benefit to sellers of producing a greater quantity of a good or service than buyers demand. 
A)  benefits to sellers of participating in a market. 
B)  costs to sellers of participating in a market. 
C)  price that buyers are willing to pay for sellers' output of a good or service. 
D)  benefit to sellers of producing a greater quantity of a good or service than buyers demand.

Question 5

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
  
-Refer to Table 7-3.If there is only one unit of the good and if the buyers bid against each other for the right to purchase it,then the good will sell for

Accepted Answer

A)  $15 or slightly less. 
B)  $25 or slightly more. 
C)  $35 or slightly more. 
D)  $45 or slightly less. 
A)  $15 or slightly less. 
B)  $25 or slightly more. 
C)  $35 or slightly more. 
D)  $45 or slightly less.

Question 6

Figure 7-21
  
-Refer to Figure 7-21.Buyers who value this good more than the equilibrium price are represented by which line segment?

Accepted Answer

A)  AC. 
B)  CK. 
C)  BC. 
D)  CH. 
A)  AC. 
B)  CK. 
C)  BC. 
D)  CH.

Question 7

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 Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.
  
-Refer to Table 7-5.If the market price of an orange increases from $0.70 to $1.40,then consumer surplus

Accepted Answer

A)  increases by $2.50. 
B)  decreases by $0.80. 
C)  decreases by $2.60. 
D)  decreases by $3.40. 
A)  increases by $2.50. 
B)  decreases by $0.80. 
C)  decreases by $2.60. 
D)  decreases by $3.40.

Question 8

Total surplus = Value to buyers - Costs to sellers.

Accepted Answer

A) True 
 B)False

Question 9

Figure 7-4
  
-Refer to Figure 7-4.If the price of the good is $12,then consumer surplus is

Accepted Answer

A)  $9. 
B)  $11. 
C)  $13. 
D)  $16. 
A)  $9. 
B)  $11. 
C)  $13. 
D)  $16.

Question 10

Figure 7-1
  
-Refer to Figure 7-1.If the price of the good is $150,then consumer surplus amounts to

Accepted Answer

A)  $150. 
B)  $200. 
C)  $250. 
D)  $300. 
A)  $150. 
B)  $200. 
C)  $250. 
D)  $300.

Question 11

Figure 7-10
  
-Refer to Figure 7-10.If the equilibrium price is $200,what is the producer surplus?

Accepted Answer

A)  $625 
B)  $3,750 
C)  $10,000 
D)  $20,000 
A)  $625 
B)  $3,750 
C)  $10,000 
D)  $20,000

Question 12

-On a graph,consumer surplus is represented by the area

Accepted Answer

A)  between the demand and supply curves. 
B)  below the demand curve and above price. 
C)  below the price and above the supply curve. 
D)  below the demand curve and to the right of equilibrium price. 
A)  between the demand and supply curves. 
B)  below the demand curve and above price. 
C)  below the price and above the supply curve. 
D)  below the demand curve and to the right of equilibrium price.

Question 13

An example of normative analysis is studying

Accepted Answer

A)  how market forces produce equilibrium. 
B)  surpluses and shortages. 
C)  whether equilibrium outcomes are socially desirable. 
D)  income distributions. 
A)  how market forces produce equilibrium. 
B)  surpluses and shortages. 
C)  whether equilibrium outcomes are socially desirable. 
D)  income distributions.

Question 14

When policymakers are considering a particular action,they can use consumer surplus as a(n)

Accepted Answer

A)  objective measure of the benefits to buyers as determined by policymakers. 
B)  measure of the benefits to buyers as the buyers perceive them. 
C)  potentially flawed measure of the benefits to buyers if the buyers are not rational. 
D)  Both b) and c) are correct. 
A)  objective measure of the benefits to buyers as determined by policymakers. 
B)  measure of the benefits to buyers as the buyers perceive them. 
C)  potentially flawed measure of the benefits to buyers if the buyers are not rational. 
D)  Both b) and c) are correct.

Question 15

Figure 7-8
  
-Refer to Figure 7-8.Which area represents the increase in producer surplus when the price rises from P1 to P2?

Accepted Answer

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

Question 16

Figure 7-11
  
-Refer to Figure 7-11.If the government imposes a price ceiling of $70 in this market,then producer surplus will decrease by

Accepted Answer

A)  $50. 
B)  $125. 
C)  $150. 
D)  $200. 
A)  $50. 
B)  $125. 
C)  $150. 
D)  $200.

Question 17

Abraham drinks Mountain Dew.He can buy as many cans of Mountain Dew as he wishes at a price of $0.55 per can.On a particular day,he is willing to pay $0.95 for the first can,$0.80 for the second can,$0.60 for the third can,and $0.40 for the fourth can.Assume Abraham is rational in deciding how many cans to buy.His consumer surplus is

Accepted Answer

A)  $0.50. 
B)  $0.60. 
C)  $0.70. 
D)  $1.00. 
A)  $0.50. 
B)  $0.60. 
C)  $0.70. 
D)  $1.00.

Question 18

Table 7-1
  
-Refer to Table 7-1.If price of the product is $30,then the total consumer surplus is

Accepted Answer

A)  $-10. 
B)  $-6. 
C)  $20. 
D)  $30. 
A)  $-10. 
B)  $-6. 
C)  $20. 
D)  $30.

Question 19

Producer surplus directly measures

Accepted Answer

A)  the well-being of sellers. 
B)  production costs. 
C)  excess demand. 
D)  unsold inventories. 
A)  the well-being of sellers. 
B)  production costs. 
C)  excess demand. 
D)  unsold inventories.

Question 20

Justin builds fences for a living.Justin's out-of-pocket expenses (for wood,paint,etc.)plus the value that he places on his own time amount to his

Accepted Answer

A)  producer surplus. 
B)  producer deficit. 
C)  cost of building fences. 
D)  profit. 
A)  producer surplus. 
B)  producer deficit. 
C)  cost of building fences. 
D)  profit.

All else equal,what happens to consumer surplus if the price of a good decreases?

Consumer surplus in a market can be represented by the

Consumer surplus

Producer surplus measures the

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3.If there is only one unit of the good and if the buyers bid against each other for the right to purchase it,then the good will sell for

Figure 7-21 -Refer to Figure 7-21.Buyers who value this good more than the equilibrium price are represented by which line segment?

Total surplus = Value to buyers - Costs to sellers.

Figure 7-4 -Refer to Figure 7-4.If the price of the good is $12,then consumer surplus is

Figure 7-1 -Refer to Figure 7-1.If the price of the good is $150,then consumer surplus amounts to

Figure 7-10 -Refer to Figure 7-10.If the equilibrium price is $200,what is the producer surplus?

-On a graph,consumer surplus is represented by the area

An example of normative analysis is studying

When policymakers are considering a particular action,they can use consumer surplus as a(n)

Figure 7-8 -Refer to Figure 7-8.Which area represents the increase in producer surplus when the price rises from P1 to P2?

Figure 7-11 -Refer to Figure 7-11.If the government imposes a price ceiling of $70 in this market,then producer surplus will decrease by

Table 7-1 -Refer to Table 7-1.If price of the product is $30,then the total consumer surplus is

Producer surplus directly measures

Justin builds fences for a living.Justin's out-of-pocket expenses (for wood,paint,etc.)plus the value that he places on his own time amount to his

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.

Application: 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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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

All else equal,what happens to consumer surplus if the price of a good decreases?

Consumer surplus in a market can be represented by the

Consumer surplus

Producer surplus measures the

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3.If there is only one unit of the good and if the buyers bid against each other for the right to purchase it,then the good will sell for

Figure 7-21 -Refer to Figure 7-21.Buyers who value this good more than the equilibrium price are represented by which line segment?

Total surplus = Value to buyers - Costs to sellers.

Figure 7-4 -Refer to Figure 7-4.If the price of the good is $12,then consumer surplus is

Figure 7-1 -Refer to Figure 7-1.If the price of the good is $150,then consumer surplus amounts to

Figure 7-10 -Refer to Figure 7-10.If the equilibrium price is $200,what is the producer surplus?

-On a graph,consumer surplus is represented by the area

An example of normative analysis is studying

When policymakers are considering a particular action,they can use consumer surplus as a(n)

Figure 7-8 -Refer to Figure 7-8.Which area represents the increase in producer surplus when the price rises from P1 to P2?

Figure 7-11 -Refer to Figure 7-11.If the government imposes a price ceiling of $70 in this market,then producer surplus will decrease by

Table 7-1 -Refer to Table 7-1.If price of the product is $30,then the total consumer surplus is

Producer surplus directly measures

Justin builds fences for a living.Justin's out-of-pocket expenses (for wood,paint,etc.)plus the value that he places on his own time amount to his

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.

Application: 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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters