Question 1

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)   ABCE) C) and D)
F) B) and D)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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 4

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

Question 5

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

Question 6

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 7

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.E) A) and C)
F) None of the above

Question 8

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.E) None of the above
F) B) and C)

Question 9

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) None of the above
F) All of the above

Question 10

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)   DGHE) All of the above
F) B) and D)

Question 11

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.E) B) and C)
F) None of the above

Question 12

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.E) All of the above
F) B) and C)

Question 13

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.E) B) and D)
F) All of the above

Question 14

An increase in price increases consumer surplus.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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

Question 17

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...

Question 18

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

Question 19

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.E) C) and D)
F) All of the above

Question 20

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 BobbyE) A) and B)
F) All of the above

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

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

An example of normative analysis is studying

Correct Answer
verified

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

Correct Answer
verified

Economists typically measure efficiency using

Correct Answer
verified

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?

Correct Answer
verified
Total cons...
View Answer

An increase in price increases consumer surplus.

Correct Answer
verified

Consumer surplus is equal to the

Correct Answer
verified

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?

Correct Answer
verified

Correct Answer
verified

Cost is a measure of the

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An example of normative analysis is studying

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Economists typically measure efficiency using

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedTotal cons...View AnswerShow Answer

An increase in price increases consumer surplus.

Correct AnswerverifiedShow Answer

Consumer surplus is equal to the

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Cost is a measure of the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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Total cons...
View Answer

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