Question 1

Figure 7-24  
-Refer to Figure 7-24.If the government imposes a price ceiling at $12,then producer surplus is

Accepted Answer

A) CDI. 
B) BDF. 
C) BCIF. 
D) HGCD. 
A) CDI. 
B) BDF. 
C) BCIF. 
D) HGCD. A

Question 2

Figure 7-27  
-Refer to Figure 7-27.Sellers whose costs are greater than the equilibrium price are represented by segment

Accepted Answer

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

Question 3

Figure 7-18  
-Refer to Figure 7-18.If total surplus is $240 and consumer surplus is

Accepted Answer

A) $100,then the price of the good is $130. 
B) $130,then the price of the good is $120. 
C) $160,then the price of the good is $100. 
D) $120,then the price of the good is $90. 
A) $100,then the price of the good is $130. 
B) $130,then the price of the good is $120. 
C) $160,then the price of the good is $100. 
D) $120,then the price of the good is $90. C

Question 4

Corn chips and potato chips are substitutes.Good weather that sharply increases the corn harvest would

Accepted Answer

A) increase consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips. 
B) increase consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips. 
C) decrease consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips. 
D) decrease consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips. 
A) increase consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips. 
B) increase consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips. 
C) decrease consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips. 
D) decrease consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips.

Question 5

Suppose that the equilibrium price in the market for widgets is $5.If a law increased the minimum legal price for widgets to $6,producer surplus

Accepted Answer

A) would necessarily increase even if the higher price resulted in a surplus of widgets. 
B) would necessarily decrease because the higher price would create a surplus of widgets. 
C) might increase or decrease. 
D) would be unaffected. 
A) would necessarily increase even if the higher price resulted in a surplus of widgets. 
B) would necessarily decrease because the higher price would create a surplus of widgets. 
C) might increase or decrease. 
D) would be unaffected.

Question 6

Figure 7-20  
-Refer to Figure 7-20.For quantities greater than M,the value to the marginal buyer is

Accepted Answer

A) greater than the cost to the marginal seller,so increasing the quantity increases total surplus. 
B) less than the cost to the marginal seller,so increasing the quantity increases total surplus. 
C) greater than the cost to the marginal seller,so decreasing the quantity increases total surplus. 
D) less than the cost to the marginal seller,so decreasing the quantity increases total surplus. 
A) greater than the cost to the marginal seller,so increasing the quantity increases total surplus. 
B) less than the cost to the marginal seller,so increasing the quantity increases total surplus. 
C) greater than the cost to the marginal seller,so decreasing the quantity increases total surplus. 
D) less than the cost to the marginal seller,so decreasing the quantity increases total surplus.

Question 7

If an allocation of resources is efficient,then

Accepted Answer

A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) all potential gains from trade among buyers are sellers are being realized. 
D) the allocation achieves equality as well. 
A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) all potential gains from trade among buyers are sellers are being realized. 
D) the allocation achieves equality as well.

Question 8

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 9

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.

Question 10

Figure 7-19  
-Refer to Figure 7-19.At the equilibrium price,producer surplus is

Accepted Answer

A) $300. 
B) $150. 
C) $450. 
D) $125. 
A) $300. 
B) $150. 
C) $450. 
D) $125.

Question 11

Total surplus in a market will increase when the government

Accepted Answer

A) imposes a binding price floor or a binding price ceiling on that market. 
B) imposes a tax on that market. 
C) Both a and b are correct. 
D) Neither a nor b is correct. 
A) imposes a binding price floor or a binding price ceiling on that market. 
B) imposes a tax on that market. 
C) Both a and b are correct. 
D) Neither a nor b is correct.

Question 12

Five hundred units of good x are currently bought and sold.The marginal buyer is willing to pay $40 for the 500th unit,and the cost to the marginal seller is $35 for the 500th unit.We know that

Accepted Answer

A) the equilibrium price of good x is somewhere between $35 and $40. 
B) the equilibrium quantity of good x exceeds 500 units. 
C) 500 units is not an efficient quantity of good x. 
D) All of the above are correct. 
A) the equilibrium price of good x is somewhere between $35 and $40. 
B) the equilibrium quantity of good x exceeds 500 units. 
C) 500 units is not an efficient quantity of good x. 
D) All of the above are correct.

Question 13

Figure 7-19  
-Refer to Figure 7-19.At the equilibrium price,total surplus is

Accepted Answer

A) $125. 
B) $450. 
C) $250. 
D) $500. 
A) $125. 
B) $450. 
C) $250. 
D) $500.

Question 14

At the equilibrium price of a good,the good will be purchased by those buyers who

Accepted Answer

A) value the good more than price. 
B) value the good less than price. 
C) have the money to buy the good. 
D) consider the good a necessity. 
A) value the good more than price. 
B) value the good less than price. 
C) have the money to buy the good. 
D) consider the good a necessity.

Question 15

Suppose that the equilibrium price in the market for widgets is $5.If a law increased the minimum legal price for widgets to $6,

Accepted Answer

A) the resulting increase in consumer surplus would be larger than any possible loss of producer surplus. 
B) the resulting increase in consumer surplus would be smaller than any possible loss of producer surplus. 
C) any possible increase in producer surplus would be larger than the loss of consumer surplus. 
D) any possible increase in producer surplus would be smaller than the loss of consumer surplus. 
A) the resulting increase in consumer surplus would be larger than any possible loss of producer surplus. 
B) the resulting increase in consumer surplus would be smaller than any possible loss of producer surplus. 
C) any possible increase in producer surplus would be larger than the loss of consumer surplus. 
D) any possible increase in producer surplus would be smaller than the loss of consumer surplus.

Question 16

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 17

Figure 7-21  
-Refer to Figure 7-21.When the price is P1,area A represents

Accepted Answer

A) total benefit. 
B) producer surplus. 
C) consumer surplus. 
D) None of the above is correct. 
A) total benefit. 
B) producer surplus. 
C) consumer surplus. 
D) None of the above is correct.

Question 18

Figure 7-20  
-Refer to Figure 7-20.For quantities less than M,the value to the marginal buyer is

Accepted Answer

A) greater than the cost to the marginal seller,so increasing the quantity increases total surplus. 
B) less than the cost to the marginal seller,so increasing the quantity increases total surplus. 
C) greater than the cost to the marginal seller,so decreasing the quantity increases total surplus. 
D) less than the cost to the marginal seller,so decreasing the quantity increases total surplus. 
A) greater than the cost to the marginal seller,so increasing the quantity increases total surplus. 
B) less than the cost to the marginal seller,so increasing the quantity increases total surplus. 
C) greater than the cost to the marginal seller,so decreasing the quantity increases total surplus. 
D) less than the cost to the marginal seller,so decreasing the quantity increases total surplus.

Question 19

The French expression used by free-market advocates,which literally translates as "allow them to do," is

Accepted Answer

A) laissez-faire. 
B) je ne sais pas. 
C) si'l vous plait. 
D) tête-à-tête. 
A) laissez-faire. 
B) je ne sais pas. 
C) si'l vous plait. 
D) tête-à-tête.

Question 20

Figure 7-26  
-Refer to Figure 7-26.At the equilibrium price,total surplus is

Accepted Answer

A) $600. 
B) $1,200. 
C) $1,500. 
D) $1,800. 
A) $600. 
B) $1,200. 
C) $1,500. 
D) $1,800.

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

Figure 7-24 -Refer to Figure 7-24.If the government imposes a price ceiling at $12,then producer surplus is

Figure 7-27 -Refer to Figure 7-27.Sellers whose costs are greater than the equilibrium price are represented by segment

Figure 7-18 -Refer to Figure 7-18.If total surplus is $240 and consumer surplus is

Corn chips and potato chips are substitutes.Good weather that sharply increases the corn harvest would

Suppose that the equilibrium price in the market for widgets is $5.If a law increased the minimum legal price for widgets to $6,producer surplus

Figure 7-20 -Refer to Figure 7-20.For quantities greater than M,the value to the marginal buyer is

If an allocation of resources is efficient,then

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

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

Figure 7-19 -Refer to Figure 7-19.At the equilibrium price,producer surplus is

Total surplus in a market will increase when the government

Five hundred units of good x are currently bought and sold.The marginal buyer is willing to pay $40 for the 500th unit,and the cost to the marginal seller is $35 for the 500th unit.We know that

Figure 7-19 -Refer to Figure 7-19.At the equilibrium price,total surplus is

At the equilibrium price of a good,the good will be purchased by those buyers who

Suppose that the equilibrium price in the market for widgets is $5.If a law increased the minimum legal price for widgets to $6,

Producer surplus equals the

Figure 7-21 -Refer to Figure 7-21.When the price is P1,area A represents

Figure 7-20 -Refer to Figure 7-20.For quantities less than M,the value to the marginal buyer is

The French expression used by free-market advocates,which literally translates as "allow them to do," is

Figure 7-26 -Refer to Figure 7-26.At the equilibrium price,total surplus is

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A

Five hundred units of good x are currently bought and sold.The marginal buyer is willing to pay $40 for the 500^th unit,and the cost to the marginal seller is $35 for the 500^th unit.We know that