Question 1

Figure 7-22 
-Refer to Figure 7-22. If the price decreases from $80 to $70 due to a shift in the supply curve, consumer surplus increases by

Accepted Answer

A)   $250.
B)   $750.
C)   $1000.
D)   $500.E) A) and B)
F) B) and D)

Question 2

Figure 7-23 
-Refer to Figure 7-23. If the price were P3, consumer surplus would be represented by the area

Accepted Answer

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

Question 3

Which of the following is correct?

Accepted Answer

A)   Efficiency deals with the size of the economic pie, and equality deals with how fairly the pie is sliced.
B)   Equality can be judged on positive grounds whereas efficiency requires normative judgments.
C)   Efficiency is more difficult to evaluate than equality.
D)   Equality and efficiency are both maximized in a society when total surplus is maximized.E) C) and D)
F) B) and D)

Question 4

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

Question 5

Figure 7-31 
-Refer to Figure 7-31. If the market equilibrium price is $35, how much is total producer surplus in this market?

Accepted Answer

Total prod...

Question 6

Figure 7-33 
-Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price.
How much is total consumer surplus in this market at the new equilibrium price?

Accepted Answer

Total consumer surpl...

Question 7

At the equilibrium price of a good, the good will be sold by those sellers

Accepted Answer

A)   whose cost is more than price.
B)   whose cost is less than price.
C)   that can produce the good.
D)   enter the market first.E) A) and B)
F) A) and C)

Question 8

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 $0.80 to $1.05, then consumer surplus

Accepted Answer

A)   increases by $0.75.
B)   decreases by $0.95.
C)   decreases by $0.75.
D)   decreases by $1.00.E) None of the above
F) B) and D)

Question 9

Figure 7-15 
-Refer to Figure 7-15. When the price is P1, producer surplus is

Accepted Answer

A)   A.
B)   C.
C)   A+B.
D)   C+D.E) None of the above
F) B) and C)

Question 10

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is likely to occur?

Accepted Answer

A)   The price of kidneys would rise to balance supply and demand.
B)   The gains from trade would make both buyers and sellers better off.
C)   Thousands of lives would be saved.
D)   All of the above are correct.E) A) and D)
F) B) and D)

Question 11

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

Accepted Answer

A)   profits and costs to firms
B)   consumer and producer surplus
C)   the equilibrium price and quantity
D)   incomes of and prices paid by buyersE) A) and B)
F) A) and C)

Question 12

Figure 7-19 
-Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

Accepted Answer

A)   $187.50.
B)   $125.00.
C)   $250.00.
D)   $266.67.E) C) and D)
F) B) and D)

Question 13

Figure 7-28 
-Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers

Accepted Answer

A)   and the marginal cost to sellers are both P2.
B)   is P2, and the marginal cost to sellers is P3.
C)   and the marginal cost to sellers are both P3.
D)   is P3, and the marginal cost to sellers is P2.E) A) and B)
F) A) and C)

Question 14

Table 7-17
 
-Refer to Table 7-17. 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) A) and D)
F) A) and C)

Question 15

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) C) and D)
F) None of the above

Question 16

On a graph, the area below a demand curve and above the price measures

Accepted Answer

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

Question 17

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) All of the above
F) None of the above

Question 18

When demand increases so that market price increases, producer surplus increases because 1) producer surplus received by existing sellers increases, and 2) new sellers enter the market.

Accepted Answer

A) True 
 B)False

Question 19

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

Accepted Answer

A)   $2.00 each.
B)   $0.50 each.
C)   $3.50 each.
D)   $5.00 each.E) A) and D)
F) B) and C)

Question 20

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) None of the above
F) A) and B)

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

Figure 7-19 -Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

Correct Answer
verified

When demand increases so that market price increases, producer surplus increases because 1) producer surplus received by existing sellers increases, and 2) new sellers enter the market.

Correct Answer
verified

Figure 7-23 -Refer to Figure 7-23. If the price were P3, consumer surplus would be represented by the area

Correct Answer
verified

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

Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price is $35, how much is total producer surplus in this market?

Correct Answer
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Total prod...
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Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total consumer surplus in this market at the new equilibrium price?

Correct Answer
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Total consumer surpl...
View Answer

Figure 7-28 -Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers

Correct Answer
verified

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

Correct Answer
verified

Figure 7-22 -Refer to Figure 7-22. If the price decreases from $80 to $70 due to a shift in the supply curve, consumer surplus increases by

Correct Answer
verified

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

Correct Answer
verified

Figure 7-15 -Refer to Figure 7-15. When the price is P1, producer surplus is

Correct Answer
verified

Which of the following is correct?

Correct Answer
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Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Correct Answer
verified

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is likely to occur?

Correct Answer
verified

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

Correct Answer
verified

Correct Answer
verified

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

Correct Answer
verified

At the equilibrium price of a good, the good will be sold by those sellers

Correct Answer
verified

On a graph, the area below a demand curve and above the price measures

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

Figure 7-19 -Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

Correct AnswerverifiedShow Answer

When demand increases so that market price increases, producer surplus increases because 1) producer surplus received by existing sellers increases, and 2) new sellers enter the market.

Correct AnswerverifiedShow Answer

Figure 7-23 -Refer to Figure 7-23. If the price were P3, consumer surplus would be represented by the area

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

Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price is $35, how much is total producer surplus in this market?

Correct AnswerverifiedTotal prod...View AnswerShow Answer

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total consumer surplus in this market at the new equilibrium price?

Correct AnswerverifiedTotal consumer surpl...View AnswerShow Answer

Figure 7-28 -Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers

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

Figure 7-22 -Refer to Figure 7-22. If the price decreases from $80 to $70 due to a shift in the supply curve, consumer surplus increases by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 7-15 -Refer to Figure 7-15. When the price is P1, producer surplus is

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Correct AnswerverifiedShow Answer

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is likely to occur?

Correct AnswerverifiedShow Answer

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

Correct AnswerverifiedShow Answer

At the equilibrium price of a good, the good will be sold by those sellers

Correct AnswerverifiedShow Answer

On a graph, the area below a demand curve and above the price measures

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 prod...
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Total consumer surpl...
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