Question 1

Total surplus

Accepted Answer

A)   can be used to measure a market's efficiency.
B)   is the sum of consumer and producer surplus.
C)   is the to value to buyers minus the cost to sellers.
D)   All of the above are correct.E) A) and B)
F) B) and D)

Question 2

Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs.St.Louis Cardinal's baseball game at Wrigley Field.
 
-Refer to Table 7-4.If tickets sell for $20 each,then what is the total consumer surplus in the market?

Accepted Answer

A)   $5
B)   $30
C)   $40
D)   $75E) All of the above
F) B) and D)

Question 3

Suppose you buy an iPod for $100.If your consumer surplus is $30,your willingness to pay is $70.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Figure 7-18 
-Refer to Figure 7-18.At the equilibrium price,producer surplus is

Accepted Answer

A)   $480.
B)   $640.
C)   $1,120.
D)   $1,280.E) A) and B)
F) A) and C)

Question 6

Figure 7-12 
-Refer to Figure 7-12.When the price falls from P2 to P1,which of the following would not be true?

Accepted Answer

A)   The sellers who still sell the good are worse off because they now receive less.
B)   Some sellers leave the market because they are not willing to sell the good at the lower price.
C)   The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price.
D)   Producer surplus would fall by area A + B.E) A) and B)
F) None of the above

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

If producing a soccer ball costs Jake $5,and he sells it for $40,his producer surplus is $35.

Accepted Answer

A) True 
 B)False

Question 9

Suppose that Firms A and B each produce high-resolution computer monitors,but Firm A can do so at a lower cost.Cassie and David each want to purchase a high-resolution computer monitor,but David is willing to pay more than Cassie.If Firm B produces a monitor that David buys,then the market outcome illustrates which of the following principles? (i) Free markets allocate the supply of goods to the buyers who value them most highly,as measured by their willingness to pay.
(ii) Free markets allocate the demand for goods to the sellers who can produce them at the least cost.

Accepted Answer

A)   (i) only
B)   (ii) only
C)   both (i) and (ii) 
D)   neither (i) nor (ii) E) A) and B)
F) A) and C)

Question 10

Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs.St.Louis Cardinal's baseball game at Wrigley Field.
 
-Refer to Table 7-4.If tickets sell for $25 each,then what is the total consumer surplus in the market?

Accepted Answer

A)   $25
B)   $35
C)   $60
D)   $110E) A) and B)
F) A) and C)

Question 11

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) B) and D)
F) A) and B)

Question 12

Figure 7-7 
-Refer to Figure 7-7.If producer surplus is $14,then the price of the good is

Accepted Answer

A)   $11.00.
B)   $12.00.
C)   $13.50.
D)   $14.75.E) C) and D)
F) A) and B)

Question 13

Economists tend to see ticket scalping as

Accepted Answer

A)   a way for a few to profit without producing anything of value.
B)   an inequitable interference in the orderly process of ticket distribution.
C)   a way of increasing the efficiency of ticket distribution.
D)   an unproductive activity which should be made illegal everywhere.E) A) and D)
F) A) and C)

Question 14

Figure 7-22 
-Refer to Figure 7-22.At the quantity Q3,

Accepted Answer

A)   the market is in equilibrium.
B)   consumer surplus is maximized.
C)   the sum of consumer surplus and producer surplus is maximized.
D)   the marginal value to buyers is less than the marginal cost to sellers.E) C) and D)
F) B) and C)

Question 15

Figure 7-13 
-Refer to Figure 7-13.Sellers will be unwilling to sell more than

Accepted Answer

A)   1 unit of the good if its price is below $200.
B)   2 units of the good if its price is below $450.
C)   3 units of the good if its price is below $700.
D)   All of the above are correct.E) B) and C)
F) C) and D)

Question 16

Figure 7-18 
-Refer to Figure 7-18.If the price decreases from $22 to $16 due to a shift in the supply curve,consumer surplus increases by

Accepted Answer

A)   $120.
B)   $360.
C)   $480.
D)   $600.E) None of the above
F) A) and C)

Question 17

If a market is in equilibrium,then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good.

Accepted Answer

A) True 
 B)False

Question 18

Five hundred units of good x are currently bought and sold.The marginal buyer is willing to pay $40 for the 500th unit,and the cost to the marginal seller is $35 for the 500th unit.We know that

Accepted Answer

A)   the equilibrium price of good x is somewhere between $35 and $40.
B)   the equilibrium quantity of good x exceeds 500 units.
C)   500 units is not an efficient quantity of good x.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 19

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction.Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist.This maximum is called

Accepted Answer

A)   deadweight loss.
B)   willingness to pay.
C)   consumer surplus.
D)   producer surplus.E) None of the above
F) C) and D)

Question 20

Figure 7-12 
-Refer to Figure 7-12.Suppose producer surplus is larger than C but smaller than A+B+C.The price of the good must be

Accepted Answer

A)   lower than P1.
B)   P1.
C)   between P1 and P2.
D)   higher than P2.E) A) and B)
F) A) and C)

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

Figure 7-12 -Refer to Figure 7-12.Suppose producer surplus is larger than C but smaller than A+B+C.The price of the good must be

Correct Answer
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If producing a soccer ball costs Jake $5,and he sells it for $40,his producer surplus is $35.

Correct Answer
verified

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction.Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist.This maximum is called

Correct Answer
verified

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs.St.Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4.If tickets sell for $25 each,then what is the total consumer surplus in the market?

Correct Answer
verified

If a market is in equilibrium,then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good.

Correct Answer
verified

Figure 7-12 -Refer to Figure 7-12.When the price falls from P2 to P1,which of the following would not be true?

Correct Answer
verified

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

Correct Answer
verified

Figure 7-18 -Refer to Figure 7-18.At the equilibrium price,producer surplus is

Correct Answer
verified

Suppose you buy an iPod for $100.If your consumer surplus is $30,your willingness to pay is $70.

Correct Answer
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Externalities are

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Five hundred units of good x are currently bought and sold.The marginal buyer is willing to pay $40 for the 500^th unit,and the cost to the marginal seller is $35 for the 500^th unit.We know that

Correct Answer
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Figure 7-22 -Refer to Figure 7-22.At the quantity Q3,

Correct Answer
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Figure 7-13 -Refer to Figure 7-13.Sellers will be unwilling to sell more than

Correct Answer
verified

Figure 7-18 -Refer to Figure 7-18.If the price decreases from $22 to $16 due to a shift in the supply curve,consumer surplus increases by

Correct Answer
verified

Figure 7-7 -Refer to Figure 7-7.If producer surplus is $14,then the price of the good is

Correct Answer
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Total surplus

Correct Answer
verified

Economists tend to see ticket scalping as

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs.St.Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4.If tickets sell for $20 each,then what is the total consumer surplus in the market?

Correct Answer
verified

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

Figure 7-12 -Refer to Figure 7-12.Suppose producer surplus is larger than C but smaller than A+B+C.The price of the good must be

Correct AnswerverifiedShow Answer

If producing a soccer ball costs Jake $5,and he sells it for $40,his producer surplus is $35.

Correct AnswerverifiedShow Answer

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction.Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist.This maximum is called

Correct AnswerverifiedShow Answer

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs.St.Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4.If tickets sell for $25 each,then what is the total consumer surplus in the market?

Correct AnswerverifiedShow Answer

If a market is in equilibrium,then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good.

Correct AnswerverifiedShow Answer

Figure 7-12 -Refer to Figure 7-12.When the price falls from P2 to P1,which of the following would not be true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 7-18 -Refer to Figure 7-18.At the equilibrium price,producer surplus is

Correct AnswerverifiedShow Answer

Suppose you buy an iPod for $100.If your consumer surplus is $30,your willingness to pay is $70.

Correct AnswerverifiedShow Answer

Externalities are

Correct AnswerverifiedShow Answer

Five hundred units of good x are currently bought and sold.The marginal buyer is willing to pay $40 for the 500th unit,and the cost to the marginal seller is $35 for the 500th unit.We know that

Correct AnswerverifiedShow Answer

Figure 7-22 -Refer to Figure 7-22.At the quantity Q3,

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Figure 7-13 -Refer to Figure 7-13.Sellers will be unwilling to sell more than

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Figure 7-18 -Refer to Figure 7-18.If the price decreases from $22 to $16 due to a shift in the supply curve,consumer surplus increases by

Correct AnswerverifiedShow Answer

Figure 7-7 -Refer to Figure 7-7.If producer surplus is $14,then the price of the good is

Correct AnswerverifiedShow Answer

Total surplus

Correct AnswerverifiedShow Answer

Economists tend to see ticket scalping as

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs.St.Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4.If tickets sell for $20 each,then what is the total consumer surplus in the market?

Correct AnswerverifiedShow Answer

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Five hundred units of good x are currently bought and sold.The marginal buyer is willing to pay $40 for the 500^th unit,and the cost to the marginal seller is $35 for the 500^th unit.We know that

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