Question 1

Suppose the market demand curve for a good passes through the point (quantity demanded = 100,price = $25) .If there are five buyers in the market,then

Accepted Answer

A)   the marginal buyer's willingness to pay for the 100th unit of the good is $25.
B)   the sum of the five buyers' willingness to pay for the 100th unit of the good is $25.
C)   the average of the five buyers' willingness to pay for the 100th unit of the good is $25.
D)   all of the five buyers are willing to pay at least $25 for the 100th unit of the good.E) B) and C)
F) A) and C)

Question 2

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

Accepted Answer

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

Question 3

Figure 7-12 
-Refer to Figure 7-12.When the price rises from P1 to P2,what area represents the increase in producer surplus?

Accepted Answer

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

Question 4

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 5

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,total surplus will be

Accepted Answer

A)   $42.
B)   $48.
C)   $54.
D)   $60.E) B) and C)
F) B) and D)

Question 6

Consumer surplus in a market can be represented by the

Accepted Answer

A)   area below the demand curve and above the price.
B)   distance from the demand curve to the horizontal axis.
C)   distance from the demand curve to the vertical axis.
D)   area below the demand curve and above the horizontal axis.E) A) and B)
F) A) and C)

Question 7

The lower the price,the lower the producer surplus,all else equal.

Accepted Answer

A) True 
 B)False

Question 8

Table 7-9
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
 
-Refer to Table 7-9.The equilibrium market price for 10 piano lessons is $400.What is the total producer surplus in the market?

Accepted Answer

A)   $0
B)   $300
C)   $400
D)   $700E) All of the above
F) A) and B)

Question 9

Figure 7-2 
-Refer to Figure 7-2.When the price rises from P1 to P2,consumer surplus

Accepted Answer

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

Question 10

Which of the following is correct?

Accepted Answer

A)   Consumer surplus refers to a situation in which there are more buyers than sellers in a market.
B)   Producer surplus refers to a situation in which there are more sellers than buyers in a market.
C)   Total surplus is measured as the area below the demand curve and above the supply curve,up to the equilibrium quantity.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 11

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

Question 12

Figure 7-4 
-Refer to Figure 7-4.If the price of the good is $12,then consumer surplus is

Accepted Answer

A)   $9.
B)   $11.
C)   $13.
D)   $16.E) A) and B)
F) A) and D)

Question 13

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

Question 14

The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of

Accepted Answer

A)   market equilibrium.
B)   market power.
C)   externalities.
D)   laissez-faire.E) A) and B)
F) All of the above

Question 15

If producing a soccer ball costs Jake $5,and he sells it for $40,his producer surplus is $45.

Accepted Answer

A) True 
 B)False

Question 16

Table 7-6
 
-Refer to Table 7-6.You have two essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament.The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game.You hold an auction to sell the two tickets.Who makes the winning bids,and what do they offer to pay for the tickets?

Accepted Answer

A)   Michael and Earvin; more than $350 but less than or equal to $400
B)   Michael and Earvin; more than $400 but less than or equal to $500
C)   Earvin and Larry; more than $300 but less than or equal to $350
D)   Larry and Charles; less than $300E) A) and D)
F) B) and D)

Question 17

Consumer surplus

Accepted Answer

A)   is the amount a buyer pays for a good minus the amount the buyer is willing to pay for it.
B)   is represented on a supply-demand graph by the area below the price and above the demand curve.
C)   measures the benefit sellers receive from participating in a market.
D)   measures the benefit buyers receive from participating in a market.E) A) and C)
F) B) and C)

Question 18

Willingness to pay

Accepted Answer

A)   measures the value that a buyer places on a good.
B)   is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept.
C)   is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept.
D)   is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.E) None of the above
F) A) and D)

Question 19

At any quantity,the price given by the supply curve shows the cost of the lowest-cost seller.

Accepted Answer

A) True 
 B)False

Question 20

Figure 7-10 
-Refer to Figure 7-10.If the equilibrium price rises from $50 to $200,what is the producer surplus to new producers?

Accepted Answer

A)   $625
B)   $3,750
C)   $5,625
D)   $10,000E) A) and B)
F) A) and C)

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

Which of the following is correct?

Correct Answer
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Willingness to pay

Correct Answer
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If a market is allowed to move freely to its equilibrium price and quantity,then an increase in supply will

Correct Answer
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Figure 7-12 -Refer to Figure 7-12.When the price rises from P1 to P2,what area represents the increase in producer surplus?

Correct Answer
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If producing a soccer ball costs Jake $5,and he sells it for $40,his producer surplus is $45.

Correct Answer
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Figure 7-4 -Refer to Figure 7-4.If the price of the good is $12,then consumer surplus is

Correct Answer
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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
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Figure 7-2 -Refer to Figure 7-2.When the price rises from P1 to P2,consumer surplus

Correct Answer
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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,total surplus will be

Correct Answer
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The lower the price,the lower the producer surplus,all else equal.

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

In a market,the marginal buyer is the buyer

Correct Answer
verified

At any quantity,the price given by the supply curve shows the cost of the lowest-cost seller.

Correct Answer
verified

Correct Answer
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Consumer surplus in a market can be represented by the

Correct Answer
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Figure 7-10 -Refer to Figure 7-10.If the equilibrium price rises from $50 to $200,what is the producer surplus to new producers?

Correct Answer
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Consumer surplus

Correct Answer
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Table 7-9 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-9.The equilibrium market price for 10 piano lessons is $400.What is the total producer surplus in the market?

Correct Answer
verified

Suppose the market demand curve for a good passes through the point (quantity demanded = 100,price = $25) .If there are five buyers in the market,then

Correct Answer
verified

The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of

Correct Answer
verified

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

Which of the following is correct?

Correct AnswerverifiedShow Answer

Willingness to pay

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 7-12 -Refer to Figure 7-12.When the price rises from P1 to P2,what area represents the increase in producer surplus?

Correct AnswerverifiedShow Answer

If producing a soccer ball costs Jake $5,and he sells it for $40,his producer surplus is $45.

Correct AnswerverifiedShow Answer

Figure 7-4 -Refer to Figure 7-4.If the price of the good is $12,then consumer surplus is

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

Figure 7-2 -Refer to Figure 7-2.When the price rises from P1 to P2,consumer surplus

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,total surplus will be

Correct AnswerverifiedShow Answer

The lower the price,the lower the producer surplus,all else equal.

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

In a market,the marginal buyer is the buyer

Correct AnswerverifiedShow Answer

At any quantity,the price given by the supply curve shows the cost of the lowest-cost seller.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Consumer surplus in a market can be represented by the

Correct AnswerverifiedShow Answer

Figure 7-10 -Refer to Figure 7-10.If the equilibrium price rises from $50 to $200,what is the producer surplus to new producers?

Correct AnswerverifiedShow Answer

Consumer surplus

Correct AnswerverifiedShow Answer

Table 7-9 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-9.The equilibrium market price for 10 piano lessons is $400.What is the total producer surplus in the market?

Correct AnswerverifiedShow Answer

Suppose the market demand curve for a good passes through the point (quantity demanded = 100,price = $25) .If there are five buyers in the market,then

Correct AnswerverifiedShow Answer

The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of

Correct AnswerverifiedShow Answer

Correct Answer
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