Question 1

Figure 7-3  
-Refer to Figure 7-3. Area C represents the

Accepted Answer

A)  decrease in consumer surplus that results from a downward-sloping demand curve. 
B)  consumer surplus to new consumers who enter the market when the price falls from P2 to P1. 
C)  increase in producer surplus when quantity sold increases from Q2 to Q1. 
D)  decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2. 
A)  decrease in consumer surplus that results from a downward-sloping demand curve. 
B)  consumer surplus to new consumers who enter the market when the price falls from P2 to P1. 
C)  increase in producer surplus when quantity sold increases from Q2 to Q1. 
D)  decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2.

Question 2

Table 7-1  
-Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product?

Accepted Answer

A)  Calvin 
B)  Calvin and Sam 
C)  Calvin, Sam, and Andrew 
D)  Calvin, Sam, Andrew, and Lori 
A)  Calvin 
B)  Calvin and Sam 
C)  Calvin, Sam, and Andrew 
D)  Calvin, Sam, Andrew, and Lori

Question 3

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following will cause a decrease in producer surplus?

Accepted Answer

A)  the imposition of a nonbinding price ceiling in the market 
B)  buyers expect the price of a good to be higher next month 
C)  the price of a substitute increases 
D)  income increases and buyers consider the good to be inferior 
A)  the imposition of a nonbinding price ceiling in the market 
B)  buyers expect the price of a good to be higher next month 
C)  the price of a substitute increases 
D)  income increases and buyers consider the good to be inferior

Question 5

Market power and externalities are examples of

Accepted Answer

A)  laissez-faire economics. 
B)  public policy. 
C)  market failure. 
D)  welfare economics. 
A)  laissez-faire economics. 
B)  public policy. 
C)  market failure. 
D)  welfare economics.

Question 6

Producer surplus is the area

Accepted Answer

A)  under the supply curve. 
B)  between the supply and demand curves. 
C)  below the price and above the supply curve. 
D)  under the demand curve and above the price. 
A)  under the supply curve. 
B)  between the supply and demand curves. 
C)  below the price and above the supply curve. 
D)  under the demand curve and above the price.

Question 7

Abraham drinks Mountain Dew. He can buy as many cans of Mountain Dew as he wishes at a price of $0.55 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Abraham is rational in deciding how many cans to buy. His consumer surplus is

Accepted Answer

A)  $0.50. 
B)  $0.60. 
C)  $0.70. 
D)  $1.00. 
A)  $0.50. 
B)  $0.60. 
C)  $0.70. 
D)  $1.00.

Question 8

Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software?

Accepted Answer

A)  $50. 
B)  $150. 
C)  $200. 
D)  $350. 
A)  $50. 
B)  $150. 
C)  $200. 
D)  $350.

Question 9

When the supply of a good decreases and the demand for the good remains unchanged, consumer surplus

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 10

Inefficiency can be caused in a market by the presence of

Accepted Answer

A)  market power. 
B)  externalities. 
C)  imperfectly competitive markets. 
D)  All of the above are correct. 
A)  market power. 
B)  externalities. 
C)  imperfectly competitive markets. 
D)  All of the above are correct.

Question 11

Figure 7-5  
-Refer to Figure 7-5. If the price of the good is $12, then consumer surplus is

Accepted Answer

A)  $9. 
B)  $11. 
C)  $13. 
D)  $16. 
A)  $9. 
B)  $11. 
C)  $13. 
D)  $16.

Question 12

Table 7-20  
-Refer to Table 7-20. How much is total consumer surplus at the equilibrium price in this market?

Accepted Answer

Total consumer surpl

Question 13

Figure 7-26  
-Refer to Figure 7-26. At the equilibrium price, consumer surplus is

Accepted Answer

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

Question 14

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, how much additional consumer surplus do consumers initially in the market at the $10 price receive?

Accepted Answer

The consumers initially in the

Question 15

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $100.

Accepted Answer

A) True 
 B)False

Question 16

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Accepted Answer

A) True 
 B)False

Question 17

Economists tend to see ticket scalping as

Accepted Answer

A)  a way for a few to profit without producing anything of value. 
B)  an inequitable interference in the orderly process of ticket distribution. 
C)  a way of increasing the efficiency of ticket distribution. 
D)  an unproductive activity which should be made illegal everywhere. 
A)  a way for a few to profit without producing anything of value. 
B)  an inequitable interference in the orderly process of ticket distribution. 
C)  a way of increasing the efficiency of ticket distribution. 
D)  an unproductive activity which should be made illegal everywhere.

Question 18

A buyer is willing to buy a product at a price greater than or equal to his willingness to pay, but would refuse to buy a product at a price less than his willingness to pay.

Accepted Answer

A) True 
 B)False

Question 19

If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets?

Accepted Answer

A)  Consumer surplus increases. 
B)  Consumer surplus decreases. 
C)  Consumer surplus will not change consumer surplus; only producer surplus changes. 
D)  Consumer surplus depends on what event led to the increase in the price of oak lumber. 
A)  Consumer surplus increases. 
B)  Consumer surplus decreases. 
C)  Consumer surplus will not change consumer surplus; only producer surplus changes. 
D)  Consumer surplus depends on what event led to the increase in the price of oak lumber.

Question 20

Total surplus in a market will increase when the government

Accepted Answer

A)  imposes a binding price floor or a binding price ceiling on that market. 
B)  imposes a tax on that market. 
C)  Both a and b are correct. 
D)  Neither a nor b is correct. 
A)  imposes a binding price floor or a binding price ceiling on that market. 
B)  imposes a tax on that market. 
C)  Both a and b are correct. 
D)  Neither a nor b is correct.

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

Figure 7-3 -Refer to Figure 7-3. Area C represents the

Table 7-1 -Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product?

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Which of the following will cause a decrease in producer surplus?

Market power and externalities are examples of

Producer surplus is the area

Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software?

When the supply of a good decreases and the demand for the good remains unchanged, consumer surplus

Inefficiency can be caused in a market by the presence of

Figure 7-5 -Refer to Figure 7-5. If the price of the good is $12, then consumer surplus is

Table 7-20 -Refer to Table 7-20. How much is total consumer surplus at the equilibrium price in this market?

Figure 7-26 -Refer to Figure 7-26. At the equilibrium price, consumer surplus 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, how much additional consumer surplus do consumers initially in the market at the $10 price receive?

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $100.

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Economists tend to see ticket scalping as

A buyer is willing to buy a product at a price greater than or equal to his willingness to pay, but would refuse to buy a product at a price less than his willingness to pay.

If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets?

Total surplus in a market will increase when the government

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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