Question 1

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Accepted Answer

A) True 
 B)False

Question 2

The "invisible hand" refers to

Accepted Answer

A)  the marketplace guiding the self-interests of market participants into promoting general economic well-being. 
B)  the fact that social planners sometimes have to intervene, even in perfectly competitive markets, to make those markets more efficient. 
C)  the equality that results from market forces allocating the goods produced in the market. 
D)  the automatic maximization of consumer surplus in free markets. 
A)  the marketplace guiding the self-interests of market participants into promoting general economic well-being. 
B)  the fact that social planners sometimes have to intervene, even in perfectly competitive markets, to make those markets more efficient. 
C)  the equality that results from market forces allocating the goods produced in the market. 
D)  the automatic maximization of consumer surplus in free markets.

Question 3

A seller's willingness to sell is

Accepted Answer

A)  measured by the seller's cost of production. 
B)  related to her supply curve, just as a buyer's willingness to buy is related to his demand curve. 
C)  less than the price received if producer surplus is a positive number. 
D)  All of the above are correct. 
A)  measured by the seller's cost of production. 
B)  related to her supply curve, just as a buyer's willingness to buy is related to his demand curve. 
C)  less than the price received if producer surplus is a positive number. 
D)  All of the above are correct.

Question 4

Table 7-10
The only four consumers in a market have the following willingness to pay for a good:
Buyer Willingness to Pay  
-Refer to Table 7-10. If there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Accepted Answer

A)  $0 or slightly more. 
B)  $3 or slightly less. 
C)  $4 or slightly more. 
D)  $8 or slightly less. 
A)  $0 or slightly more. 
B)  $3 or slightly less. 
C)  $4 or slightly more. 
D)  $8 or slightly less.

Question 5

Figure 7-24  
-Refer to Figure 7-24. If 10 units of the good are produced and sold, then

Accepted Answer

A)  the marginal cost to sellers exceeds the marginal value to buyers. 
B)  producer surplus is maximized. 
C)  total surplus is minimized. 
D)  the marginal value to buyers exceeds the marginal cost to sellers. 
A)  the marginal cost to sellers exceeds the marginal value to buyers. 
B)  producer surplus is maximized. 
C)  total surplus is minimized. 
D)  the marginal value to buyers exceeds the marginal cost to sellers.

Question 6

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 consumer surplus increase for those consumers who enter the market after the price floor is removed?

Accepted Answer

New consumers entering the mar

Question 7

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 Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day.  
-Refer to Table 7-5. If the market price of an orange is $0.90, then the market quantity of oranges demanded per day is

Accepted Answer

A)  5. 
B)  2. 
C)  3. 
D)  4. 
A)  5. 
B)  2. 
C)  3. 
D)  4.

Question 8

Figure 7-33  
-Refer to Figure 7-33. How much is total producer surplus in this market at the equilibrium price?

Accepted Answer

Total producer surpl

Question 9

Figure 7-24  
-Refer to Figure 7-24. At equilibrium, producer surplus is

Accepted Answer

A)  $36. 
B)  $72. 
C)  $54. 
D)  $18. 
A)  $36. 
B)  $72. 
C)  $54. 
D)  $18.

Question 10

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 11

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 12

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, who will buy the ticket?

Accepted Answer

A)  Dan 
B)  David 
C)  Ken 
D)  Lisa 
A)  Dan 
B)  David 
C)  Ken 
D)  Lisa

Question 13

Figure 7-19  
-Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

Accepted Answer

A)  $187.50. 
B)  $125.00. 
C)  $250.00. 
D)  $266.67. 
A)  $187.50. 
B)  $125.00. 
C)  $250.00. 
D)  $266.67.

Question 14

Which of the following statements is not correct about a market in equilibrium?

Accepted Answer

A)  The price determines which buyers and which sellers participate in the market. 
B)  Those buyers who value the good more than the price choose to buy the good. 
C)  Those sellers whose costs are less than the price choose to produce and sell the good. 
D)  Consumer surplus will be equal to producer surplus. 
A)  The price determines which buyers and which sellers participate in the market. 
B)  Those buyers who value the good more than the price choose to buy the good. 
C)  Those sellers whose costs are less than the price choose to produce and sell the good. 
D)  Consumer surplus will be equal to producer surplus.

Question 15

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 16

Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be

Accepted Answer

A)  $15. 
B)  $30. 
C)  $45. 
D)  $90. 
A)  $15. 
B)  $30. 
C)  $45. 
D)  $90.

Question 17

Figure 7-15  
-Refer to Figure 7-15. When the price is P2, producer surplus is

Accepted Answer

A)  A. 
B)  A+C. 
C)  A+B+C. 
D)  D+G. 
A)  A. 
B)  A+C. 
C)  A+B+C. 
D)  D+G.

Question 18

Suppose John's cost for performing some carpentry work is $120. If John is paid $200 for the carpentry work, what is his producer surplus?

Accepted Answer

His produc

Question 19

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 consumer surplus increase for those consumers who were purchasing the good when the price floor was in place?

Accepted Answer

Those consumers who were alrea

Question 20

Total surplus is

Accepted Answer

A)  the total cost to sellers of providing the good minus the total value of the good to buyers. 
B)  the total value of the good to buyers minus the cost to sellers of providing the good. 
C)  the difference between consumer surplus and sellers' cost. 
D)  always smaller than producer surplus. 
A)  the total cost to sellers of providing the good minus the total value of the good to buyers. 
B)  the total value of the good to buyers minus the cost to sellers of providing the good. 
C)  the difference between consumer surplus and sellers' cost. 
D)  always smaller than producer surplus.

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

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

The "invisible hand" refers to

A seller's willingness to sell is

Figure 7-24 -Refer to Figure 7-24. If 10 units of the good are produced and sold, then

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 consumer surplus increase for those consumers who enter the market after the price floor is removed?

Figure 7-33 -Refer to Figure 7-33. How much is total producer surplus in this market at the equilibrium price?

Figure 7-24 -Refer to Figure 7-24. At equilibrium, producer surplus is

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

Producer surplus equals the

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, who will buy the ticket?

Figure 7-19 -Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

Which of the following statements is not correct about a market in equilibrium?

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

Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be

Figure 7-15 -Refer to Figure 7-15. When the price is P2, producer surplus is

Suppose John's cost for performing some carpentry work is $120. If John is paid $200 for the carpentry work, what is his producer surplus?

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 consumer surplus increase for those consumers who were purchasing the good when the price floor was in place?

Total surplus is

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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