Question 1

Total surplus = Value to buyers - Costs to sellers.

Accepted Answer

A) True 
 B)False

Question 2

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is

Accepted Answer

A)  $650. 
B)  $150. 
C)  $250. 
D)  $400. 
A)  $650. 
B)  $150. 
C)  $250. 
D)  $400.

Question 3

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 tickets sell for $25 each, then what is the total consumer surplus in the market?

Accepted Answer

A)  $25 
B)  $35 
C)  $60 
D)  $110 
A)  $25 
B)  $35 
C)  $60 
D)  $110

Question 4

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 $0.65, then consumer surplus amounts to

Accepted Answer

A)  $3.90. 
B)  $6.75. 
C)  $3.60. 
D)  $7.50. 
A)  $3.90. 
B)  $6.75. 
C)  $3.60. 
D)  $7.50.

Question 5

Figure 7-10  
-Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

Accepted Answer

A)  BCG 
B)  ACH 
C)  ABGD 
D)  AHGB 
A)  BCG 
B)  ACH 
C)  ABGD 
D)  AHGB

Question 6

Consumer surplus can be measured as the area between the demand curve and the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 7

Figure 7-8  
-Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

Accepted Answer

A)  $150. 
B)  $325. 
C)  $650. 
D)  $675. 
A)  $150. 
B)  $325. 
C)  $650. 
D)  $675.

Question 8

Figure 7-27  
-Refer to Figure 7-27. Buyers who value this good less than the equilibrium price are represented by which line segment?

Accepted Answer

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

Question 9

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for

Accepted Answer

A)  $6.50 each. 
B)  $7.50 each. 
C)  $9.50 each. 
D)  $10.50 each. 
A)  $6.50 each. 
B)  $7.50 each. 
C)  $9.50 each. 
D)  $10.50 each.

Question 10

When markets fail, public policy can

Accepted Answer

A)  do nothing to improve the situation. 
B)  potentially remedy the problem and increase economic efficiency. 
C)  always remedy the problem and increase economic efficiency. 
D)  in theory, remedy the problem, but in practice, public policy has proven to be ineffective. 
A)  do nothing to improve the situation. 
B)  potentially remedy the problem and increase economic efficiency. 
C)  always remedy the problem and increase economic efficiency. 
D)  in theory, remedy the problem, but in practice, public policy has proven to be ineffective.

Question 11

Which of the following equations is not valid?

Accepted Answer

A)  Consumer surplus = Value to buyers - Amount paid by buyers 
B)  Producer surplus = Amount received by sellers - Cost to sellers 
C)  Total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers 
D)  Total surplus = Value to sellers - Cost to sellers 
A)  Consumer surplus = Value to buyers - Amount paid by buyers 
B)  Producer surplus = Amount received by sellers - Cost to sellers 
C)  Total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers 
D)  Total surplus = Value to sellers - Cost to sellers

Question 12

Figure 7-9  
-Refer to Figure 7-9. If the price of the good is $14, then producer surplus is

Accepted Answer

A)  $19.50. 
B)  $22.50. 
C)  $20.50. 
D)  $25.00. 
A)  $19.50. 
B)  $22.50. 
C)  $20.50. 
D)  $25.00.

Question 13

Table 7-9
During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase.  
-Refer to Table 7-9. The price that Chad paid for a latte on the first day is

Accepted Answer

A)  $3.75. 
B)  $6.25. 
C)  $5.00. 
D)  $5.50. 
A)  $3.75. 
B)  $6.25. 
C)  $5.00. 
D)  $5.50.

Question 14

Figure 7-3  
-Refer to Figure 7-3. When the price rises from P1 to P2, consumer surplus

Accepted Answer

A)  increases by an amount equal to A. 
B)  decreases by an amount equal to B+C. 
C)  increases by an amount equal to B+C. 
D)  decreases by an amount equal to C. 
A)  increases by an amount equal to A. 
B)  decreases by an amount equal to B+C. 
C)  increases by an amount equal to B+C. 
D)  decreases by an amount equal to C.

Question 15

Which of the following will cause an increase in consumer surplus?

Accepted Answer

A)  an increase in the production cost of the good 
B)  a technological improvement in the production of the good 
C)  a decrease in the number of sellers of the good 
D)  the imposition of a binding price floor in the market 
A)  an increase in the production cost of the good 
B)  a technological improvement in the production of the good 
C)  a decrease in the number of sellers of the good 
D)  the imposition of a binding price floor in the market

Question 16

Table 7-19
The following table shows the cost of producing a good for the only four producers in a market.  
-Refer to Table 7-19. If the market price is $28, which producers will supply units in the market?

Accepted Answer

The answer of Table 7-19
The following table shows the cost...

Question 17

The "invisible hand" is

Accepted Answer

A)  used to describe the welfare system in the United States. 
B)  a concept developed by Adam Smith to describe the virtues of free markets. 
C)  a concept used by J.M. Keynes to describe the role of government in guiding the allocation of resources in the economy. 
D)  a term used by some economists to characterize the role of government in an economy - inevitable but invisible. 
A)  used to describe the welfare system in the United States. 
B)  a concept developed by Adam Smith to describe the virtues of free markets. 
C)  a concept used by J.M. Keynes to describe the role of government in guiding the allocation of resources in the economy. 
D)  a term used by some economists to characterize the role of government in an economy - inevitable but invisible.

Question 18

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 19

Justin builds fences for a living. Justin's out­of­pocket expenses (for wood, paint, etc.) plus the value that he places

Accepted Answer

A)  producer surplus. 
B)  producer deficit. 
C)  cost of building fences. 
D)  profit. 
A)  producer surplus. 
B)  producer deficit. 
C)  cost of building fences. 
D)  profit.

Question 20

If John's willingness to pay for a good is $20 and the price of the good is $15, how much is John's consumer surplus
from purchasing the good?

Accepted Answer

Consumer s

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

Total surplus = Value to buyers - Costs to sellers.

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is

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 tickets sell for $25 each, then what is the total consumer surplus in the market?

Figure 7-10 -Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

Consumer surplus can be measured as the area between the demand curve and the equilibrium price.

Figure 7-8 -Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

Figure 7-27 -Refer to Figure 7-27. Buyers who value this good less than the equilibrium price are represented by which line segment?

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for

When markets fail, public policy can

Which of the following equations is not valid?

Figure 7-9 -Refer to Figure 7-9. If the price of the good is $14, then producer surplus is

Table 7-9 During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase. -Refer to Table 7-9. The price that Chad paid for a latte on the first day is

Figure 7-3 -Refer to Figure 7-3. When the price rises from P1 to P2, consumer surplus

Which of the following will cause an increase in consumer surplus?

Table 7-19 The following table shows the cost of producing a good for the only four producers in a market. -Refer to Table 7-19. If the market price is $28, which producers will supply units in the market?

The "invisible hand" is

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

Justin builds fences for a living. Justin's out­of­pocket expenses (for wood, paint, etc.) plus the value that he places

If John's willingness to pay for a good is $20 and the price of the good is $15, how much is John's consumer surplus from purchasing the good?

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

Justin builds fences for a living. Justin's outofpocket expenses (for wood, paint, etc.) plus the value that he places