Question 1

Table 7-17  
-Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Accepted Answer

A)  $44. 
B)  $56. 
C)  $72. 
D)  $96. 
A)  $44. 
B)  $56. 
C)  $72. 
D)  $96.

Question 2

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to

Accepted Answer

A)  $4. 
B)  $16. 
C)  $20. 
D)  $36. 
A)  $4. 
B)  $16. 
C)  $20. 
D)  $36.

Question 3

Figure 7-31  
-Refer to Figure 7-31. If the market equilibrium price is $25, how much is total producer surplus in this market?

Accepted Answer

Total prod

Question 4

Figure 7-14  
-Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then the new producer surplus will be

Accepted Answer

A)  $200. 
B)  $100. 
C)  $125. 
D)  $250. 
A)  $200. 
B)  $100. 
C)  $125. 
D)  $250.

Question 5

Which of the following statements is not correct?

Accepted Answer

A)  An invisible hand leads buyers and sellers to an equilibrium that maximizes total surplus. 
B)  Market power can cause markets to be inefficient. 
C)  Externalities can cause markets to be inefficient. 
D)  The invisible hand can remedy all types of market failures. 
A)  An invisible hand leads buyers and sellers to an equilibrium that maximizes total surplus. 
B)  Market power can cause markets to be inefficient. 
C)  Externalities can cause markets to be inefficient. 
D)  The invisible hand can remedy all types of market failures.

Question 6

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.  
-Refer to Table 7-2. Which of the following is not true?

Accepted Answer

A)  At a price of $9.00, no buyer is willing to purchase Vanilla Coke. 
B)  At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not buying one. 
C)  At a price of $4.00, total consumer surplus in the market will be $9.00. 
D)  All of the above are correct. 
A)  At a price of $9.00, no buyer is willing to purchase Vanilla Coke. 
B)  At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not buying one. 
C)  At a price of $4.00, total consumer surplus in the market will be $9.00. 
D)  All of the above are correct.

Question 7

Consumer surplus is

Accepted Answer

A)  a concept that helps us make normative statements about the desirability of market outcomes. 
B)  represented on a graph by the area below the demand curve and above the price. 
C)  a good measure of economic welfare if buyers' preferences are the primary concern. 
D)  All of the above are correct. 
A)  a concept that helps us make normative statements about the desirability of market outcomes. 
B)  represented on a graph by the area below the demand curve and above the price. 
C)  a good measure of economic welfare if buyers' preferences are the primary concern. 
D)  All of the above are correct.

Question 8

Scenario 7-2
Suppose market demand and market supply are given by the equations:  
-Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to   How much total consumer surplus goes to new consumers who enter the market after the supply curve shifts?

Accepted Answer

Total consumer surplus increas

Question 9

Moving production from a high-cost producer to a low-cost producer will

Accepted Answer

A)  lower total surplus. 
B)  raise total surplus. 
C)  lower producer surplus. 
D)  raise producer surplus but lower consumer surplus. 
A)  lower total surplus. 
B)  raise total surplus. 
C)  lower producer surplus. 
D)  raise producer surplus but lower consumer surplus.

Question 10

All else equal, an increase in supply will cause an increase in consumer surplus.

Accepted Answer

A) True 
 B)False

Question 11

In a competitive market, sales go to those producers who are willing to supply the product at the lowest price.

Accepted Answer

A) True 
 B)False

Question 12

Figure 7-24  
-Refer to Figure 7-24. If 4 units of the good are produced and sold, then

Accepted Answer

A)  producer surplus is greater than consumer surplus. 
B)  consumer surplus is $16. 
C)  total surplus is minimized. 
D)  total surplus is not maximized. 
A)  producer surplus is greater than consumer surplus. 
B)  consumer surplus is $16. 
C)  total surplus is minimized. 
D)  total surplus is not maximized.

Question 13

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

Accepted Answer

A)  seller's producer surplus. 
B)  seller's cost of production. 
C)  seller's profit. 
D)  average willingness to pay of buyers of the product. 
A)  seller's producer surplus. 
B)  seller's cost of production. 
C)  seller's profit. 
D)  average willingness to pay of buyers of the product.

Question 14

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. If Firm A produces a monitor that Cassie buys but David does not, then the market outcome illustrates which of the following principles?

Accepted Answer

A)  (i) only 
B)  (ii) only 
C)  both (i) and (ii) 
D)  neither (i) nor (ii) 
A)  (i) only 
B)  (ii) only 
C)  both (i) and (ii) 
D)  neither (i) nor (ii)

Question 15

Figure 7-15  
-Refer to Figure 7-15. Area B represents

Accepted Answer

A)  the combined profits of all producers when the price is P2. 
B)  the increase in producer surplus to all producers as the result of an increase in the price from P1 to P2. 
C)  producer surplus to new producers entering the market as the result of an increase in the price from P1 to P2. 
D)  that portion of the increase in producer surplus that is offset by a loss in consumer surplus when the price increases from P1 to P2. 
A)  the combined profits of all producers when the price is P2. 
B)  the increase in producer surplus to all producers as the result of an increase in the price from P1 to P2. 
C)  producer surplus to new producers entering the market as the result of an increase in the price from P1 to P2. 
D)  that portion of the increase in producer surplus that is offset by a loss in consumer surplus when the price increases from P1 to P2.

Question 16

The Surgeon General announces that eating apples promotes healthy teeth. As a result, the equilibrium price of apples

Accepted Answer

A)  increases, and producer surplus increases. 
B)  increases, and producer surplus decreases. 
C)  decreases, and producer surplus increases. 
D)  decreases, and producer surplus decreases. 
A)  increases, and producer surplus increases. 
B)  increases, and producer surplus decreases. 
C)  decreases, and producer surplus increases. 
D)  decreases, and producer surplus decreases.

Question 17

Figure 7-16  
-Refer to Figure 7-16. If the price of the good is $300, then producer surplus amounts to

Accepted Answer

A)  $100. 
B)  $200. 
C)  $300. 
D)  $400. 
A)  $100. 
B)  $200. 
C)  $300. 
D)  $400.

Question 18

Figure 7-34  
-Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the government removed the price ceiling, by how much would total producer surplus change?

Accepted Answer

Total producer surplus with th

Question 19

Table 7-7  
-Refer to Table 7-7. You are selling 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. Which of the following graphs represents the market demand curve?

Accepted Answer

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

Question 20

The lower the price, the lower the producer surplus, all else equal.

Accepted Answer

A) True 
 B)False

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

Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to

Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price is $25, how much is total producer surplus in this market?

Figure 7-14 -Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then the new producer surplus will be

Which of the following statements is not correct?

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. Which of the following is not true?

Consumer surplus is

Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to How much total consumer surplus goes to new consumers who enter the market after the supply curve shifts?

Moving production from a high-cost producer to a low-cost producer will

All else equal, an increase in supply will cause an increase in consumer surplus.

In a competitive market, sales go to those producers who are willing to supply the product at the lowest price.

Figure 7-24 -Refer to Figure 7-24. If 4 units of the good are produced and sold, then

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

Figure 7-15 -Refer to Figure 7-15. Area B represents

The Surgeon General announces that eating apples promotes healthy teeth. As a result, the equilibrium price of apples

Figure 7-16 -Refer to Figure 7-16. If the price of the good is $300, then producer surplus amounts to

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the government removed the price ceiling, by how much would total producer surplus change?

The lower the price, the lower the producer surplus, all else equal.

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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