Question 1

Figure 7-18  
-Refer to Figure 7-18. At the equilibrium price, producer surplus is

Accepted Answer

A) $480. 
B) $640. 
C) $1,120. 
D) $1,280. 
A) $480. 
B) $640. 
C) $1,120. 
D) $1,280.

Question 2

Consumer surplus measures the benefit to buyers of participating in a market.

Accepted Answer

A) True 
 B)False

Question 3

According to many economists, government restrictions on ticket scalping do all of the following except

Accepted Answer

A) inconvenience the public. 
B) reduce the audience for cultural and sports events. 
C) waste police officers' time. 
D) keep the cost of tickets to all consumers low. 
A) inconvenience the public. 
B) reduce the audience for cultural and sports events. 
C) waste police officers' time. 
D) keep the cost of tickets to all consumers low.

Question 4

Table 7-6
 $$\begin{array} { | l | c } 
\hline \text { Buygr } & \text { Willingrins to Pay } \
\hline \text { Michad } & \$ 500 \
\hline \text { Farvin } & \$ 400 \
\hline \text { Larry } & \$ 350 \
\hline \text { Charles } & \$ 300 \
\hline
\end{array}$$
-Refer to Table 7-6. You have two essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the two tickets. Michael and Earvin each offer to pay $360 for a ticket, and you sell them the two tickets. What is the total consumer surplus in the market?

Accepted Answer

A) $720 
B) $180 
C) $140 
D) $40 
A) $720 
B) $180 
C) $140 
D) $40

Question 5

Producer surplus equals the

Accepted Answer

A) value to buyers minus the amount paid by buyers. 
B) value to buyers minus the cost to sellers. 
C) amount received by sellers minus the cost to sellers. 
D) amount received by sellers minus the amount paid by buyers. 
A) value to buyers minus the amount paid by buyers. 
B) value to buyers minus the cost to sellers. 
C) amount received by sellers minus the cost to sellers. 
D) amount received by sellers minus the amount paid by buyers.

Question 6

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. $$\begin{array} { | l | c | c | c | } 
\hline & \text { First Orangp } & \text { Second Orange } & \text { Third Orange } \
\hline \text { Alliton } & \$ 2.00 & \$ 1.50 & \$ 0.75 \
\hline \text { Bob } & \$ 1.50 & \$ 1.00 & \$ 0.80 \
\hline \text { Chariste } & \$ 0.75 & \$ 0.25 & \$ 0 \
\hline
\end{array}$$
-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 7

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 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 8

Willingness to pay

Accepted Answer

A) measures the value that a buyer places on a good. 
B) is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C) is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D) is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
A) measures the value that a buyer places on a good. 
B) is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. 
C) is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. 
D) is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

Question 9

Figure 7-13  
-Refer to Figure 7-13. Producer surplus amounts to $300 if the price of the good is

Accepted Answer

A) $300. 
B) $350. 
C) $400. 
D) $450. 
A) $300. 
B) $350. 
C) $400. 
D) $450.

Question 10

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for

Accepted Answer

A) $6.50 each. 
B) $7.50 each. 
C) $9.50 each. 
D) $10.50 each. 
A) $6.50 each. 
B) $7.50 each. 
C) $9.50 each. 
D) $10.50 each.

Question 11

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's willingness to pay 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 12

Josh is willing to pay $40 for a haircut, but he is able to pay $25 at the local salon. His consumer surplus is

Accepted Answer

A) $0 because the cost exceeds his maximum willingness to pay. 
B) $15. 
C) $25. 
D) $65. 
A) $0 because the cost exceeds his maximum willingness to pay. 
B) $15. 
C) $25. 
D) $65.

Question 13

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. Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is

Accepted Answer

A) $24. 
B) $32. 
C) $48. 
D) $64. 
A) $24. 
B) $32. 
C) $48. 
D) $64.

Question 14

Figure 7-15  
-Refer to Figure 7-15. If the government imposes a price floor of $60 in this market, then total surplus will be

Accepted Answer

A) higher by $57.50 than it would be without the price floor. 
B) lower by $20.00 than it would be without the price floor. 
C) lower by $45.00 than it would be without the price floor. 
D) lower by $62.50 than it would be without the price floor. 
A) higher by $57.50 than it would be without the price floor. 
B) lower by $20.00 than it would be without the price floor. 
C) lower by $45.00 than it would be without the price floor. 
D) lower by $62.50 than it would be without the price floor.

Question 15

Consumer surplus equals the

Accepted Answer

A) value to buyers minus the amount paid by buyers. 
B) value to buyers minus the cost to sellers. 
C) amount received by sellers minus the cost to sellers. 
D) amount received by sellers minus the amount paid by buyers. 
A) value to buyers minus the amount paid by buyers. 
B) value to buyers minus the cost to sellers. 
C) amount received by sellers minus the cost to sellers. 
D) amount received by sellers minus the amount paid by buyers.

Question 16

In order to conclude that markets are efficient, we assume that they are perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 17

Anita sharpens knives in her spare time for extra income. Buyers of her service are willing to pay $3.50 per knife for as many knives as Anita is willing to sharpen. On a particular day, she is willing to sharpen the first knife for $2.00, the second knife for $2.50, the third knife for $3.00, and the fourth knife for $3.50. Assume Anita is rational in deciding how many knives to sharpen. Her producer surplus is

Accepted Answer

A) $3.50. 
B) $3.00. 
C) $2.00. 
D) $0.50. 
A) $3.50. 
B) $3.00. 
C) $2.00. 
D) $0.50.

Question 18

Figure 7-16  
-Refer to Figure 7-16. Total surplus can be measured as the area

Accepted Answer

A) JNK. 
B) JNML. 
C) JRL. 
D) JNL. 
A) JNK. 
B) JNML. 
C) JRL. 
D) JNL.

Question 19

Consumer surplus is

Accepted Answer

A) the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
B) the amount a buyer is willing to pay for a good minus the cost of producing the good. 
C) the amount by which the quantity supplied of a good exceeds the quantity demanded of the good. 
D) a buyer's willingness to pay for a good plus the price of the good. 
A) the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
B) the amount a buyer is willing to pay for a good minus the cost of producing the good. 
C) the amount by which the quantity supplied of a good exceeds the quantity demanded of the good. 
D) a buyer's willingness to pay for a good plus the price of the good.

Question 20

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

Accepted Answer

A) supply and demand are both limited. 
B) supply is limited and demand is not limited. 
C) supply is limited and demand is not limited 
D) supply and demand are both not limited. 
A) supply and demand are both limited. 
B) supply is limited and demand is not limited. 
C) supply is limited and demand is not limited 
D) supply and demand are both not limited.

Figure 7-18 -Refer to Figure 7-18. At the equilibrium price, producer surplus is

Consumer surplus measures the benefit to buyers of participating in a market.

According to many economists, government restrictions on ticket scalping do all of the following except

Producer surplus equals the

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 price of the product is $30, then the total consumer surplus is

Willingness to pay

Figure 7-13 -Refer to Figure 7-13. Producer surplus amounts to $300 if the price of the good is

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for

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

Josh is willing to pay $40 for a haircut, but he is able to pay $25 at the local salon. His consumer surplus is

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. Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is

Figure 7-15 -Refer to Figure 7-15. If the government imposes a price floor of $60 in this market, then total surplus will be

Consumer surplus equals the

In order to conclude that markets are efficient, we assume that they are perfectly competitive.

Figure 7-16 -Refer to Figure 7-16. Total surplus can be measured as the area

Consumer surplus is

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

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

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

Figure 7-18 -Refer to Figure 7-18. At the equilibrium price, producer surplus is

Consumer surplus measures the benefit to buyers of participating in a market.

According to many economists, government restrictions on ticket scalping do all of the following except

Producer surplus equals the

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 price of the product is $30, then the total consumer surplus is

Willingness to pay

Figure 7-13 -Refer to Figure 7-13. Producer surplus amounts to $300 if the price of the good is

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for

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

Josh is willing to pay $40 for a haircut, but he is able to pay $25 at the local salon. His consumer surplus is

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. Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is

Figure 7-15 -Refer to Figure 7-15. If the government imposes a price floor of $60 in this market, then total surplus will be

Consumer surplus equals the

In order to conclude that markets are efficient, we assume that they are perfectly competitive.

Figure 7-16 -Refer to Figure 7-16. Total surplus can be measured as the area

Consumer surplus is

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

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