Question 1

At present, the maximum legal price for a human kidney is $0. The price of $0 maximizes

Accepted Answer

A)  consumer surplus but not producer surplus. 
B)  producer surplus but not consumer surplus. 
C)  both consumer and producer surplus. 
D)  neither consumer nor producer surplus. 
A)  consumer surplus but not producer surplus. 
B)  producer surplus but not consumer surplus. 
C)  both consumer and producer surplus. 
D)  neither consumer nor producer surplus.

Question 2

Figure 7-22  
-Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus would be

Accepted Answer

A)  $2,500. 
B)  $900. 
C)  $800. 
D)  $1,600. 
A)  $2,500. 
B)  $900. 
C)  $800. 
D)  $1,600.

Question 3

Which of the following statements is correct?

Accepted Answer

A)  Buyers always want to pay less and sellers always want to be paid more. 
B)  Buyers always want to pay less and sellers always want to be paid less. 
C)  Buyers always want to pay more and sellers always want to be paid more. 
D)  Buyers always want to pay more and sellers always want to be paid less. 
A)  Buyers always want to pay less and sellers always want to be paid more. 
B)  Buyers always want to pay less and sellers always want to be paid less. 
C)  Buyers always want to pay more and sellers always want to be paid more. 
D)  Buyers always want to pay more and sellers always want to be paid less.

Question 4

Table 7-15  
-Refer to Table 7-15. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. You hire Kevin for a price of $500. What is his producer surplus?

Accepted Answer

The answer of Table 7-15  
-Refer to Table 7-15....

Question 5

Figure 7-23  
-Refer to Figure 7-23. The equilibrium price is

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P4. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P4.

Question 6

Figure 7-15  
-Refer to Figure 7-15. When the price rises from P1 to P2, which area represents the increase in producer surplus due to new producers entering the market?

Accepted Answer

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

Question 7

Total surplus

Accepted Answer

A)  can be used to measure a market's efficiency. 
B)  is the sum of consumer and producer surplus. 
C)  is the value to buyers minus the cost to sellers. 
D)  All of the above are correct. 
A)  can be used to measure a market's efficiency. 
B)  is the sum of consumer and producer surplus. 
C)  is the value to buyers minus the cost to sellers. 
D)  All of the above are correct.

Question 8

Figure 7-1  
-Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to

Accepted Answer

A)  $50. 
B)  $100. 
C)  $150. 
D)  $200. 
A)  $50. 
B)  $100. 
C)  $150. 
D)  $200.

Question 9

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to

Accepted Answer

A)  only existing customers who now get lower prices on the gowns they were already planning to purchase. 
B)  only new customers who enter the market because of the lower prices. 
C)  both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. 
D)  Consumer surplus does not increase; it decreases. 
A)  only existing customers who now get lower prices on the gowns they were already planning to purchase. 
B)  only new customers who enter the market because of the lower prices. 
C)  both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. 
D)  Consumer surplus does not increase; it decreases.

Question 10

Consumer surplus is

Accepted Answer

A)  the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
B)  the amount a buyer is willing to pay for a good minus the cost of producing the good. 
C)  the amount by which the quantity supplied of a good exceeds the quantity demanded of the good. 
D)  a buyer's willingness to pay for a good plus the price of the good. 
A)  the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
B)  the amount a buyer is willing to pay for a good minus the cost of producing the good. 
C)  the amount by which the quantity supplied of a good exceeds the quantity demanded of the good. 
D)  a buyer's willingness to pay for a good plus the price of the good.

Question 11

Welfare economics is the study of the welfare system.

Accepted Answer

A) True 
 B)False

Question 12

Figure 7-9  
-Refer to Figure 7-9. If the price of the good is $9.50, then producer surplus is

Accepted Answer

A)  $3.00. 
B)  $6.50. 
C)  $10.50. 
D)  $8.50. 
A)  $3.00. 
B)  $6.50. 
C)  $10.50. 
D)  $8.50.

Question 13

Another way to think of the marginal seller is the seller who

Accepted Answer

A)  will accept the lowest price of any seller in the market. 
B)  requires the highest price of any potential seller in the market. 
C)  would leave the market first if the price were any lower. 
D)  would leave the market last if the price falls. 
A)  will accept the lowest price of any seller in the market. 
B)  requires the highest price of any potential seller in the market. 
C)  would leave the market first if the price were any lower. 
D)  would leave the market last if the price falls.

Question 14

Figure 7-24  
-Refer to Figure 7-24. If the government imposes a price ceiling at $12, then producer surplus is

Accepted Answer

A)  CDI. 
B)  BDF. 
C)  BCIF. 
D)  HGCD. 
A)  CDI. 
B)  BDF. 
C)  BCIF. 
D)  HGCD.

Question 15

Figure 7-16  
-Refer to Figure 7-16. Suppose the price of the good is $400. Then, on the first unit of the good that is sold, producer surplus amounts to

Accepted Answer

A)  $200. 
B)  $300. 
C)  $400. 
D)  $450. 
A)  $200. 
B)  $300. 
C)  $400. 
D)  $450.

Question 16

A seller's opportunity cost measures the

Accepted Answer

A)  value of everything she must give up to produce a good. 
B)  amount she is paid for a good minus her cost of providing it. 
C)  consumer surplus. 
D)  out of pocket expenses to produce a good but not the value of her time. 
A)  value of everything she must give up to produce a good. 
B)  amount she is paid for a good minus her cost of providing it. 
C)  consumer surplus. 
D)  out of pocket expenses to produce a good but not the value of her time.

Question 17

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?

Accepted Answer

With the removal of the price

Question 18

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

Accepted Answer

A)  $100. 
B)  $200. 
C)  $50. 
D)  $450. 
A)  $100. 
B)  $200. 
C)  $50. 
D)  $450.

Question 19

Unless markets are perfectly competitive, they may fail to maximize the total benefits to buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 20

Figure 7-14  
-Refer to Figure 7-14. At the equilibrium price, producer surplus is

Accepted Answer

A)  $800. 
B)  $400. 
C)  $450. 
D)  $900. 
A)  $800. 
B)  $400. 
C)  $450. 
D)  $900.

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

At present, the maximum legal price for a human kidney is $0. The price of $0 maximizes

Figure 7-22 -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus would be

Which of the following statements is correct?

Table 7-15 -Refer to Table 7-15. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. You hire Kevin for a price of $500. What is his producer surplus?

Figure 7-23 -Refer to Figure 7-23. The equilibrium price is

Figure 7-15 -Refer to Figure 7-15. When the price rises from P1 to P2, which area represents the increase in producer surplus due to new producers entering the market?

Total surplus

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to

Consumer surplus is

Welfare economics is the study of the welfare system.

Figure 7-9 -Refer to Figure 7-9. If the price of the good is $9.50, then producer surplus is

Another way to think of the marginal seller is the seller who

Figure 7-24 -Refer to Figure 7-24. If the government imposes a price ceiling at $12, then producer surplus is

Figure 7-16 -Refer to Figure 7-16. Suppose the price of the good is $400. Then, on the first unit of the good that is sold, producer surplus amounts to

A seller's opportunity cost measures the

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?

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

Unless markets are perfectly competitive, they may fail to maximize the total benefits to buyers and sellers.

Figure 7-14 -Refer to Figure 7-14. At the equilibrium price, producer 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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