Question 1

Inefficiency exists in an economy when a good is

Accepted Answer

A)  not being consumed by buyers who value it most highly.
B)  not distributed fairly among buyers.
C)  not produced because buyers do not value it very highly.
D)  being produced with less than all available resources.E) None of the above
F) B) and C)

Question 2

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

Accepted Answer

A)  $13,000.
B)  $105,000.
C)  $118,000.
D)  $131,000.E) All of the above
F) B) and C)

Question 3

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 producer surplus increase as a result of this supply shift?

Accepted Answer

Total producer surplus prior t...

Question 4

Table 7-3
The only four consumers in a market have the following willingness to pay for a good: 
-Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Accepted Answer

A)  Quilana
B)  Wilbur
C)  Ming-la
D)  All three buyers experience the same loss of consumer surplus.E) B) and C)
F) B) and D)

Question 5

Efficiency refers to whether a market outcome is fair, while equality refers to whether the maximum amount of output was produced from a given number of inputs.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following will cause an increase in producer surplus?

Accepted Answer

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

Question 7

Economists typically measure efficiency using

Accepted Answer

A)  the price paid by buyers.
B)  the quantity supplied by sellers.
C)  total surplus.
D)  profits to firms.E) C) and D)
F) A) and C)

Question 8

Producer surplus equals

Accepted Answer

A)  Value to buyers - Amount paid by buyers.
B)  Amount received by sellers - Costs of sellers.
C)  Value to buyers - Costs of sellers.
D)  Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers.E) All of the above
F) C) and D)

Question 9

If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the

Accepted Answer

A)  consumer has consumer surplus of $2 if he or she buys the good.
B)  consumer does not purchase the good.
C)  market is not a competitive market.
D)  price of the good will fall due to market forces.E) A) and B)
F) B) and C)

Question 10

Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software?

Accepted Answer

A)  $50.
B)  $150.
C)  $200.
D)  $350.E) B) and D)
F) C) and D)

Question 11

Figure 7-1 
-Refer to Figure 7-1. The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

Accepted Answer

A)  $200.
B)  $150.
C)  $125.
D)  $100.E) All of the above
F) None of the above

Question 12

Figure 7-12 
-Refer to Figure 7-12. If the equilibrium price is $200, what is the producer surplus?

Accepted Answer

A)  $7,500
B)  $3,750
C)  $10,000
D)  $15,000E) All of the above
F) C) and D)

Question 13

Market power and externalities are examples of market failures.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Figure 7-34 
-Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total producer surplus change, assuming the producers with the lowest cost were the ones supplying the market when the price floor was in place?

Accepted Answer

Total producer surplus with the price fl...

Question 16

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 17

Table 7-3
The only four consumers in a market have the following willingness to pay for a good: 
-Refer to Table 7-3. If the price is $20, then consumer surplus in the market is

Accepted Answer

A)  $20, and Wilbur and Ming-la purchase the good.
B)  $45, and Carlos and Quilana purchase the good.
C)  $45, and Quilana, Wilbur, and Ming-la purchase the good.
D)  $55, and Carlos, Wilbur, and Ming-la purchase the good.E) A) and B)
F) All of the above

Question 18

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

Accepted Answer

A)  seller's producer surplus.
B)  seller's cost of production.
C)  seller's profit.
D)  average willingness to pay of buyers of the product.E) A) and C)
F) A) and B)

Question 19

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

Question 20

An increase in price increases consumer surplus.

Accepted Answer

A) True 
 B)False

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

Economists typically measure efficiency using

Correct Answer
verified

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 producer surplus increase as a result of this supply shift?

Correct Answer
verified
Total producer surplus prior t...
View Answer

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price is $200, what is the producer surplus?

Correct Answer
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Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Correct Answer
verified

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 Answer
verified

An increase in price increases consumer surplus.

Correct Answer
verified

Market power and externalities are examples of market failures.

Correct Answer
verified

Producer surplus equals

Correct Answer
verified

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

Correct Answer
verified

Inefficiency exists in an economy when a good is

Correct Answer
verified

If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the

Correct Answer
verified

Correct Answer
verified
Total producer surplus with the price fl...
View Answer

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

Correct Answer
verified

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If the price is $20, then consumer surplus in the market is

Correct Answer
verified

Efficiency refers to whether a market outcome is fair, while equality refers to whether the maximum amount of output was produced from a given number of inputs.

Correct Answer
verified

Figure 7-1 -Refer to Figure 7-1. The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

Correct Answer
verified

Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software?

Correct Answer
verified

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

Correct Answer
verified

Which of the following will cause an increase in producer surplus?

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

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

Economists typically measure efficiency using

Correct AnswerverifiedShow Answer

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 producer surplus increase as a result of this supply shift?

Correct AnswerverifiedTotal producer surplus prior t...View AnswerShow Answer

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price is $200, what is the producer surplus?

Correct AnswerverifiedShow Answer

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

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

An increase in price increases consumer surplus.

Correct AnswerverifiedShow Answer

Market power and externalities are examples of market failures.

Correct AnswerverifiedShow Answer

Producer surplus equals

Correct AnswerverifiedShow Answer

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

Correct AnswerverifiedShow Answer

Inefficiency exists in an economy when a good is

Correct AnswerverifiedShow Answer

If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedTotal producer surplus with the price fl...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If the price is $20, then consumer surplus in the market is

Correct AnswerverifiedShow Answer

Efficiency refers to whether a market outcome is fair, while equality refers to whether the maximum amount of output was produced from a given number of inputs.

Correct AnswerverifiedShow Answer

Figure 7-1 -Refer to Figure 7-1. The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

Correct AnswerverifiedShow Answer

Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software?

Correct AnswerverifiedShow Answer

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

Correct AnswerverifiedShow Answer

Which of the following will cause an increase in producer surplus?

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

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Total producer surplus prior t...
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Total producer surplus with the price fl...
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His produc...
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