Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Figure 7-2
 
-Refer to Figure 7-2.Which area represents consumer surplus at a price of P₂?

Accepted Answer

A)  ABD
B)  ACF
C)  BCDE
D)  DEFE) None of the above
F) B) and D)

Question 3

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,Kendras'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) B) and C)
F) A) and C)

Question 4

Table 7-3
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.
 
-Refer to Table 7-3.If the market price of an orange is $0.40,

Accepted Answer

A)  6 oranges are demanded per day and total consumer surplus amounts to $4.45.
B)  6 oranges are demanded per day and total consumer surplus amounts to $5.10.
C)  7 oranges are demanded per day and total consumer surplus amounts to $5.35.
D)  7 oranges are demanded per day and total consumer surplus amounts to $5.50.E) None of the above
F) A) and B)

Question 5

Figure 7-1
 
-Refer to Figure 7-1.When the price is P₂,consumer surplus is

Accepted Answer

A)  a.
B)  B.
C)  A + B.
D)  A + B + C.E) A) and C)
F) A) and B)

Question 6

A technological advance in the production of computers will

Accepted Answer

A)  increase consumer surplus in the market for computers and decrease producer surplus in the market for computer software.
B)  increase consumer surplus in the market for computers and increase producer surplus in the market for computer software.
C)  decrease consumer surplus in the market for computers and increase producer surplus in the market for computer software.
D)  decrease consumer surplus in the market for computers and decrease producer surplus in the market for computer software.E) All of the above
F) B) and C)

Question 7

Consumer surplus is

Accepted Answer

A)  the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
B)  the amount a buyer is willing to pay for a good minus the cost of producing the good.
C)  the amount by which the quantity supplied of a good exceeds the quantity demanded of the good.
D)  a buyer's willingness to pay for a good plus the price of the good.E) All of the above
F) B) and C)

Question 8

Figure 7-6
 
-Refer to Figure 7-6.When the price is P₂,producer surplus is

Accepted Answer

A)  a.
B)  A + C.
C)  A + B + C.
D)  D + E.E) A) and C)
F) A) and D)

Question 9

Figure 7-6
 
-Refer to Figure 7-6.When the price is P₁,producer surplus is

Accepted Answer

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

Question 10

When markets fail,public policy

Accepted Answer

A)  can do nothing to improve the situation.
B)  can potentially remedy the problem and increase economic efficiency.
C)  can always remedy the problem and increase economic efficiency.
D)  can, in theory, remedy the problem, but in practice, public policy has proven to be ineffective.E) C) and D)
F) B) and D)

Question 11

Ivana produces cookies.Her production cost is $6 per dozen.She sells the cookies for $8 per dozen.Her producer surplus per dozen cookies is

Accepted Answer

A)  $2.
B)  $6.
C)  $8.
D)  $14.E) All of the above
F) A) and B)

Question 12

In which of the following circumstances would a buyer be indifferent about buying a good?

Accepted Answer

A)  The amount of consumer surplus the buyer would experience as a result of buying the good is zero.
B)  The price of the good is equal to the buyer's willingness to pay for the good.
C)  The price of the good is equal to the value the buyer places on the good.
D)  All of the above are correct.E) All of the above
F) B) and C)

Question 13

Unless markets are perfectly competitive,they mail fail to maximize the total benefits to buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 14

Total surplus in a market is consumer surplus minus producer surplus.

Accepted Answer

A) True 
 B)False

Question 15

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

Question 16

Figure 7-11. On the graph below, Q represents the quantity of the good and P represents the good's price.
 
-Refer to Figure 7-11.At the equilibrium,producer surplus amounts to

Accepted Answer

A)  $32.
B)  $48.
C)  $72.
D)  $144.E) B) and C)
F) A) and D)

Question 17

Suppose Larry,Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

Accepted Answer

A)  a resistance price.
B)  willingness to pay.
C)  consumer surplus.
D)  producer surplus.E) A) and B)
F) None of the above

Question 18

Efficiency is related to the size of the economic pie,whereas equity is related to how the pie gets sliced and distributed.

Accepted Answer

A) True 
 B)False

Question 19

Figure 7-8
 
-Refer to Figure 7-8.Sellers whose costs are greater than price are represented by segment

Accepted Answer

A)  AC.
B)  CE.
C)  BC.
D)  CD.E) C) and D)
F) B) and C)

Question 20

Figure 7-10
 
-Refer to Figure 7-10.At the market-clearing equilibrium,total producer surplus is represented by the area

Accepted Answer

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

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

Figure 7-6 -Refer to Figure 7-6.When the price is P₂,producer surplus is

Correct Answer
verified

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

Correct Answer
verified

Efficiency is related to the size of the economic pie,whereas equity is related to how the pie gets sliced and distributed.

Correct Answer
verified

Total surplus in a market is consumer surplus minus 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,Kendras's willingness to pay was $95,and Kristen's willingness to pay was $80.Which of the following statements is correct?

Correct Answer
verified

Consumer surplus is

Correct Answer
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Figure 7-2 -Refer to Figure 7-2.Which area represents consumer surplus at a price of P₂?

Correct Answer
verified

When markets fail,public policy

Correct Answer
verified

In which of the following circumstances would a buyer be indifferent about buying a good?

Correct Answer
verified

Figure 7-6 -Refer to Figure 7-6.When the price is P₁,producer surplus is

Correct Answer
verified

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

Correct Answer
verified

Figure 7-10 -Refer to Figure 7-10.At the market-clearing equilibrium,total producer surplus is represented by the area

Correct Answer
verified

Correct Answer
verified

Figure 7-1 -Refer to Figure 7-1.When the price is P₂,consumer surplus is

Correct Answer
verified

Figure 7-11. On the graph below, Q represents the quantity of the good and P represents the good's price. -Refer to Figure 7-11.At the equilibrium,producer surplus amounts to

Correct Answer
verified

Unless markets are perfectly competitive,they mail fail to maximize the total benefits to buyers and sellers.

Correct Answer
verified

Ivana produces cookies.Her production cost is $6 per dozen.She sells the cookies for $8 per dozen.Her producer surplus per dozen cookies is

Correct Answer
verified

A technological advance in the production of computers will

Correct Answer
verified

Figure 7-8 -Refer to Figure 7-8.Sellers whose costs are greater than price are represented by segment

Correct Answer
verified

Suppose Larry,Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

Correct Answer
verified

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

Figure 7-6 -Refer to Figure 7-6.When the price is P₂,producer surplus is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Efficiency is related to the size of the economic pie,whereas equity is related to how the pie gets sliced and distributed.

Correct AnswerverifiedShow Answer

Total surplus in a market is consumer surplus minus 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,Kendras's willingness to pay was $95,and Kristen's willingness to pay was $80.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Consumer surplus is

Correct AnswerverifiedShow Answer

Figure 7-2 -Refer to Figure 7-2.Which area represents consumer surplus at a price of P₂?

Correct AnswerverifiedShow Answer

When markets fail,public policy

Correct AnswerverifiedShow Answer

In which of the following circumstances would a buyer be indifferent about buying a good?

Correct AnswerverifiedShow Answer

Figure 7-6 -Refer to Figure 7-6.When the price is P₁,producer surplus is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 7-10 -Refer to Figure 7-10.At the market-clearing equilibrium,total producer surplus is represented by the area

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 7-1 -Refer to Figure 7-1.When the price is P₂,consumer surplus is

Correct AnswerverifiedShow Answer

Figure 7-11. On the graph below, Q represents the quantity of the good and P represents the good's price. -Refer to Figure 7-11.At the equilibrium,producer surplus amounts to

Correct AnswerverifiedShow Answer

Unless markets are perfectly competitive,they mail fail to maximize the total benefits to buyers and sellers.

Correct AnswerverifiedShow Answer

Ivana produces cookies.Her production cost is $6 per dozen.She sells the cookies for $8 per dozen.Her producer surplus per dozen cookies is

Correct AnswerverifiedShow Answer

A technological advance in the production of computers will

Correct AnswerverifiedShow Answer

Figure 7-8 -Refer to Figure 7-8.Sellers whose costs are greater than price are represented by segment

Correct AnswerverifiedShow Answer

Suppose Larry,Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

Correct AnswerverifiedShow Answer

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