Question 1

Which of the following statements is not correct about a market in equilibrium?

Accepted Answer

A)   The price determines which buyers and which sellers participate in the market.
B)   Those buyers who value the good more than the price choose to buy the good.
C)   Those sellers whose costs are less than the price choose to produce and sell the good.
D)   Consumer surplus will be equal to producer surplus.E) C) and D)
F) B) and D)

Question 2

The study of how the allocation of resources affects economic well-being is called

Accepted Answer

A)   consumer economics.
B)   macroeconomics.
C)   willingness-to-pay economics.
D)   welfare economics.E) A) and B)
F) All of the above

Question 3

Suppose Brent,Callie,and Danielle each purchase a particular type of electric pencil sharpener at a price of $20.Brent's willingness to pay was $22,Callie's willingness to pay was $25,and Danielle's willingness to pay was $30.Which of the following statements is correct?

Accepted Answer

A)   Had the price of the pencil sharpener been $24 rather than $20,only Danielle would have been a buyer.
B)   Brent's consumer surplus is the smallest of the three individual consumer surpluses.
C)   For the three individuals together,consumer surplus amounts to $60.
D)   The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener.E) B) and C)
F) All of the above

Question 4

Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

Accepted Answer

A) True 
 B)False

Question 5

Figure 7-19 
-Refer to Figure 7-19.If the price were P1,producer surplus would be represented by the area

Accepted Answer

A)   F.
B)   F+G.
C)   D+H+F.
D)   D+H+F+G+I.E) B) and C)
F) All of the above

Question 6

Figure 7-18 
-Refer to Figure 7-18.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.The increase in producer surplus due to new producers entering the market would be

Accepted Answer

A)   $90.
B)   $210.
C)   $360.
D)   $480.E) None of the above
F) A) and B)

Question 7

Total surplus is

Accepted Answer

A)   the total cost to sellers of providing the good minus the total value of the good to buyers.
B)   the total value of the good to buyers minus the cost to sellers of providing the good.
C)   the difference between consumer surplus and sellers' cost.
D)   always smaller than producer surplus.E) B) and C)
F) B) and D)

Question 8

Table 7-11
 
-Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.At equilibrium,total surplus is

Accepted Answer

A)   $44.
B)   $56.
C)   $72.
D)   $96.E) B) and C)
F) C) and D)

Question 9

Figure 7-21 
-Refer to Figure 7-21.Sellers whose costs are greater than the equilibrium price are represented by segment

Accepted Answer

A)   AC.
B)   CK.
C)   BC.
D)   CH.E) B) and C)
F) None of the above

Question 10

Figure 7-18 
-Refer to Figure 7-18.The efficient price is

Accepted Answer

A)   $22,and the efficient quantity is 40.
B)   $22,and the efficient quantity is 110.
C)   $16,and the efficient quantity is 80.
D)   $8,and the efficient quantity is 40.E) B) and D)
F) B) and C)

Question 11

Figure 7-1 
-Refer to Figure 7-1.If the price of the good is $150,then consumer surplus amounts to

Accepted Answer

A)   $150.
B)   $200.
C)   $250.
D)   $300.E) A) and B)
F) A) and C)

Question 12

In order to calculate consumer surplus in a market,we need to know willingness to pay and price.

Accepted Answer

A) True 
 B)False

Question 13

Figure 7-21 
-Refer to Figure 7-21.If the government mandated a price increase from P1 to a higher price,then

Accepted Answer

A)   total surplus would decrease.
B)   consumer surplus would increase.
C)   total surplus would increase,since producer surplus would increase.
D)   total surplus would remain unchanged.E) C) and D)
F) All of the above

Question 14

Producer surplus is the area

Accepted Answer

A)   under the supply curve.
B)   between the supply and demand curves.
C)   below the price and above the supply curve.
D)   under the demand curve and above the price.E) None of the above
F) A) and B)

Question 15

Efficiency is attained when

Accepted Answer

A)   total surplus is maximized.
B)   producer surplus is maximized.
C)   all resources are being used.
D)   consumer surplus is maximized and producer surplus is minimized.E) All of the above
F) C) and D)

Question 16

Figure 7-23 
-Refer to Figure 7-23.Which of the following statements is correct?

Accepted Answer

A)   The market is in equilibrium at Q1.
B)   At Q2,the cost to sellers exceeds the value to buyers.
C)   At Q4,the value to buyers is less than the cost to sellers.
D)   At Q3,the market is producing too much output.E) All of the above
F) None of the above

Question 17

Suppose televisions are a normal good and buyers of televisions experience a decrease in income.As a result,consumer surplus in the television market

Accepted Answer

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

Question 18

If the government allowed a free market in organs for transplant there would be

Accepted Answer

A)   a decrease in the shortage of organs for transplant.
B)   a decrease in producer surplus.
C)   an decrease in consumer surplus
D)   an increase in the waiting period for transplant organs.E) A) and B)
F) None of the above

Question 19

Figure 7-20 
-Refer to Figure 7-20.At equilibrium,producer surplus is

Accepted Answer

A)   $36.
B)   $72.
C)   $108.
D)   $144.E) A) and D)
F) None of the above

Question 20

Table 7-10
 
-Refer to Table 7-10.You want to hire a professional photographer to take pictures of your family.The table shows the costs of the four potential sellers in the local photography market.You take bids from the sellers.Who offers the winning bid,and what does he offer to charge for the photography session?

Accepted Answer

A)   Steve; more than $400 but less than $450
B)   Steve; $399
C)   LeBron; more than $700
D)   LeBron; more than $600 but less than $700E) None of the above
F) A) and D)

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

Which of the following statements is not correct about a market in equilibrium?

Correct Answer
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Figure 7-21 -Refer to Figure 7-21.If the government mandated a price increase from P1 to a higher price,then

Correct Answer
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Figure 7-18 -Refer to Figure 7-18.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.The increase in producer surplus due to new producers entering the market would be

Correct Answer
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Suppose televisions are a normal good and buyers of televisions experience a decrease in income.As a result,consumer surplus in the television market

Correct Answer
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Correct Answer
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Figure 7-19 -Refer to Figure 7-19.If the price were P1,producer surplus would be represented by the area

Correct Answer
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If the government allowed a free market in organs for transplant there would be

Correct Answer
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Figure 7-18 -Refer to Figure 7-18.The efficient price is

Correct Answer
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Total surplus is

Correct Answer
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Figure 7-23 -Refer to Figure 7-23.Which of the following statements is correct?

Correct Answer
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In order to calculate consumer surplus in a market,we need to know willingness to pay and price.

Correct Answer
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Efficiency is attained when

Correct Answer
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Figure 7-1 -Refer to Figure 7-1.If the price of the good is $150,then consumer surplus amounts to

Correct Answer
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Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.At equilibrium,total surplus is

Correct Answer
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Suppose Brent,Callie,and Danielle each purchase a particular type of electric pencil sharpener at a price of $20.Brent's willingness to pay was $22,Callie's willingness to pay was $25,and Danielle's willingness to pay was $30.Which of the following statements is correct?

Correct Answer
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The study of how the allocation of resources affects economic well-being is called

Correct Answer
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Figure 7-20 -Refer to Figure 7-20.At equilibrium,producer surplus is

Correct Answer
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Figure 7-21 -Refer to Figure 7-21.Sellers whose costs are greater than the equilibrium price are represented by segment

Correct Answer
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Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

Correct Answer
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Producer surplus is the area

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

Which of the following statements is not correct about a market in equilibrium?

Correct AnswerverifiedShow Answer

Figure 7-21 -Refer to Figure 7-21.If the government mandated a price increase from P1 to a higher price,then

Correct AnswerverifiedShow Answer

Figure 7-18 -Refer to Figure 7-18.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.The increase in producer surplus due to new producers entering the market would be

Correct AnswerverifiedShow Answer

Suppose televisions are a normal good and buyers of televisions experience a decrease in income.As a result,consumer surplus in the television market

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 7-19 -Refer to Figure 7-19.If the price were P1,producer surplus would be represented by the area

Correct AnswerverifiedShow Answer

If the government allowed a free market in organs for transplant there would be

Correct AnswerverifiedShow Answer

Figure 7-18 -Refer to Figure 7-18.The efficient price is

Correct AnswerverifiedShow Answer

Total surplus is

Correct AnswerverifiedShow Answer

Figure 7-23 -Refer to Figure 7-23.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

In order to calculate consumer surplus in a market,we need to know willingness to pay and price.

Correct AnswerverifiedShow Answer

Efficiency is attained when

Correct AnswerverifiedShow Answer

Figure 7-1 -Refer to Figure 7-1.If the price of the good is $150,then consumer surplus amounts to

Correct AnswerverifiedShow Answer

Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.At equilibrium,total surplus is

Correct AnswerverifiedShow Answer

Suppose Brent,Callie,and Danielle each purchase a particular type of electric pencil sharpener at a price of $20.Brent's willingness to pay was $22,Callie's willingness to pay was $25,and Danielle's willingness to pay was $30.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The study of how the allocation of resources affects economic well-being is called

Correct AnswerverifiedShow Answer

Figure 7-20 -Refer to Figure 7-20.At equilibrium,producer surplus is

Correct AnswerverifiedShow Answer

Figure 7-21 -Refer to Figure 7-21.Sellers whose costs are greater than the equilibrium price are represented by segment

Correct AnswerverifiedShow Answer

Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

Correct AnswerverifiedShow Answer

Producer surplus is the area

Correct AnswerverifiedShow Answer

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