Question 1

Figure 7-13 
-Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producer s in the market?

Accepted Answer

A)   $1,200
B)   $2,400
C)   $3,600
D)   $4,800E) B) and C)
F) A) and D)

Question 2

Figure 7-20 
-Refer to Figure 7-20. For quantities greater than M, the value to the marginal buyer is

Accepted Answer

A)   greater than the cost to the marginal seller, so increasing the quantity increases total surplus.
B)   less than the cost to the marginal seller, so increasing the quantity increases total surplus.
C)   greater than the cost to the marginal seller, so decreasing the quantity increases total surplus.
D)   less than the cost to the marginal seller, so decreasing the quantity increases total surplus.E) A) and B)
F) C) and D)

Question 3

The area below the demand curve and above the supply curve measures the producer surplus in a market.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following equations is valid?

Accepted Answer

A)   Consumer surplus = Total surplus - Cost to sellers
B)   Producer surplus = Total surplus - Consumer surplus
C)   Total surplus = Value to buyers - Amount paid by buyers
D)   Total surplus = Amount received by sellers - Cost to sellersE) C) and D)
F) None of the above

Question 5

Figure 7-16 
-Refer to Figure 7-16. Suppose the price of the good is $450. Then, on the first unit of the good that is sold, producer surplus is

Accepted Answer

A)   $250, and on the second unit of the good that is sold, producer surplus is $100.
B)   $250, and on the second unit of the good that is sold, producer surplus is $150.
C)   $350, and on the second unit of the good that is sold, producer surplus is $100.
D)   $350, and on the second unit of the good that is sold, producer surplus is $150.E) A) and B)
F) B) and C)

Question 6

Scenario 7-1
Suppose market demand is given by the equation 
-Refer to Scenario 7-1. If the market equilibrium price rises from $10 to $15, what is the change in total consumer surplus in the market?

Accepted Answer

Consumer s...

Question 7

Total surplus is represented by the area

Accepted Answer

A)   under the demand curve and above the price.
B)   above the supply curve and up to the price.
C)   under the supply curve and up to the price.
D)   between the demand and supply curves up to the point of equilibrium.E) A) and D)
F) B) and C)

Question 8

When markets fail, public policy can

Accepted Answer

A)   do nothing to improve the situation.
B)   potentially remedy the problem and increase economic efficiency.
C)   always remedy the problem and increase economic efficiency.
D)   in theory, remedy the problem, but in practice, public policy has proven to be ineffective.E) B) and D)
F) A) and B)

Question 9

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 there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the good will sell for

Accepted Answer

A)   $12 or slightly less
B)   $15 or slightly more
C)   $19 or slightly more
D)   $27 or slightly lessE) B) and C)
F) A) and D)

Question 10

Figure 7-21 
-Refer to Figure 7-21. Which area represents producer surplus when the price is P1?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) B) and C)
F) None of the above

Question 11

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 12

Figure 7-33 
-Refer to Figure 7-33. How much is total consumer surplus in this market at the equilibrium price?

Accepted Answer

Total consumer surpl...

Question 13

Figure 7-30 
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the increase in consumer surplus to the consumers who were initially in the market at the $120 price?

Accepted Answer

Consumer surplus inc...

Question 14

Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will

Accepted Answer

A)   decrease, and producer surplus in the industry will decrease.
B)   increase, and producer surplus in the industry will increase.
C)   decrease, and producer surplus in the industry will increase.
D)   increase, and producer surplus in the industry will decrease.E) C) and D)
F) A) and B)

Question 15

The welfare of sellers is measured by

Accepted Answer

A)   consumer surplus.
B)   producer surplus.
C)   total surplus.
D)   price.E) B) and D)
F) None of the above

Question 16

Hot dogs and hot dog buns are complements. An increase in the price of flour used to make hot dogs buns will

Accepted Answer

A)   increase consumer surplus in the market for hot dog buns and decrease producer surplus in the market for hot dogs.
B)   increase consumer surplus in the market for hot dogs and increase producer surplus in the market for hot dog buns.
C)   decrease consumer surplus in the market for hot dog buns and increase producer surplus in the market for hot dogs.
D)   decrease consumer surplus in the market for hot dog buns and decrease producer surplus in the market for hot dogs.E) B) and C)
F) All of the above

Question 17

Total surplus in a market is equal to

Accepted Answer

A)   consumer surplus + producer surplus.
B)   value to buyers - amount paid by buyers.
C)   amount received by sellers - costs of sellers.
D)   producer surplus - consumer surplus.E) None of the above
F) C) and D)

Question 18

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) B) and C)
F) A) and B)

Question 19

Table 7-7
 
-Refer to Table 7-7. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You offer to sell the tickets for $400. How many tickets do you sell, and what is the total consumer surplus in the market?

Accepted Answer

A)   one ticket; $100
B)   two tickets; $100
C)   two tickets; $0
D)   three tickets; $0E) B) and C)
F) All of the above

Question 20

Figure 7-25 
-Refer to Figure 7-25. Suppose the government imposes a price ceiling of $16 in this market. If the buyers with the highest willingness to pay purchase the good, then total surplus will be

Accepted Answer

A)   $256.
B)   $768.
C)   $1,024.
D)   $1,280.E) None of the above
F) B) and D)

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

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the increase in consumer surplus to the consumers who were initially in the market at the $120 price?

Correct Answer
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Consumer surplus inc...
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Figure 7-13 -Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producer s in the market?

Correct Answer
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Figure 7-33 -Refer to Figure 7-33. How much is total consumer surplus in this market at the equilibrium price?

Correct Answer
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Total consumer surpl...
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Figure 7-22 -Refer to Figure 7-22. The efficient price is

Correct Answer
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Total surplus in a market is equal to

Correct Answer
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Hot dogs and hot dog buns are complements. An increase in the price of flour used to make hot dogs buns will

Correct Answer
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Figure 7-16 -Refer to Figure 7-16. Suppose the price of the good is $450. Then, on the first unit of the good that is sold, producer surplus is

Correct Answer
verified

When markets fail, public policy can

Correct Answer
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Total surplus is represented by the area

Correct Answer
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Correct Answer
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Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price rises from $10 to $15, what is the change in total consumer surplus in the market?

Correct Answer
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Consumer s...
View Answer

Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will

Correct Answer
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Correct Answer
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The welfare of sellers is measured by

Correct Answer
verified

The area below the demand curve and above the supply curve measures the producer surplus in a market.

Correct Answer
verified

Figure 7-20 -Refer to Figure 7-20. For quantities greater than M, the value to the marginal buyer is

Correct Answer
verified

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.

Correct Answer
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Which of the following equations is valid?

Correct Answer
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Figure 7-25 -Refer to Figure 7-25. Suppose the government imposes a price ceiling of $16 in this market. If the buyers with the highest willingness to pay purchase the good, then total surplus will be

Correct Answer
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Figure 7-21 -Refer to Figure 7-21. Which area represents producer surplus when the price is P1?

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

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the increase in consumer surplus to the consumers who were initially in the market at the $120 price?

Correct AnswerverifiedConsumer surplus inc...View AnswerShow Answer

Figure 7-13 -Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producer s in the market?

Correct AnswerverifiedShow Answer

Figure 7-33 -Refer to Figure 7-33. How much is total consumer surplus in this market at the equilibrium price?

Correct AnswerverifiedTotal consumer surpl...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Total surplus in a market is equal to

Correct AnswerverifiedShow Answer

Hot dogs and hot dog buns are complements. An increase in the price of flour used to make hot dogs buns will

Correct AnswerverifiedShow Answer

Figure 7-16 -Refer to Figure 7-16. Suppose the price of the good is $450. Then, on the first unit of the good that is sold, producer surplus is

Correct AnswerverifiedShow Answer

When markets fail, public policy can

Correct AnswerverifiedShow Answer

Total surplus is represented by the area

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price rises from $10 to $15, what is the change in total consumer surplus in the market?

Correct AnswerverifiedConsumer s...View AnswerShow Answer

Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The welfare of sellers is measured by

Correct AnswerverifiedShow Answer

The area below the demand curve and above the supply curve measures the producer surplus in a market.

Correct AnswerverifiedShow Answer

Figure 7-20 -Refer to Figure 7-20. For quantities greater than M, the value to the marginal buyer is

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Which of the following equations is valid?

Correct AnswerverifiedShow Answer

Figure 7-25 -Refer to Figure 7-25. Suppose the government imposes a price ceiling of $16 in this market. If the buyers with the highest willingness to pay purchase the good, then total surplus will be

Correct AnswerverifiedShow Answer

Figure 7-21 -Refer to Figure 7-21. Which area represents producer surplus when the price is P1?

Correct AnswerverifiedShow Answer

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Total consumer surpl...
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Consumer s...
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