Question 1

Free markets allocate (a) the supply of goods to the buyers who value them most highly and (b) the demand for goods to the sellers who can produce them at least cost.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following will cause a decrease in producer surplus?

Accepted Answer

A)   the imposition of a nonbinding price ceiling in the market
B)   buyers expect the price of a good to be higher next month
C)   the price of a substitute increases
D)   income increases and buyers consider the good to be inferiorE) B) and D)
F) C) and D)

Question 3

Figure 7-25 
-Refer to Figure 7-25. At the equilibrium price, total surplus is

Accepted Answer

A)   $288.
B)   $576.
C)   $1,152.
D)   $2,304.E) A) and D)
F) A) and B)

Question 4

Suppose John's cost for performing some carpentry work is $120. If John is paid $200 for the carpentry work, what is his producer surplus?

Accepted Answer

His produc...

Question 5

Table 7-15
 
-Refer to Table 7-15. 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. Which of the following graphs represents the market supply curve?

Accepted Answer

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

Question 6

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?

Accepted Answer

A)   For the three individuals together, consumer surplus amounts to $35.
B)   Having bought the cell phone, Kristen is better off than she would have been had she not bought it.
C)   Had the price of the cell phone been $95 rather than $80, Katie and Kendra definitely would have been buyers and Kristen definitely would not have been a buyer.
D)   The fact that all three individuals paid $80 for the same type of cell phone indicates that each one placed the same value on that cell phone.E) A) and C)
F) None of the above

Question 7

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 value to buyers minus the cost to sellers.
D)   All of the above are correct.E) None of the above
F) A) and C)

Question 8

At present, the maximum legal price for a human kidney is $0. The price of $0 maximizes

Accepted Answer

A)   consumer surplus but not producer surplus.
B)   producer surplus but not consumer surplus.
C)   both consumer and producer surplus.
D)   neither consumer nor producer surplus.E) All of the above
F) A) and B)

Question 9

If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will

Accepted Answer

A)   increase producer surplus.
B)   reduce producer surplus.
C)   not affect producer surplus.
D)   Any of the above are possible.E) A) and B)
F) A) and C)

Question 10

Hot dogs and hot dog buns are complements. An increase in the price of flour used to make hot dogs buns will

Accepted Answer

A)   increase consumer surplus in the market for hot dog buns and decrease producer surplus in the market for hot dogs.
B)   increase consumer surplus in the market for hot dogs and increase producer surplus in the market for hot dog buns.
C)   decrease consumer surplus in the market for hot dog buns and increase producer surplus in the market for hot dogs.
D)   decrease consumer surplus in the market for hot dog buns and decrease producer surplus in the market for hot dogs.E) B) and C)
F) None of the above

Question 11

Producer surplus equals the

Accepted Answer

A)   value to buyers minus the amount paid by buyers.
B)   value to buyers minus the cost to sellers.
C)   amount received by sellers minus the cost to sellers.
D)   amount received by sellers minus the amount paid by buyers.E) A) and B)
F) A) and D)

Question 12

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 C)
F) All of the above

Question 13

Scenario 7-2
Suppose market demand and market supply are given by the equations: 
-Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to  By how much does total consumer surplus increase for those consumers who were already willing to purchase the good with the original supply curve?

Accepted Answer

For those consumers already in...

Question 14

Table 7-6
For each of three potential buyers of apples, the table displays the willingness to pay for the first three apples of the day. Assume Xavier, Yadier, and Zavi are the only three buyers of apples, and only three apples can be supplied per day.
 
-Refer to Table 7-6. If the market price of an apple is $1.40, then the market quantity of apples demanded per day is

Accepted Answer

A)   1.
B)   2.
C)   3.
D)   4.E) A) and B)
F) A) and C)

Question 15

Figure 7-1 
-Refer to Figure 7-1. If the price of the good is $50, then consumer surplus amounts to

Accepted Answer

A)   $400.
B)   $500.
C)   $600.
D)   $750.E) A) and D)
F) C) and D)

Question 16

Figure 7-13 
-Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producer s in the market?

Accepted Answer

A)   $1,200
B)   $2,400
C)   $3,600
D)   $4,800E) None of the above
F) B) and C)

Question 17

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 18

Producing a soccer ball costs Jake $5. He sells it to Darby for $35. Darby values the soccer ball at $50. For this transaction, the total surplus in the market is $40.

Accepted Answer

A) True 
 B)False

Question 19

Figure 7-10 
-Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

Accepted Answer

A)   BCG
B)   ACH
C)   ABGD
D)   AHGBE) A) and C)
F) All of the above

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

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

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $50, then consumer surplus amounts to

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

Table 7-15 -Refer to Table 7-15. 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. Which of the following graphs represents the market supply curve?

Correct Answer
verified

Figure 7-10 -Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

Correct Answer
verified

Suppose John's cost for performing some carpentry work is $120. If John is paid $200 for the carpentry work, what is his producer surplus?

Correct Answer
verified
His produc...
View Answer

Which of the following will cause a decrease in producer surplus?

Correct Answer
verified

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?

Correct Answer
verified

Correct Answer
verified
For those consumers already in...
View Answer

Producer surplus equals the

Correct Answer
verified

Figure 7-25 -Refer to Figure 7-25. At the equilibrium price, total surplus is

Correct Answer
verified

Total surplus

Correct Answer
verified

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

Correct Answer
verified

Hot dogs and hot dog buns are complements. An increase in the price of flour used to make hot dogs buns will

Correct Answer
verified

Correct Answer
verified

If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will

Correct Answer
verified

Producing a soccer ball costs Jake $5. He sells it to Darby for $35. Darby values the soccer ball at $50. For this transaction, the total surplus in the market is $40.

Correct Answer
verified

Figure 7-13 -Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producer s in the market?

Correct Answer
verified

Free markets allocate (a) the supply of goods to the buyers who value them most highly and (b) the demand for goods to the sellers who can produce them at least cost.

Correct Answer
verified

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

Correct Answer
verified

At present, the maximum legal price for a human kidney is $0. The price of $0 maximizes

Correct Answer
verified

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

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $50, then consumer surplus amounts to

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

Table 7-15 -Refer to Table 7-15. 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. Which of the following graphs represents the market supply curve?

Correct AnswerverifiedShow Answer

Figure 7-10 -Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

Correct AnswerverifiedShow Answer

Suppose John's cost for performing some carpentry work is $120. If John is paid $200 for the carpentry work, what is his producer surplus?

Correct AnswerverifiedHis produc...View AnswerShow Answer

Which of the following will cause a decrease in producer surplus?

Correct AnswerverifiedShow Answer

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFor those consumers already in...View AnswerShow Answer

Producer surplus equals the

Correct AnswerverifiedShow Answer

Figure 7-25 -Refer to Figure 7-25. At the equilibrium price, total surplus is

Correct AnswerverifiedShow Answer

Total surplus

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

Hot dogs and hot dog buns are complements. An increase in the price of flour used to make hot dogs buns will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will

Correct AnswerverifiedShow Answer

Producing a soccer ball costs Jake $5. He sells it to Darby for $35. Darby values the soccer ball at $50. For this transaction, the total surplus in the market is $40.

Correct AnswerverifiedShow Answer

Figure 7-13 -Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producer s in the market?

Correct AnswerverifiedShow Answer

Free markets allocate (a) the supply of goods to the buyers who value them most highly and (b) the demand for goods to the sellers who can produce them at least cost.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

At present, the maximum legal price for a human kidney is $0. The price of $0 maximizes

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
His produc...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
For those consumers already in...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified