Question 1

If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would

Accepted Answer

A)  not reduce the shortage of organs. 
B)  benefit rich people but not poor people. 
C)  be inefficient because markets are not good at allocating scarce resources. 
D)  be inferior to a plan imposed by a benevolent dictator. 
A)  not reduce the shortage of organs. 
B)  benefit rich people but not poor people. 
C)  be inefficient because markets are not good at allocating scarce resources. 
D)  be inferior to a plan imposed by a benevolent dictator.

Question 2

Figure 7-11  
-Refer to Figure 7-11. If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?

Accepted Answer

A)  $625 
B)  $1,250 
C)  $2,500 
D)  $5,000 
A)  $625 
B)  $1,250 
C)  $2,500 
D)  $5,000

Question 3

Table 7-11
The following table represents the costs of five possible sellers.  
-Refer to Table 7-11. If the market price is $1,400, the combined total cost of all participating sellers is

Accepted Answer

A)  $5,700. 
B)  $1,500. 
C)  $1,400. 
D)  $4,100. 
A)  $5,700. 
B)  $1,500. 
C)  $1,400. 
D)  $4,100.

Question 4

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

Accepted Answer

A)  $300. 
B)  $150. 
C)  $450. 
D)  $125. 
A)  $300. 
B)  $150. 
C)  $450. 
D)  $125.

Question 5

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

Accepted Answer

Consumer s

Question 6

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

Accepted Answer

A)  profits and costs to firms 
B)  consumer and producer surplus 
C)  the equilibrium price and quantity 
D)  incomes of and prices paid by buyers 
A)  profits and costs to firms 
B)  consumer and producer surplus 
C)  the equilibrium price and quantity 
D)  incomes of and prices paid by buyers

Question 7

Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market

Accepted Answer

A)  decreases. 
B)  is unchanged. 
C)  increases. 
D)  may increase, decrease, or remain unchanged. 
A)  decreases. 
B)  is unchanged. 
C)  increases. 
D)  may increase, decrease, or remain unchanged.

Question 8

Figure 7-24  
-Refer to Figure 7-24. If the government imposes a price floor at $18, then consumer surplus is

Accepted Answer

A)  ABF. 
B)  AGH. 
C)  HGCD. 
D)  HGBF. 
A)  ABF. 
B)  AGH. 
C)  HGCD. 
D)  HGBF.

Question 9

If the government allowed a free market for transplant organs such as kidneys to exist, the

Accepted Answer

A)  shortage of organs would be eliminated, and there would be no surplus of organs. 
B)  shortage of organs would be eliminated, but a surplus of organs would develop. 
C)  shortage of organs would persist. 
D)  overall well-being of society would remain unchanged. 
A)  shortage of organs would be eliminated, and there would be no surplus of organs. 
B)  shortage of organs would be eliminated, but a surplus of organs would develop. 
C)  shortage of organs would persist. 
D)  overall well-being of society would remain unchanged.

Question 10

When there is a technological advance in the pork industry, consumer surplus in that market will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change, since technology affects producers and not consumers. 
D)  not change, since consumers' willingness to pay is unaffected by the technological advance. 
A)  increase. 
B)  decrease. 
C)  not change, since technology affects producers and not consumers. 
D)  not change, since consumers' willingness to pay is unaffected by the technological advance.

Question 11

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's consumer surplus is

Accepted Answer

A)  $500. 
B)  $3,000. 
C)  $3,500. 
D)  $6,500. 
A)  $500. 
B)  $3,000. 
C)  $3,500. 
D)  $6,500.

Question 12

Figure 7-11  
-Refer to Figure 7-11. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?

Accepted Answer

A)  $625 
B)  $1,250 
C)  $2,500 
D)  $5,000 
A)  $625 
B)  $1,250 
C)  $2,500 
D)  $5,000

Question 13

Which of the following is true when the price of a good or service rises?

Accepted Answer

A)  Buyers who were already buying the good or service are better off. 
B)  Some buyers exit the market. 
C)  The total consumer surplus in the market increases. 
D)  The total value of purchases before and after the price change is the same. 
A)  Buyers who were already buying the good or service are better off. 
B)  Some buyers exit the market. 
C)  The total consumer surplus in the market increases. 
D)  The total value of purchases before and after the price change is the same.

Question 14

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is   If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

Accepted Answer

A) True 
 B)False

Question 15

Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20. Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30.
Which of the following statements is correct?

Accepted Answer

A)  Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been a buyer. 
B)  Brent's consumer surplus is the smallest of the three individual consumer surpluses. 
C)  For the three individuals together, consumer surplus amounts to $60. 
D)  The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener. 
A)  Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been a buyer. 
B)  Brent's consumer surplus is the smallest of the three individual consumer surpluses. 
C)  For the three individuals together, consumer surplus amounts to $60. 
D)  The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener.

Question 16

Table 7-11
The following table represents the costs of five possible sellers.  
-Refer to Table 7-11. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 4 if the price is

Accepted Answer

A)  $860. 
B)  $1,050. 
C)  $1,650. 
D)  $1,400. 
A)  $860. 
B)  $1,050. 
C)  $1,650. 
D)  $1,400.

Question 17

Scenario 7-1
Suppose market demand is given by the equation  
-Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, what is the change in total consumer surplus in the market?

Accepted Answer

Consumer s

Question 18

If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

Accepted Answer

A)  zero. 
B)  negative, and the consumer would not purchase the product. 
C)  positive, and the consumer would purchase the product. 
D)  There is not enough information given to answer this question. 
A)  zero. 
B)  negative, and the consumer would not purchase the product. 
C)  positive, and the consumer would purchase the product. 
D)  There is not enough information given to answer this question.

Question 19

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 the market price for the good is $20, who will purchase the good?

Accepted Answer

A)  Danita only 
B)  Carolyn and Danita only 
C)  Ashleigh, Barb, and Carolyn only 
D)  All four buyers would purchase the good. 
A)  Danita only 
B)  Carolyn and Danita only 
C)  Ashleigh, Barb, and Carolyn only 
D)  All four buyers would purchase the good.

Question 20

Table 7-1  
-Refer to Table 7-1. If the market price is $105,

Accepted Answer

A)  Calvin's consumer surplus is $45 and total consumer surplus is $85. 
B)  Sam's consumer surplus is $30 and total consumer surplus is $90. 
C)  Andrew's consumer surplus is $15 and total consumer surplus is $67.50. 
D)  Lori's consumer surplus is ­$2 and total consumer surplus is $100. 
A)  Calvin's consumer surplus is $45 and total consumer surplus is $85. 
B)  Sam's consumer surplus is $30 and total consumer surplus is $90. 
C)  Andrew's consumer surplus is $15 and total consumer surplus is $67.50. 
D)  Lori's consumer surplus is ­$2 and total consumer surplus is $100.

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

If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would

Figure 7-11 -Refer to Figure 7-11. If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,400, the combined total cost of all participating sellers is

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

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

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market

Figure 7-24 -Refer to Figure 7-24. If the government imposes a price floor at $18, then consumer surplus is

If the government allowed a free market for transplant organs such as kidneys to exist, the

When there is a technological advance in the pork industry, consumer surplus in that market will

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's consumer surplus is

Figure 7-11 -Refer to Figure 7-11. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?

Which of the following is true when the price of a good or service rises?

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20. Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30. Which of the following statements is correct?

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 4 if the price is

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, what is the change in total consumer surplus in the market?

If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

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 the market price for the good is $20, who will purchase the good?

Table 7-1 -Refer to Table 7-1. If the market price is $105,

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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