Question 1

Each seller of a product is willing to sell as long as the price he or she can receive is greater than the opportunity cost of producing the product.

Accepted Answer

A) True 
 B)False

Question 2

The current policy on kidney donation effectively sets a price ceiling of zero.

Accepted Answer

A) True 
 B)False

Question 3

Producer surplus is the cost of production minus the amount a seller is paid.

Accepted Answer

A) True 
 B)False

Question 4

The welfare of sellers is measured by

Accepted Answer

A)   consumer surplus.
B)   producer surplus.
C)   total surplus.
D)   price.E) A) and B)
F) B) and C)

Question 5

In a market,the marginal buyer is the buyer

Accepted Answer

A)   whose willingness to pay is higher than that of all other buyers and potential buyers.
B)   whose willingness to pay is lower than that of all other buyers and potential buyers.
C)   who is willing to buy exactly one unit of the good.
D)   who would be the first to leave the market if the price were any higher.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,producer surplus

Accepted Answer

A)   decreases by an amount equal to C.
B)   decreases by an amount equal to A+B.
C)   decreases by an amount equal to A+C.
D)   increases by an amount equal to A+B.E) B) and C)
F) A) and B)

Question 7

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Accepted Answer

A) True 
 B)False

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

Question 9

Figure 7-1 
-Refer to Figure 7-1.If the price of the good is $250,then consumer surplus amounts to

Accepted Answer

A)   $50.
B)   $100.
C)   $150.
D)   $200.E) C) and D)
F) B) and C)

Question 10

Figure 7-14 rd unit is $225.Then total surplus is maximized if A)  1 unit of the good is produced and sold. B)  2 units of the good are produced and sold. C)  3 units of the good are produced and sold. D)  4 units of the good are produced and sold." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 7-14.Suppose the willingness to pay of the marginal buyer of the 3rd unit is $225.Then total surplus is maximized if

Accepted Answer

A)   1 unit of the good is produced and sold.
B)   2 units of the good are produced and sold.
C)   3 units of the good are produced and sold.
D)   4 units of the good are produced and sold.E) None of the above
F) A) and C)

Question 11

As a result of a decrease in price,

Accepted Answer

A)   new buyers enter the market,increasing consumer surplus.
B)   new buyers enter the market,decreasing consumer surplus.
C)   existing buyers exit the market,increasing consumer surplus.
D)   existing buyers exit the market,decreasing consumer surplus.E) A) and C)
F) C) and D)

Question 12

A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that

Accepted Answer

A)   both the value of MP3 players to consumers and the cost of producing MP3 players has increased.
B)   both the value of MP3 players to consumers and the cost of producing MP3 players has decreased.
C)   the value of MP3 players to consumers has decreased,and the cost of producing MP3 players has increased.
D)   the value of MP3 players to consumers has increased,and the cost of producing MP3 players has decreased.E) None of the above
F) B) and D)

Question 13

Which of the following statements is not correct?

Accepted Answer

A)   An invisible hand leads buyers and sellers to an equilibrium that maximizes total surplus.
B)   Market power can cause markets to be inefficient.
C)   Externalities can cause markets to be inefficient.
D)   The invisible hand can remedy most if not all types of market failures.E) A) and C)
F) A) and D)

Question 14

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) None of the above
F) All of the above

Question 15

Table 7-11
 
-Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If the price is $4 but only 6 units are bought and sold,producer surplus will be

Accepted Answer

A)   $16.
B)   $18.
C)   $24.
D)   $26.E) A) and D)
F) None of the above

Question 16

Michael values a stainless steel refrigerator for his new house at $3,500,but he succeeds in buying one for $3,000.Michael's willingness to pay is

Accepted Answer

A)   $500.
B)   $3,000.
C)   $3,500.
D)   $6,500.E) A) and D)
F) A) and C)

Question 17

Suppose that the equilibrium price in the market for widgets is $5.If a law increased the minimum legal price for widgets to $6,

Accepted Answer

A)   the resulting increase in consumer surplus would be larger than any possible loss of producer surplus.
B)   the resulting increase in consumer surplus would be smaller than any possible loss of producer surplus.
C)   any possible increase in producer surplus would be larger than the loss of consumer surplus.
D)   any possible increase in producer surplus would be smaller than the loss of consumer surplus.E) None of the above
F) B) and C)

Question 18

Welfare economics is the study of the welfare system.

Accepted Answer

A) True 
 B)False

Question 19

Justin builds fences for a living.Justin's out-of-pocket expenses (for wood,paint,etc. ) plus the value that he places on his own time amount to his

Accepted Answer

A)   producer surplus.
B)   producer deficit.
C)   cost of building fences.
D)   profit.E) All of the above
F) A) and D)

Question 20

All else equal,what happens to consumer surplus if the price of a good decreases?

Accepted Answer

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

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

The current policy on kidney donation effectively sets a price ceiling of zero.

Correct AnswerverifiedShow Answer

In a market,the marginal buyer is the buyer

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Michael values a stainless steel refrigerator for his new house at $3,500,but he succeeds in buying one for $3,000.Michael's willingness to pay is

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Justin builds fences for a living.Justin's out-of-pocket expenses (for wood,paint,etc. ) plus the value that he places on his own time amount to his

Correct AnswerverifiedShow Answer

Suppose that the equilibrium price in the market for widgets is $5.If a law increased the minimum legal price for widgets to $6,

Correct AnswerverifiedShow Answer

As a result of a decrease in price,

Correct AnswerverifiedShow Answer

Figure 7-1 -Refer to Figure 7-1.If the price of the good is $250,then consumer surplus amounts to

Correct AnswerverifiedShow Answer

All else equal,what happens to consumer surplus if the price of a good decreases?

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Figure 7-14 -Refer to Figure 7-14.Suppose the willingness to pay of the marginal buyer of the 3rd unit is $225.Then total surplus is maximized if

Correct AnswerverifiedShow Answer

Producer surplus is the cost of production minus the amount a seller is paid.

Correct AnswerverifiedShow Answer

Figure 7-12 -Refer to Figure 7-12.When the price falls from P2 to P1,producer surplus

Correct AnswerverifiedShow Answer

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Correct AnswerverifiedShow Answer

Each seller of a product is willing to sell as long as the price he or she can receive is greater than the opportunity cost of producing the product.

Correct AnswerverifiedShow Answer

Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If the price is $4 but only 6 units are bought and sold,producer surplus will be

Correct AnswerverifiedShow Answer

Total surplus is

Correct AnswerverifiedShow Answer

Welfare economics is the study of the welfare system.

Correct AnswerverifiedShow Answer

A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that

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

The welfare of sellers is measured by

Correct AnswerverifiedShow Answer

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Figure 7-14 -Refer to Figure 7-14.Suppose the willingness to pay of the marginal buyer of the 3^rd unit is $225.Then total surplus is maximized if

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