Question 1

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.

Question 2

A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that

Accepted Answer

A)  both the value of MP3 players to consumers and the cost of producing MP3 players has increased. 
B)  both the value of MP3 players to consumers and the cost of producing MP3 players has decreased. 
C)  the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased. 
D)  the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased. 
A)  both the value of MP3 players to consumers and the cost of producing MP3 players has increased. 
B)  both the value of MP3 players to consumers and the cost of producing MP3 players has decreased. 
C)  the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased. 
D)  the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased.

Question 3

Table 7-7  
-Refer to Table 7-7. You have four 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 offer to sell the tickets for $400. How many tickets do you sell, and what is the total consumer surplus in the market?

Accepted Answer

A)  one ticket; $100 
B)  two tickets; $100 
C)  two tickets; $0 
D)  three tickets; $0 
A)  one ticket; $100 
B)  two tickets; $100 
C)  two tickets; $0 
D)  three tickets; $0

Question 4

On a graph, the area below a demand curve and above the price measures

Accepted Answer

A)  producer surplus. 
B)  consumer surplus. 
C)  deadweight loss. 
D)  willingness to pay. 
A)  producer surplus. 
B)  consumer surplus. 
C)  deadweight loss. 
D)  willingness to pay.

Question 5

Total surplus is represented by the area

Accepted Answer

A)  under the demand curve and above the price. 
B)  above the supply curve and up to the price. 
C)  under the supply curve and up to the price. 
D)  between the demand and supply curves up to the point of equilibrium. 
A)  under the demand curve and above the price. 
B)  above the supply curve and up to the price. 
C)  under the supply curve and up to the price. 
D)  between the demand and supply curves up to the point of equilibrium.

Question 6

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is

Accepted Answer

A)  $800. 
B)  $300. 
C)  $200. 
D)  $500. 
A)  $800. 
B)  $300. 
C)  $200. 
D)  $500.

Question 7

Figure 7-21  
-Refer to Figure 7-21. Which area represents producer surplus when the price is P1?

Accepted Answer

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

Question 8

Efficiency is related to the size of the economic pie, whereas equality is related to how the pie gets sliced and distributed.

Accepted Answer

A) True 
 B)False

Question 9

Figure 7-30  
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

Accepted Answer

Consumer s

Question 10

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

Accepted Answer

A)  $700 
B)  $2,300 
C)  $3,000 
D)  $3,700 
A)  $700 
B)  $2,300 
C)  $3,000 
D)  $3,700

Question 11

All else equal, an increase in demand will always increase consumer surplus.

Accepted Answer

A) True 
 B)False

Question 12

If the government imposes a binding price ceiling in a market, then the producer surplus in that market will increase.

Accepted Answer

A) True 
 B)False

Question 13

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 14

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175, the price of the tickets is $625.

Accepted Answer

A) True 
 B)False

Question 15

Table 7-14
The only four producers in a market have the following costs:  
-Refer to Table 7-14. If the sellers bid against each other for the right to sell the good to a single consumer, then the producer surplus will be

Accepted Answer

A)  $0 or slightly more. 
B)  $5 or slightly less. 
C)  $10 or slightly less. 
D)  $25 or slightly less. 
A)  $0 or slightly more. 
B)  $5 or slightly less. 
C)  $10 or slightly less. 
D)  $25 or slightly less.

Question 16

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.  
-Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, what will be the selling price?

Accepted Answer

A)  slightly more than $20. 
B)  slightly more than $25. 
C)  slightly more than $50. 
D)  slightly more than $60. 
A)  slightly more than $20. 
B)  slightly more than $25. 
C)  slightly more than $50. 
D)  slightly more than $60.

Question 17

Figure 7-8  
-Refer to Figure 7-8. At the equilibrium price, consumer surplus is

Accepted Answer

A)  $1,050. 
B)  $1,225. 
C)  $1,575. 
D)  $2,450. 
A)  $1,050. 
B)  $1,225. 
C)  $1,575. 
D)  $2,450.

Question 18

The distinction between efficiency and equality can be described as follows:

Accepted Answer

A)  Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains from trade among buyers and sellers. 
B)  Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers. 
C)  Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost. 
D)  Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society. 
A)  Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains from trade among buyers and sellers. 
B)  Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers. 
C)  Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost. 
D)  Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.

Question 19

Figure 7-30  
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Accepted Answer

Consumers entering t

Question 20

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

Accepted Answer

A) True 
 B)False

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

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

A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that

On a graph, the area below a demand curve and above the price measures

Total surplus is represented by the area

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is

Figure 7-21 -Refer to Figure 7-21. Which area represents producer surplus when the price is P1?

Efficiency is related to the size of the economic pie, whereas equality is related to how the pie gets sliced and distributed.

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

All else equal, an increase in demand will always increase consumer surplus.

If the government imposes a binding price ceiling in a market, then the producer surplus in that market will increase.

If an allocation of resources is efficient, then

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175, the price of the tickets is $625.

Table 7-14 The only four producers in a market have the following costs: -Refer to Table 7-14. If the sellers bid against each other for the right to sell the good to a single consumer, then the producer surplus will be

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. -Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, what will be the selling price?

Figure 7-8 -Refer to Figure 7-8. At the equilibrium price, consumer surplus is

The distinction between efficiency and equality can be described as follows:

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

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

Filters