Question 1

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

Accepted Answer

A) $13,000. 
B) $105,000. 
C) $118,000. 
D) $131,000. 
A) $13,000. 
B) $105,000. 
C) $118,000. 
D) $131,000. D

Question 2

Which of the following will cause a decrease in producer surplus?

Accepted Answer

A) the imposition of a binding price ceiling in the market 
B) an increase in the number of buyers of the good 
C) income increases and buyers consider the good to be normal 
D) the price of a complement decreases 
A) the imposition of a binding price ceiling in the market 
B) an increase in the number of buyers of the good 
C) income increases and buyers consider the good to be normal 
D) the price of a complement decreases A

Question 3

Economists normally assume people's preferences should be

Accepted Answer

A) respected. 
B) adjusted. 
C) overruled. 
D) ignored. 
A) respected. 
B) adjusted. 
C) overruled. 
D) ignored. A

Question 4

Figure 7-12  
-Refer to Figure 7-12. 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 5

Figure 7-3  
-Refer to Figure 7-3. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Accepted Answer

A) ABD 
B) ACG 
C) BCFD 
D) DFG 
A) ABD 
B) ACG 
C) BCFD 
D) DFG

Question 6

Table 7-11
 $$\begin{array} { | c | c | c } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Supplied }
\end{array} \
\hline \$ 12.00 & 0 & 36 \
\hline \$ 10.00 & 3 & 30 \
\hline \$ 8.00 & 6 & 24 \
\hline \$ 6.00 & 9 & 18 \
\hline \$ 4.00 & 12 & 12 \
\hline \$ 2.00 & 15 & 6 \
\hline \$ 0.00 & 18 & 0 \
\hline
\end{array}$$
-Refer to Table 7-11. At a price of $2.00, total surplus is

Accepted Answer

A) larger than it would be at the equilibrium price. 
B) smaller than it would be at the equilibrium price. 
C) the same as it would be at the equilibrium price. 
D) There is insufficient information to make this determination. 
A) larger than it would be at the equilibrium price. 
B) smaller than it would be at the equilibrium price. 
C) the same as it would be at the equilibrium price. 
D) There is insufficient information to make this determination.

Question 7

Which of the following will cause a decrease in consumer surplus?

Accepted Answer

A) an increase in the number of sellers of the good 
B) a decrease in the production cost of the good 
C) sellers expect the price of the good to be lower next month 
D) the imposition of a binding price floor in the market 
A) an increase in the number of sellers of the good 
B) a decrease in the production cost of the good 
C) sellers expect the price of the good to be lower next month 
D) the imposition of a binding price floor in the market

Question 8

The current policy on kidney donation effectively sets a price ceiling of zero.

Accepted Answer

A) True 
 B)False

Question 9

Tom tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $155 per tuning. One particular week, Tom is willing to tune the first piano for $120, the second piano for $125, the third piano for $140, and the fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. His producer surplus is

Accepted Answer

A) $95. 
B) $80. 
C) $75. 
D) $60. 
A) $95. 
B) $80. 
C) $75. 
D) $60.

Question 10

Which of the following is true when the price of a good or service rises?

Accepted Answer

A) Buyers who were already buying the good or service are better off. 
B) Some buyers exit the market. 
C) The total consumer surplus in the market increases. 
D) The total value of purchases before and after the price change is the same. 
A) Buyers who were already buying the good or service are better off. 
B) Some buyers exit the market. 
C) The total consumer surplus in the market increases. 
D) The total value of purchases before and after the price change is the same.

Question 11

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. $$\begin{array} { | c | c | } 
\hline \text { Buyer } & \text { Willingnes to Pay } \
\hline \text { Jenrifer } & \$ 10 \
\hline \text { Bryce } & \$ 15 \
\hline \text { Dan } & \$ 20 \
\hline \text { David } & \$ 25 \
\hline \text { Ker } & \$ 50 \
\hline \text { Lisa } & \$ 60 \
\hline
\end{array}$$
-Refer to Table 7-4. If tickets sell for $25 each, then what is the total consumer surplus in the market?

Accepted Answer

A) $25 
B) $35 
C) $60 
D) $110 
A) $25 
B) $35 
C) $60 
D) $110

Question 12

Figure 7-8  
-Refer to Figure 7-8. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Accepted Answer

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

Question 13

Table 7-8
The only four producers in a market have the following costs:
 $$\begin{array} { | c | c | } 
\hline \text { Sallar } & \text { Cast } \
\hline \text { Evar } & \$ 50 \
\hline \text { Selana } & \$ 100 \
\hline \text { Angie } & \$ 150 \
\hline \text { Kris } & \$ 200 \
\hline
\end{array}$$
-Refer to Table 7-8. If the sellers bid against each other for the right to sell the good to a consumer, then the producer surplus will be

Accepted Answer

A) $0 or slightly more. 
B) $50 or slightly less. 
C) $150 or slightly less. 
D) $200 or slightly more. 
A) $0 or slightly more. 
B) $50 or slightly less. 
C) $150 or slightly less. 
D) $200 or slightly more.

Question 14

Figure 7-19  
-Refer to Figure 7-19. If the price were P1, producer surplus would be represented by the area

Accepted Answer

A) F. 
B) F+G. 
C) D+H+F. 
D) D+H+F+G+I. 
A) F. 
B) F+G. 
C) D+H+F. 
D) D+H+F+G+I.

Question 15

Welfare economics is the study of how

Accepted Answer

A) the allocation of resources affects economic well-being. 
B) a price ceiling compares to a price floor. 
C) the government helps poor people. 
D) a consumer's optimal choice affects her demand curve. 
A) the allocation of resources affects economic well-being. 
B) a price ceiling compares to a price floor. 
C) the government helps poor people. 
D) a consumer's optimal choice affects her demand curve.

Question 16

Table 7-10
 $$\begin{array} { | l | r | } 
\hline \text { Seller } & \text { Cost } \
\hline \text { Lepran } & \$ 700 \
\hline \text { Kabe } & \$ 600 \
\hline \text { Kevin } & \$ 450 \
\hline \text { Steve } & \$ 400 \
\hline
\end{array}$$
-Refer to Table 7-10. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. Which of the following graphs represents the market supply curve?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 17

If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would

Accepted Answer

A) not reduce the shortage of organs. 
B) benefit rich people but not poor people. 
C) be inefficient because markets are not good at allocating scarce resources. 
D) be inferior to a plan imposed by a benevolent dictator. 
A) not reduce the shortage of organs. 
B) benefit rich people but not poor people. 
C) be inefficient because markets are not good at allocating scarce resources. 
D) be inferior to a plan imposed by a benevolent dictator.

Question 18

Table 7-1
 $$\begin{array} { | l | l | } 
\hline \text { Buger } & \text { Willingnits Ta Raz } \
\hline \text { Lari } & \$ 50.00 \
\hline \text { Audrey } & \$ 30.00 \
\hline \text { Zach } & \$ 20.00 \
\hline \text { Calvin } & \$ 10.00 \
\hline
\end{array}$$
-Refer to Table 7-1. If the price of the product is $15, then who would be willing to purchase the product?

Accepted Answer

A) Lori 
B) Lori and Audrey 
C) Lori, Audrey, and Zach 
D) Lori, Audrey, Zach, and Calvin 
A) Lori 
B) Lori and Audrey 
C) Lori, Audrey, and Zach 
D) Lori, Audrey, Zach, and Calvin

Question 19

Figure 7-15  
-Refer to Figure 7-15. At the equilibrium price, total surplus is

Accepted Answer

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

Question 20

When the supply of a good increases and the demand for the good remains unchanged, consumer surplus

Accepted Answer

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

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

Which of the following will cause a decrease in producer surplus?

Economists normally assume people's preferences should be

Figure 7-12 -Refer to Figure 7-12. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Figure 7-3 -Refer to Figure 7-3. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Table 7-11 Price Quantity Demanded Quantity Supplied \ 12.00 0 36 \ 10.00 3 30 \ 8.00 6 24 \ 6.00 9 18 \ 4.00 12 12 \ 2.00 15 6 \ 0.00 18 0 -Refer to Table 7-11. At a price of $2.00, total surplus is

Which of the following will cause a decrease in consumer surplus?

The current policy on kidney donation effectively sets a price ceiling of zero.

Which of the following is true when the price of a good or service rises?

Figure 7-8 -Refer to Figure 7-8. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Table 7-8 The only four producers in a market have the following costs: Sallar Cast Evar \ 50 Selana \ 100 Angie \ 150 Kris \ 200 -Refer to Table 7-8. If the sellers bid against each other for the right to sell the good to a consumer, then the producer surplus will be

Figure 7-19 -Refer to Figure 7-19. If the price were P1, producer surplus would be represented by the area

Welfare economics is the study of how

If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would

Table 7-1 Buger Willingnits Ta Raz Lari \ 50.00 Audrey \ 30.00 Zach \ 20.00 Calvin \ 10.00 -Refer to Table 7-1. If the price of the product is $15, then who would be willing to purchase the product?

Figure 7-15 -Refer to Figure 7-15. At the equilibrium price, total surplus is

When the supply of a good increases and the demand for the good remains unchanged, consumer surplus

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

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

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

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

Which of the following will cause a decrease in producer surplus?

Economists normally assume people's preferences should be

Figure 7-12 -Refer to Figure 7-12. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Figure 7-3 -Refer to Figure 7-3. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Table 7-11 Price Quantity Demanded Quantity Supplied \ 12.00 0 36 \ 10.00 3 30 \ 8.00 6 24 \ 6.00 9 18 \ 4.00 12 12 \ 2.00 15 6 \ 0.00 18 0 -Refer to Table 7-11. At a price of $2.00, total surplus is

Which of the following will cause a decrease in consumer surplus?

The current policy on kidney donation effectively sets a price ceiling of zero.

Which of the following is true when the price of a good or service rises?

Figure 7-8 -Refer to Figure 7-8. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Table 7-8 The only four producers in a market have the following costs: Sallar Cast Evar \ 50 Selana \ 100 Angie \ 150 Kris \ 200 -Refer to Table 7-8. If the sellers bid against each other for the right to sell the good to a consumer, then the producer surplus will be

Figure 7-19 -Refer to Figure 7-19. If the price were P1, producer surplus would be represented by the area

Welfare economics is the study of how

If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would

Table 7-1 Buger Willingnits Ta Raz Lari \ 50.00 Audrey \ 30.00 Zach \ 20.00 Calvin \ 10.00 -Refer to Table 7-1. If the price of the product is $15, then who would be willing to purchase the product?

Figure 7-15 -Refer to Figure 7-15. At the equilibrium price, total surplus is

When the supply of a good increases and the demand for the good remains unchanged, consumer surplus

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

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters