Question 1

Efficiency addresses the best way to achieve a goal once it has been determined.

Accepted Answer

A) True 
 B)False  True

Question 2

Use the following to answer questions  
-(Table: Willingness to Pay for Peanuts) Using the table Willingness to Pay for Peanuts, if the price of a bag of peanuts is $3, the total value of consumer surplus is equal to:

Accepted Answer

A)  $12. 
B)  $26. 
C)  $10. 
D)  $21. 
A)  $12. 
B)  $26. 
C)  $10. 
D)  $21. A

Question 3

Use the following to answer questions 
Figure: The Gains from Trade  
-(Figure: The Gains from Trade) Look at the figure The Gains from Trade. When demand increases from D1 to D2, equilibrium total surplus:

Accepted Answer

A)  decreases by $10.00. 
B)  increases by $12.75. 
C)  decreases by $15.00. 
D)  increases by $27.50. 
A)  decreases by $10.00. 
B)  increases by $12.75. 
C)  decreases by $15.00. 
D)  increases by $27.50. D

Question 4

If property rights are restricted by government regulation, many more mutually beneficial transactions will occur.

Accepted Answer

A) True 
 B)False

Question 5

Property rights benefit sellers of goods much more than they benefit consumers.

Accepted Answer

A) True 
 B)False

Question 6

Market failure occurs when a market fails to be efficient.

Accepted Answer

A) True 
 B)False

Question 7

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 8

A competitive market for cell phone chargers is in equilibrium. If the price temporarily falls below the equilibrium price:

Accepted Answer

A)  producer surplus will rise. 
B)  producer surplus will fall. 
C)  the change in producer surplus is indeterminate. 
D)  there will be no change in producer surplus. 
A)  producer surplus will rise. 
B)  producer surplus will fall. 
C)  the change in producer surplus is indeterminate. 
D)  there will be no change in producer surplus.

Question 9

Use the following to answer questions :  
-The total producer surplus for a good can be calculated in all of the following ways EXCEPT as:

Accepted Answer

A)  the sum of the individual producer surpluses for all sellers of the good. 
B)  the area below the supply curve for the good up to the quantity of the good sold. 
C)  the area above the supply curve and below the price at which the good is being sold. 
D)  the sum, for all sellers of the good, of the difference between what each seller receives and the minimum amount he or she is willing to accept for selling the good. 
A)  the sum of the individual producer surpluses for all sellers of the good. 
B)  the area below the supply curve for the good up to the quantity of the good sold. 
C)  the area above the supply curve and below the price at which the good is being sold. 
D)  the sum, for all sellers of the good, of the difference between what each seller receives and the minimum amount he or she is willing to accept for selling the good.

Question 10

Use the following to answer questions  
-(Table: Producer Surplus) Look at the table Producer Surplus. If the price of a ticket to see The Nutty Nutcracker is $50, then Francisco's producer surplus is:

Accepted Answer

A)  $0. 
B)  $40. 
C)  $90. 
D)  $240. 
A)  $0. 
B)  $40. 
C)  $90. 
D)  $240.

Question 11

Use the following to answer questions  
-(Table: Willingness to Pay for Basketball Sneakers) The table Willingness to Pay for Basketball Sneakers shows each player's willingness to pay for basketball sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the price of basketball sneakers is $100, how many pairs will be purchased?

Accepted Answer

A)  one 
B)  two 
C)  three 
D)  four 
A)  one 
B)  two 
C)  three 
D)  four

Question 12

Suppose the market demand for TV remotes is given by the equation Qd = 100 - 2P, where P is the price and Qd is the number of TV remotes. If the market price of TV remotes is $40, then the quantity demanded equals _____ and the value of consumer surplus is _____.

Accepted Answer

A)  20; $100 
B)  100; $20 
C)  40; $200 
D)  2; $40 
A)  20; $100 
B)  100; $20 
C)  40; $200 
D)  2; $40

Question 13

Use the following to answer questions 
Figure: Market for Hamburgers  
-(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Irvine, Kentucky. If 400 hamburgers are sold, producer surplus will equal:

Accepted Answer

A)  $650. 
B)  $400. 
C)  $510. 
D)  $200. 
A)  $650. 
B)  $400. 
C)  $510. 
D)  $200.

Question 14

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.

Question 15

Vonda and Aleiyah are shopping together at the mall for new jeans. Vonda is willing to pay $90 and Aleiyah is willing to pay $50 for a pair of jeans. What is the gain in total consumer surplus when the price decreases from $59 to $40?

Accepted Answer

A)  $10 
B)  $29 
C)  $31 
D)  $60 
A)  $10 
B)  $29 
C)  $31 
D)  $60

Question 16

Anna is willing to sell her 20-year-old boat, but not for less than $2,300. For Anna, the cost of selling this boat is _____ $2,300.

Accepted Answer

A)  more than 
B)  less than 
C)  equal to 
D)  There is not enough information to answer the question. 
A)  more than 
B)  less than 
C)  equal to 
D)  There is not enough information to answer the question.

Question 17

Use the following to answer questions  
-(Table: Producer Surplus) Look at the table Producer Surplus. If the price of a ticket to see The Nutty Nutcracker is $75 and there is no other market for tickets, the total producer surplus for the five students is:

Accepted Answer

A)  $190. 
B)  $139. 
C)  $75. 
D)  $40. 
A)  $190. 
B)  $139. 
C)  $75. 
D)  $40.

Question 18

Suppose purchases do not occur because the value of the good to the potential seller exceeds the value to a potential consumer. This situation will occur in:

Accepted Answer

A)  a market dominated by government regulation. 
B)  well-functioning markets. 
C)  a market made up of many buyers and sellers. 
D)  a centralized market system. 
A)  a market dominated by government regulation. 
B)  well-functioning markets. 
C)  a market made up of many buyers and sellers. 
D)  a centralized market system.

Question 19

Along a straight-line downward-sloping demand curve, a decrease in the market price of a good:

Accepted Answer

A)  will cause no change in consumer surplus. 
B)  will increase consumer surplus. 
C)  will decrease consumer surplus. 
D)  may either decrease or increase consumer surplus. 
A)  will cause no change in consumer surplus. 
B)  will increase consumer surplus. 
C)  will decrease consumer surplus. 
D)  may either decrease or increase consumer surplus.

Question 20

Prices above equilibrium on agricultural products like milk exist to maximize the consumer surplus.

Accepted Answer

A) True 
 B)False

Exam 4: Consumer and Producer Surplus

Efficiency addresses the best way to achieve a goal once it has been determined.

Use the following to answer questions -(Table: Willingness to Pay for Peanuts) Using the table Willingness to Pay for Peanuts, if the price of a bag of peanuts is $3, the total value of consumer surplus is equal to:

Use the following to answer questions Figure: The Gains from Trade -(Figure: The Gains from Trade) Look at the figure The Gains from Trade. When demand increases from D1 to D2, equilibrium total surplus:

If property rights are restricted by government regulation, many more mutually beneficial transactions will occur.

Property rights benefit sellers of goods much more than they benefit consumers.

Market failure occurs when a market fails to be efficient.

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?

A competitive market for cell phone chargers is in equilibrium. If the price temporarily falls below the equilibrium price:

Use the following to answer questions : -The total producer surplus for a good can be calculated in all of the following ways EXCEPT as:

Use the following to answer questions -(Table: Producer Surplus) Look at the table Producer Surplus. If the price of a ticket to see The Nutty Nutcracker is $50, then Francisco's producer surplus is:

Suppose the market demand for TV remotes is given by the equation Qd = 100 - 2P, where P is the price and Qd is the number of TV remotes. If the market price of TV remotes is $40, then the quantity demanded equals _____ and the value of consumer surplus is _____.

Use the following to answer questions Figure: Market for Hamburgers -(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Irvine, Kentucky. If 400 hamburgers are sold, producer surplus will equal:

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

Vonda and Aleiyah are shopping together at the mall for new jeans. Vonda is willing to pay $90 and Aleiyah is willing to pay $50 for a pair of jeans. What is the gain in total consumer surplus when the price decreases from $59 to $40?

Anna is willing to sell her 20-year-old boat, but not for less than $2,300. For Anna, the cost of selling this boat is _____ $2,300.

Use the following to answer questions -(Table: Producer Surplus) Look at the table Producer Surplus. If the price of a ticket to see The Nutty Nutcracker is $75 and there is no other market for tickets, the total producer surplus for the five students is:

Suppose purchases do not occur because the value of the good to the potential seller exceeds the value to a potential consumer. This situation will occur in:

Along a straight-line downward-sloping demand curve, a decrease in the market price of a good:

Prices above equilibrium on agricultural products like milk exist to maximize the consumer surplus.

First Principles

Economic Models- Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas- Meddling With Markets

Elasticity

Taxes

The Rational Consumer

International Trade

Decision Making by Individuals and Firms

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Macroeconomics- the Big Picture

Gdp and the Consumer Price Index

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Macroeconomics- Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

Toward a Fuller Understanding

Consumer Preferences and Consumer Choice

Indifference Curve Analysis of Labor Supply

Filters

Use the following to answer questions Figure: The Gains from Trade -(Figure: The Gains from Trade) Look at the figure The Gains from Trade. When demand increases from D₁ to D₂, equilibrium total 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?

Suppose the market demand for TV remotes is given by the equation Q_d = 100 - 2P, where P is the price and Q_d is the number of TV remotes. If the market price of TV remotes is $40, then the quantity demanded equals _ and the value of consumer surplus is _.