Question 1

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is least likely to occur?

Accepted Answer

A)  The supply of kidneys would increase. 
B)  The shortage of kidneys would decrease. 
C)  Many lives would be saved. 
D)  The allocation of kidneys would be fair. 
A)  The supply of kidneys would increase. 
B)  The shortage of kidneys would decrease. 
C)  Many lives would be saved. 
D)  The allocation of kidneys would be fair.

Question 2

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be

Accepted Answer

A)  $3. 
B)  $8. 
C)  $5. 
D)  $11. 
A)  $3. 
B)  $8. 
C)  $5. 
D)  $11.

Question 3

Producer surplus is the cost of production minus the amount a seller is paid.

Accepted Answer

A) True 
 B)False

Question 4

Figure 7-24  
-Refer to Figure 7-24. If 6 units of the good are produced and sold, then

Accepted Answer

A)  efficiency is achieved in this market. 
B)  the marginal value to buyers equals the marginal cost to sellers. 
C)  the sum of consumer surplus and producer surplus is maximized. 
D)  All of the above are correct. 
A)  efficiency is achieved in this market. 
B)  the marginal value to buyers equals the marginal cost to sellers. 
C)  the sum of consumer surplus and producer surplus is maximized. 
D)  All of the above are correct.

Question 5

Figure 7-34  
-Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total producer surplus change, assuming the producers with the lowest cost were the ones supplying the market when the price floor was in place?

Accepted Answer

Total producer surplus with the price fl

Question 6

The marginal seller is the seller who

Accepted Answer

A)  cannot compete with the other sellers in the market. 
B)  would leave the market first if the price were any lower. 
C)  can produce at the lowest cost. 
D)  has the largest producer surplus. 
A)  cannot compete with the other sellers in the market. 
B)  would leave the market first if the price were any lower. 
C)  can produce at the lowest cost. 
D)  has the largest producer surplus.

Question 7

An example of positive analysis is studying

Accepted Answer

A)  how market forces produce equilibrium. 
B)  whether equilibrium outcomes are fair. 
C)  whether equilibrium outcomes are socially desirable. 
D)  if income distributions are fair. 
A)  how market forces produce equilibrium. 
B)  whether equilibrium outcomes are fair. 
C)  whether equilibrium outcomes are socially desirable. 
D)  if income distributions are fair.

Question 8

Table 7-13
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.  
-Refer to Table 7-13. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market?

Accepted Answer

A)  $0 
B)  $300 
C)  $400 
D)  $700 
A)  $0 
B)  $300 
C)  $400 
D)  $700

Question 9

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $200.

Accepted Answer

A) True 
 B)False

Question 10

Figure 7-24  
-Refer to Figure 7-24. C

Accepted Answer

A)  $36. 
B)  $54. 
C)  $18. 
D)  $108. 
A)  $36. 
B)  $54. 
C)  $18. 
D)  $108.

Question 11

Table 7-16
The following table represents the costs of five possible sellers.
Seller Cost ($)  
-Refer to Table 7-16. Suppose each of the five sellers can supply at most one unit of the good. At which of the following prices would the market quantity supplied be exactly three units?

Accepted Answer

A)  $20 
B)  $50 
C)  $90 
D)  $120 
A)  $20 
B)  $50 
C)  $90 
D)  $120

Question 12

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.  
-Refer to Table 7-2. If the market price is $3.80,

Accepted Answer

A)  David's consumer surplus is $4.70 and total consumer surplus for the five individuals is $9.50. 
B)  Megan's consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80. 
C)  David, Laura, and Megan will be the only buyers of Vanilla Coke. 
D)  the demand curve for Vanilla Coke, taking the five individuals into account, is horizontal. 
A)  David's consumer surplus is $4.70 and total consumer surplus for the five individuals is $9.50. 
B)  Megan's consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80. 
C)  David, Laura, and Megan will be the only buyers of Vanilla Coke. 
D)  the demand curve for Vanilla Coke, taking the five individuals into account, is horizontal.

Question 13

Figure 7-23  
-Refer to Figure 7-23. The efficient price-quantity combination is

Accepted Answer

A)  P1 and Q1. 
B)  P2 and Q2. 
C)  P3 and Q1. 
D)  P4 and 0. 
A)  P1 and Q1. 
B)  P2 and Q2. 
C)  P3 and Q1. 
D)  P4 and 0.

Question 14

Table 7-1  
-Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?

Accepted Answer

A)  Calvin 
B)  Calvin and Sam 
C)  Calvin, Sam, and Andrew 
D)  Calvin, Sam, Andrew, and Lori 
A)  Calvin 
B)  Calvin and Sam 
C)  Calvin, Sam, and Andrew 
D)  Calvin, Sam, Andrew, and Lori

Question 15

Figure 7-11  
-Refer to Figure 7-11. If the demand curve is D and the supply curve shifts from S' to S, what is the change in producer surplus?

Accepted Answer

A)  Producer surplus increases by $625. 
B)  Producer surplus increases by $1,875. 
C)  Producer surplus decreases by $625. 
D)  Producer surplus decreases by $1,875. 
A)  Producer surplus increases by $625. 
B)  Producer surplus increases by $1,875. 
C)  Producer surplus decreases by $625. 
D)  Producer surplus decreases by $1,875.

Question 16

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?

Accepted Answer

A)  Firm A produces a monitor that Cassie buys. David does not purchase a monitor. 
B)  Firm A produces a monitor that David buys. 
C)  Firm B produces a monitor that Cassie buys. David does not purchase a monitor. 
D)  Firm B produces a monitor that David buys. 
A)  Firm A produces a monitor that Cassie buys. David does not purchase a monitor. 
B)  Firm A produces a monitor that David buys. 
C)  Firm B produces a monitor that Cassie buys. David does not purchase a monitor. 
D)  Firm B produces a monitor that David buys.

Question 17

Table 7-11
The following table represents the costs of five possible sellers.  
-Refer to Table 7-11. If the market price is $1,100, the combined total cost of all participating sellers is

Accepted Answer

A)  $2,800. 
B)  $2,900. 
C)  $1,700. 
D)  $4,000. 
A)  $2,800. 
B)  $2,900. 
C)  $1,700. 
D)  $4,000.

Question 18

Total surplus in a market will increase when the government

Accepted Answer

A)  imposes a tax on that market. 
B)  imposes a binding price floor on that market. 
C)  removes a binding price ceiling from that market. 
D)  None of the above is correct. 
A)  imposes a tax on that market. 
B)  imposes a binding price floor on that market. 
C)  removes a binding price ceiling from that market. 
D)  None of the above is correct.

Question 19

One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of

Accepted Answer

A)  factor markets. 
B)  energy markets. 
C)  welfare economics. 
D)  labor economics. 
A)  factor markets. 
B)  energy markets. 
C)  welfare economics. 
D)  labor economics.

Question 20

Figure 7-34  
-Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. How much is total producer surplus with the price ceiling in place?

Accepted Answer

Total producer surpl

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

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is least likely to occur?

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be

Producer surplus is the cost of production minus the amount a seller is paid.

Figure 7-24 -Refer to Figure 7-24. If 6 units of the good are produced and sold, then

The marginal seller is the seller who

An example of positive analysis is studying

Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market?

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $200.

Figure 7-24 -Refer to Figure 7-24. C

Table 7-16 The following table represents the costs of five possible sellers. Seller Cost ($) -Refer to Table 7-16. Suppose each of the five sellers can supply at most one unit of the good. At which of the following prices would the market quantity supplied be exactly three units?

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. If the market price is $3.80,

Figure 7-23 -Refer to Figure 7-23. The efficient price-quantity combination is

Table 7-1 -Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?

Figure 7-11 -Refer to Figure 7-11. If the demand curve is D and the supply curve shifts from S' to S, what is the change in producer surplus?

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,100, the combined total cost of all participating sellers is

Total surplus in a market will increase when the government

One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. How much is total producer surplus with the price ceiling in place?

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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 Macroeconomics: Basic Concepts

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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