Question 1

Figure 7-9 
-Refer to Figure 7-9. If producer surplus is $19, then the price of the good is

Accepted Answer

A)   $11.50.
B)   $14.50.
C)   $13.50.
D)   $9.75.E) A) and D)
F) None of the above

Question 2

Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?

Accepted Answer

A)   It increases.
B)   It decreases.
C)   It remains unchanged.
D)   It may increase, decrease, or remain unchanged.E) A) and B)
F) A) and C)

Question 3

Which of the following is not correct?

Accepted Answer

A)   Market power can cause markets to be inefficient.
B)   When the decisions of buyers and sellers affect nonparticipants, markets may be inefficient.
C)   The tools of welfare economics cannot help economists when markets are inefficient.
D)   Externalities can cause markets to be inefficient.E) B) and C)
F) A) and D)

Question 4

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

Accepted Answer

A)   consumer has consumer surplus of $5 if he buys the good.
B)   consumer does not purchase the good.
C)   price of the good will rise due to market forces.
D)   market is out of equilibrium.E) None of the above
F) A) and B)

Question 5

A supply curve can be used to measure producer surplus because it reflects

Accepted Answer

A)   the actions of sellers.
B)   quantity supplied.
C)   sellers' costs.
D)   the amount that will be purchased by consumers in the market.E) C) and D)
F) B) and C)

Question 6

Table 7-17
 
-Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is

Accepted Answer

A)   $24.
B)   $32.
C)   $48.
D)   $64.E) A) and C)
F) A) and B)

Question 7

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.E) A) and B)
F) C) and D)

Question 8

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
 
-Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be

Accepted Answer

A)   $3.00.
B)   $4.50.
C)   $15.50.
D)   $21.00.E) A) and D)
F) C) and D)

Question 9

Economists normally assume people's preferences should be

Accepted Answer

A)   respected.
B)   adjusted.
C)   overruled.
D)   ignored.E) C) and D)
F) A) and D)

Question 10

Figure 7-10 
-Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

Accepted Answer

A)   BCG
B)   ACH
C)   DGH
D)   AHGBE) A) and B)
F) B) and C)

Question 11

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be

Accepted Answer

A)   $3.
B)   $8.
C)   $5.
D)   $11.E) C) and D)
F) A) and B)

Question 12

The cost of production plus producer surplus is the price a seller is paid.

Accepted Answer

A) True 
 B)False

Question 13

Figure 7-22 
-Refer to Figure 7-22. The efficient price is

Accepted Answer

A)   $80, and the efficient quantity is 50.
B)   $70, and the efficient quantity is 60.
C)   $70, and the efficient quantity is 100.
D)   $50, and the efficient quantity is 60.E) A) and D)
F) All of the above

Question 14

Scenario 7-2
Suppose market demand and market supply are given by the equations: 
-Refer to Scenario 7-2. How much is total surplus at the equilibrium price in this market?

Accepted Answer

Total surp...

Question 15

Table 7-16
The following table represents the costs of five possible sellers.
Seller Cost ($) 
 
-Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $70, how much is the combined total cost of all participating sellers in the market?

Accepted Answer

A)   $100
B)   $150
C)   $250
D)   $350E) B) and C)
F) C) and D)

Question 16

Efficiency is related to the size of the economic pie, whereas equality is related to how the pie gets sliced and distributed.

Accepted Answer

A) True 
 B)False

Question 17

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.E) A) and B)
F) A) and C)

Question 18

Figure 7-16 
-Refer to Figure 7-16. If the price of the good is $600, then

Accepted Answer

A)   consumer surplus is $800.
B)   consumer surplus is $900.
C)   producer surplus is $900.
D)   producer surplus is $1,000.E) B) and D)
F) B) and C)

Question 19

Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is

Accepted Answer

A)   $1.40.
B)   $14.
C)   $3.80.
D)   $52.E) B) and C)
F) All of the above

Question 20

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
 
-Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good?

Accepted Answer

A)   all five individuals
B)   Megan, Mallory and Audrey
C)   David, Laura and Megan
D)   David and LauraE) C) and D)
F) B) and D)

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

Figure 7-9 -Refer to Figure 7-9. If producer surplus is $19, then the price of the good is

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Efficiency is related to the size of the economic pie, whereas equality is related to how the pie gets sliced and distributed.

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

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A supply curve can be used to measure producer surplus because it reflects

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Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be

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Figure 7-22 -Refer to Figure 7-22. The efficient price is

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If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

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Which of the following is not correct?

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Economists normally assume people's preferences should be

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Figure 7-16 -Refer to Figure 7-16. If the price of the good is $600, then

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

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Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be

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Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is

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The cost of production plus producer surplus is the price a seller is paid.

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Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good?

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Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. How much is total surplus at the equilibrium price in this market?

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Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?

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Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is

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Table 7-16 The following table represents the costs of five possible sellers. Seller Cost ($) -Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $70, how much is the combined total cost of all participating sellers in the market?

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Figure 7-10 -Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

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Total surp...
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