Question 1

An example of normative analysis is studying

Accepted Answer

A)  how market forces produce equilibrium. 
B)  surpluses and shortages. 
C)  whether equilibrium outcomes are socially desirable. 
D)  income distributions. 
A)  how market forces produce equilibrium. 
B)  surpluses and shortages. 
C)  whether equilibrium outcomes are socially desirable. 
D)  income distributions.

Question 2

Economists typically measure efficiency using

Accepted Answer

A)  the price paid by buyers. 
B)  the quantity supplied by sellers. 
C)  total surplus. 
D)  profits to firms. 
A)  the price paid by buyers. 
B)  the quantity supplied by sellers. 
C)  total surplus. 
D)  profits to firms.

Question 3

Kristi sells purses. Her cost is $35 per purse. On a certain day, she sells 12 purses, and her producer surplus for that day amounts to $180. Kristi sold each purse for

Accepted Answer

A)  $65. 
B)  $50. 
C)  $45. 
D)  $53. 
A)  $65. 
B)  $50. 
C)  $45. 
D)  $53.

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 increases from $0.70 to $1.40, then consumer surplus

Accepted Answer

A)  increases by $2.60. 
B)  decreases by $0.70. 
C)  decreases by $2.50. 
D)  decreases by $2.60. 
A)  increases by $2.60. 
B)  decreases by $0.70. 
C)  decreases by $2.50. 
D)  decreases by $2.60.

Question 5

Table 7-11
The following table represents the costs of five possible sellers.  
-Refer to Table 7-11. Who is a marginal seller when the price is $1,100?

Accepted Answer

A)  Dianne 
B)  Bobby and Abby 
C)  Carlos, Dianne, and Evaline 
D)  Carlos, Dianne, Evaline, and Bobby 
A)  Dianne 
B)  Bobby and Abby 
C)  Carlos, Dianne, and Evaline 
D)  Carlos, Dianne, Evaline, and Bobby

Question 6

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

Accepted Answer

A)  $325. 
B)  $100. 
C)  $300. 
D)  $200. 
A)  $325. 
B)  $100. 
C)  $300. 
D)  $200.

Question 7

Cost is a measure of the

Accepted Answer

A)  seller's willingness to sell. 
B)  seller's producer surplus. 
C)  producer shortage. 
D)  seller's willingness to buy. 
A)  seller's willingness to sell. 
B)  seller's producer surplus. 
C)  producer shortage. 
D)  seller's willingness to buy.

Question 8

Consumer surplus is equal to the

Accepted Answer

A)  Value to buyers - Amount paid by buyers. 
B)  Amount paid by buyers - Costs of sellers. 
C)  Value to buyers - Costs of sellers. 
D)  Value to buyers - Willingness to pay of buyers. 
A)  Value to buyers - Amount paid by buyers. 
B)  Amount paid by buyers - Costs of sellers. 
C)  Value to buyers - Costs of sellers. 
D)  Value to buyers - Willingness to pay of buyers.

Question 9

For any given quantity, the price on a demand curve represents the marginal buyer's willingness to pay.

Accepted Answer

A) True 
 B)False

Question 10

All else equal, an increase in demand will cause an increase in producer surplus.

Accepted Answer

A) True 
 B)False

Question 11

Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is

Accepted Answer

A)  $150. 
B)  $350. 
C)  $500. 
D)  $850. 
A)  $150. 
B)  $350. 
C)  $500. 
D)  $850.

Question 12

Tomato sauce and spaghetti noodles are complementary goods. A decrease in the price of tomatoes will

Accepted Answer

A)  increase consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles. 
B)  increase consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles. 
C)  decrease consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles. 
D)  decrease consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles. 
A)  increase consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles. 
B)  increase consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles. 
C)  decrease consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles. 
D)  decrease consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles.

Question 13

If the government imposes a binding price floor in a market, then the consumer surplus in that market will decrease.

Accepted Answer

A) True 
 B)False

Question 14

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Accepted Answer

A) True 
 B)False

Question 15

Figure 7-4  
-Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Accepted Answer

A)  BDF 
B)  AFG 
C)  BCGD 
D)  ABC 
A)  BDF 
B)  AFG 
C)  BCGD 
D)  ABC

Question 16

If the demand for leather decreases, producer surplus in the leather market

Accepted Answer

A)  increases. 
B)  decreases. 
C)  remains the same. 
D)  may increase, decrease, or remain the same. 
A)  increases. 
B)  decreases. 
C)  remains the same. 
D)  may increase, decrease, or remain the same.

Question 17

Figure 7-10  
-Refer to Figure 7-10. Which area represents producer surplus when the price is P1?

Accepted Answer

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

Question 18

Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then

Accepted Answer

A)  the marginal buyer's willingness to pay for the 100th unit of the good is $25. 
B)  the sum of the five buyers' willingness to pay for the 100th unit of the good is $25. 
C)  the average of the five buyers' willingness to pay for the 100th unit of the good is $25. 
D)  all of the five buyers are willing to pay at least $25 for the 100th unit of the good. 
A)  the marginal buyer's willingness to pay for the 100th unit of the good is $25. 
B)  the sum of the five buyers' willingness to pay for the 100th unit of the good is $25. 
C)  the average of the five buyers' willingness to pay for the 100th unit of the good is $25. 
D)  all of the five buyers are willing to pay at least $25 for the 100th unit of the good.

Question 19

An increase in price increases consumer surplus.

Accepted Answer

A) True 
 B)False

Question 20

Table 7-18
The following table shows the willingness to pay for a good for the only four consumers in a market.  
-Refer to Table 7-18. If the price of the good is $20, how much is the total consumer surplus?

Accepted Answer

Total cons

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

An example of normative analysis is studying

Economists typically measure efficiency using

Kristi sells purses. Her cost is $35 per purse. On a certain day, she sells 12 purses, and her producer surplus for that day amounts to $180. Kristi sold each purse for

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. Who is a marginal seller when the price is $1,100?

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

Cost is a measure of the

Consumer surplus is equal to the

For any given quantity, the price on a demand curve represents the marginal buyer's willingness to pay.

All else equal, an increase in demand will cause an increase in producer surplus.

Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is

Tomato sauce and spaghetti noodles are complementary goods. A decrease in the price of tomatoes will

If the government imposes a binding price floor in a market, then the consumer surplus in that market will decrease.

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

If the demand for leather decreases, producer surplus in the leather market

Figure 7-10 -Refer to Figure 7-10. Which area represents producer surplus when the price is P1?

Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then

An increase in price increases consumer surplus.

Table 7-18 The following table shows the willingness to pay for a good for the only four consumers in a market. -Refer to Table 7-18. If the price of the good is $20, how much is the total consumer surplus?

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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