Question 1

If the cost of producing sofas decreases,then consumer surplus in the sofa market will

Accepted Answer

A)  increase.
B)  decrease.
C)  remain constant.
D)  increase for some buyers and decrease for other buyers.E) All of the above
F) C) and D)

Question 2

Table 7-3
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.
 
-Refer to Table 7-3.If the market price of an orange is $1.20,consumer surplus amounts to

Accepted Answer

A)  $0.70.
B)  $1.10.
C)  $1.40.
D)  $5.00.E) A) and D)
F) B) and D)

Question 3

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

Accepted Answer

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

Question 4

Externalities are

Accepted Answer

A)  side effects passed on to a party other than the buyers and sellers in the market.
B)  side effects of government intervention in markets.
C)  external forces that cause the price of a good to be higher than it otherwise would be.
D)  external forces that help establish equilibrium price.E) All of the above
F) A) and D)

Question 5

Market Supply and Demand for Pepperoni Pizza
Table 7-5
 
-Refer to Table 7-5.As the table suggests,the demand curve is a straight line and so is the supply curve.Taking this into account,when there is equilibrium,producer surplus is

Accepted Answer

A)  $16.
B)  $24.
C)  $32.
D)  $48.E) C) and D)
F) B) and D)

Question 6

Welfare economics is the study of

Accepted Answer

A)  the well-being of less fortunate people.
B)  welfare programs in the United States.
C)  the effect of income redistribution on work effort.
D)  how the allocation of resources affects economic well-being.E) None of the above
F) All of the above

Question 7

Market power refers to the

Accepted Answer

A)  side effects that may occur in a market.
B)  government regulations imposed on the sellers in a market.
C)  ability of market participants to influence price.
D)  forces of supply and demand in determining equilibrium price.E) All of the above
F) A) and B)

Question 8

In a competitive market,sales go to those producers who are willing to supply the product at the lowest price.

Accepted Answer

A) True 
 B)False

Question 9

Economists generally believe that,although there may be advantages to society from ticket-scalping,the costs to society of this activity outweigh the benefits.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Figure 7-6
 
-Refer to Figure 7-6.Area B represents

Accepted Answer

A)  the combined profits of all producers when the price is P₂.
B)  the increase in producer surplus to all producers as the result of an increase in the price from P₁ to P₂.
C)  producer surplus to new producers entering the market as the result of an increase in the price from P₁ to P₂.
D)  that portion of the increase in producer surplus that is offset by a loss in consumer surplus when the price increases from P₁ to P₂.E) B) and C)
F) A) and D)

Question 12

Other things equal,if the price of a good falls,the consumer surplus

Accepted Answer

A)  decreases.
B)  is unchanged.
C)  increases.
D)  may increase, decrease, or remain unchanged.E) B) and D)
F) All of the above

Question 13

Figure 7-4
 
-Refer to Figure 7-4.When the price rises from P₁ to P₂,which area represents the increase in producer surplus to existing producers?

Accepted Answer

A)  BCE
B)  ACF
C)  DEF
D)  ABEDE) A) and D)
F) C) and D)

Question 14

Brock is willing to pay $400 for a new suit,but he is able to buy the suit for $350.His consumer surplus is

Accepted Answer

A)  $50.
B)  $150.
C)  $350.
D)  $400.E) A) and B)
F) B) and C)

Question 15

The following table represents the costs of five possible sellers.
Table 7-4
 
-Refer to Table 7-4.If the market price is $1,100,the combined total cost of all participating sellers is

Accepted Answer

A)  $3,700.
B)  $2,700.
C)  $2,250.
D)  $1,500.E) A) and C)
F) A) and B)

Question 16

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

Accepted Answer

A)  maximizes costs of the seller.
B)  maximizes tax revenue for the government.
C)  maximizes the combined welfare of buyers and sellers.
D)  minimizes the expenditure of buyers.E) B) and D)
F) B) and C)

Question 17

The following table represents the costs of five possible sellers.
Table 7-4
 
-Refer to Table 7-4.If the price is $1,000,

Accepted Answer

A)  Denise is an eager supplier.
B)  Catherine is an eager supplier.
C)  Dale's producer surplus is $500.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 18

Table 7-1
 
-Refer to Table 7-1.If the table represents the willingness to pay of four buyers and the price of the product is $18,then their total consumer surplus is

Accepted Answer

A)  $38.
B)  $42.
C)  $46.
D)  $72.E) B) and D)
F) All of the above

Question 19

Total surplus is equal to

Accepted Answer

A)  value to buyers minus profit to sellers.
B)  value to buyers minus cost to sellers.
C)  consumer surplus minus producer surplus.
D)  (consumer surplus plus producer surplus)  times equilibrium quantity.E) A) and D)
F) A) and C)

Question 20

If the United States legally allowed for the existence of a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.

Accepted Answer

A) True 
 B)False

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

In a competitive market,sales go to those producers who are willing to supply the product at the lowest price.

Correct Answer
verified

Welfare economics is the study of

Correct Answer
verified

Externalities are

Correct Answer
verified

Market power refers to the

Correct Answer
verified

Market Supply and Demand for Pepperoni Pizza Table 7-5 -Refer to Table 7-5.As the table suggests,the demand curve is a straight line and so is the supply curve.Taking this into account,when there is equilibrium,producer surplus is

Correct Answer
verified

If the cost of producing sofas decreases,then consumer surplus in the sofa market will

Correct Answer
verified

Economists generally believe that,although there may be advantages to society from ticket-scalping,the costs to society of this activity outweigh the benefits.

Correct Answer
verified

Figure 7-4 -Refer to Figure 7-4.When the price rises from P₁ to P₂,which area represents the increase in producer surplus to existing producers?

Correct Answer
verified

Figure 7-6 -Refer to Figure 7-6.Area B represents

Correct Answer
verified

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

Correct Answer
verified

Correct Answer
verified

The following table represents the costs of five possible sellers. Table 7-4 -Refer to Table 7-4.If the market price is $1,100,the combined total cost of all participating sellers is

Correct Answer
verified

If the United States legally allowed for the existence of a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.

Correct Answer
verified

Table 7-1 -Refer to Table 7-1.If the table represents the willingness to pay of four buyers and the price of the product is $18,then their total consumer surplus is

Correct Answer
verified

Brock is willing to pay $400 for a new suit,but he is able to buy the suit for $350.His consumer 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

Other things equal,if the price of a good falls,the consumer surplus

Correct Answer
verified

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

Correct Answer
verified

Total surplus is equal to

Correct Answer
verified

The following table represents the costs of five possible sellers. Table 7-4 -Refer to Table 7-4.If the price is $1,000,

Correct Answer
verified

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

In a competitive market,sales go to those producers who are willing to supply the product at the lowest price.

Correct AnswerverifiedShow Answer

Welfare economics is the study of

Correct AnswerverifiedShow Answer

Externalities are

Correct AnswerverifiedShow Answer

Market power refers to the

Correct AnswerverifiedShow Answer

Market Supply and Demand for Pepperoni Pizza Table 7-5 -Refer to Table 7-5.As the table suggests,the demand curve is a straight line and so is the supply curve.Taking this into account,when there is equilibrium,producer surplus is

Correct AnswerverifiedShow Answer

If the cost of producing sofas decreases,then consumer surplus in the sofa market will

Correct AnswerverifiedShow Answer

Economists generally believe that,although there may be advantages to society from ticket-scalping,the costs to society of this activity outweigh the benefits.

Correct AnswerverifiedShow Answer

Figure 7-4 -Refer to Figure 7-4.When the price rises from P₁ to P₂,which area represents the increase in producer surplus to existing producers?

Correct AnswerverifiedShow Answer

Figure 7-6 -Refer to Figure 7-6.Area B represents

Correct AnswerverifiedShow Answer

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The following table represents the costs of five possible sellers. Table 7-4 -Refer to Table 7-4.If the market price is $1,100,the combined total cost of all participating sellers is

Correct AnswerverifiedShow Answer

If the United States legally allowed for the existence of a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.

Correct AnswerverifiedShow Answer

Table 7-1 -Refer to Table 7-1.If the table represents the willingness to pay of four buyers and the price of the product is $18,then their total consumer surplus is

Correct AnswerverifiedShow Answer

Brock is willing to pay $400 for a new suit,but he is able to buy the suit for $350.His consumer 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

Other things equal,if the price of a good falls,the consumer surplus

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Total surplus is equal to

Correct AnswerverifiedShow Answer

The following table represents the costs of five possible sellers. Table 7-4 -Refer to Table 7-4.If the price is $1,000,

Correct AnswerverifiedShow Answer

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