Question 1

Figure 7-24 
-Refer to Figure 7-24. At equilibrium, producer surplus is

Accepted Answer

A)   $36.
B)   $72.
C)   $54.
D)   $18.E) All of the above
F) None of the above

Question 2

Figure 7-24 
-Refer to Figure 7-24. If 10 units of the good are produced and sold, then

Accepted Answer

A)   the marginal cost to sellers exceeds the marginal value to buyers.
B)   producer surplus is maximized.
C)   total surplus is minimized.
D)   the marginal value to buyers exceeds the marginal cost to sellers.E) A) and B)
F) A) and C)

Question 3

Figure 7-20 
-Refer to Figure 7-20. For quantities greater than M, the value to the marginal buyer is

Accepted Answer

A)   greater than the cost to the marginal seller, so increasing the quantity increases total surplus.
B)   less than the cost to the marginal seller, so increasing the quantity increases total surplus.
C)   greater than the cost to the marginal seller, so decreasing the quantity increases total surplus.
D)   less than the cost to the marginal seller, so decreasing the quantity increases total surplus.E) A) and C)
F) A) and B)

Question 4

A seller's willingness to sell is

Accepted Answer

A)   measured by the seller's cost of production.
B)   related to her supply curve, just as a buyer's willingness to buy is related to his demand curve.
C)   less than the price received if producer surplus is a positive number.
D)   All of the above are correct.E) B) and D)
F) All of the above

Question 5

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 consumer surplus increase for those consumers who were purchasing the good when the price floor was in place?

Accepted Answer

Those consumers who were alrea...

Question 6

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Accepted Answer

A) True 
 B)False

Question 7

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 consumer surplus increase for those consumers who enter the market after the price floor is removed?

Accepted Answer

New consumers entering the mar...

Question 8

Figure 7-19 
-Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

Accepted Answer

A)   $187.50.
B)   $125.00.
C)   $250.00.
D)   $266.67.E) A) and C)
F) B) and C)

Question 9

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

Question 10

Which of the following statements is not correct about a market in equilibrium?

Accepted Answer

A)   The price determines which buyers and which sellers participate in the market.
B)   Those buyers who value the good more than the price choose to buy the good.
C)   Those sellers whose costs are less than the price choose to produce and sell the good.
D)   Consumer surplus will be equal to producer surplus.E) B) and D)
F) B) and C)

Question 11

Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. 
-Refer to Table 7-5. If the market price of an orange is $0.90, then the market quantity of oranges demanded per day is

Accepted Answer

A)   5.
B)   2.
C)   3.
D)   4.E) C) and D)
F) All of the above

Question 12

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 13

Figure 7-19 
-Refer to Figure 7-19. At the equilibrium price, total surplus is

Accepted Answer

A)   $125.
B)   $450.
C)   $250.
D)   $500.E) A) and B)
F) All of the above

Question 14

Figure 7-15 
-Refer to Figure 7-15. When the price is P2, producer surplus is

Accepted Answer

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

Question 15

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

Question 16

Figure 7-33 
-Refer to Figure 7-33. How much is total producer surplus in this market at the equilibrium price?

Accepted Answer

Total producer surpl...

Question 17

Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be

Accepted Answer

A)   $15.
B)   $30.
C)   $45.
D)   $90.E) None of the above
F) A) and C)

Question 18

Table 7-10
The only four consumers in a market have the following willingness to pay for a good:
Buyer Willingness to Pay 
-Refer to Table 7-10. If there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Accepted Answer

A)   $0 or slightly more.
B)   $3 or slightly less.
C)   $4 or slightly more.
D)   $8 or slightly less.E) B) and D)
F) All of the above

Question 19

Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. 
-Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, who will buy the ticket?

Accepted Answer

A)   Dan
B)   David
C)   Ken
D)   LisaE) None of the above
F) A) and B)

Question 20

The "invisible hand" refers to

Accepted Answer

A)   the marketplace guiding the self-interests of market participants into promoting general economic well-being.
B)   the fact that social planners sometimes have to intervene, even in perfectly competitive markets, to make those markets more efficient.
C)   the equality that results from market forces allocating the goods produced in the market.
D)   the automatic maximization of consumer surplus in free markets.E) A) and B)
F) C) and D)

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

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 consumer surplus increase for those consumers who were purchasing the good when the price floor was in place?

Correct Answer
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Those consumers who were alrea...
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Figure 7-20 -Refer to Figure 7-20. For quantities greater than M, the value to the marginal buyer is

Correct Answer
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Correct Answer
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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 consumer surplus increase for those consumers who enter the market after the price floor is removed?

Correct Answer
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New consumers entering the mar...
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Which of the following statements is not correct about a market in equilibrium?

Correct Answer
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Total surplus is

Correct Answer
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A seller's willingness to sell is

Correct Answer
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Producer surplus equals the

Correct Answer
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Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be

Correct Answer
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Figure 7-24 -Refer to Figure 7-24. At equilibrium, producer surplus is

Correct Answer
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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
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His produc...
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Figure 7-19 -Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

Correct Answer
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Figure 7-19 -Refer to Figure 7-19. At the equilibrium price, total surplus is

Correct Answer
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Correct Answer
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Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, who will buy the ticket?

Correct Answer
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Figure 7-15 -Refer to Figure 7-15. When the price is P2, producer surplus is

Correct Answer
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The "invisible hand" refers to

Correct Answer
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If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Correct Answer
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Figure 7-33 -Refer to Figure 7-33. How much is total producer surplus in this market at the equilibrium price?

Correct Answer
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Total producer surpl...
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Figure 7-24 -Refer to Figure 7-24. If 10 units of the good are produced and sold, then

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

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 consumer surplus increase for those consumers who were purchasing the good when the price floor was in place?

Correct AnswerverifiedThose consumers who were alrea...View AnswerShow Answer

Figure 7-20 -Refer to Figure 7-20. For quantities greater than M, the value to the marginal buyer is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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 consumer surplus increase for those consumers who enter the market after the price floor is removed?

Correct AnswerverifiedNew consumers entering the mar...View AnswerShow Answer

Which of the following statements is not correct about a market in equilibrium?

Correct AnswerverifiedShow Answer

Total surplus is

Correct AnswerverifiedShow Answer

A seller's willingness to sell is

Correct AnswerverifiedShow Answer

Producer surplus equals the

Correct AnswerverifiedShow Answer

Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be

Correct AnswerverifiedShow Answer

Figure 7-24 -Refer to Figure 7-24. At equilibrium, producer surplus is

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

Figure 7-19 -Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

Correct AnswerverifiedShow Answer

Figure 7-19 -Refer to Figure 7-19. At the equilibrium price, total surplus is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, who will buy the ticket?

Correct AnswerverifiedShow Answer

Figure 7-15 -Refer to Figure 7-15. When the price is P2, producer surplus is

Correct AnswerverifiedShow Answer

The "invisible hand" refers to

Correct AnswerverifiedShow Answer

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Correct AnswerverifiedShow Answer

Figure 7-33 -Refer to Figure 7-33. How much is total producer surplus in this market at the equilibrium price?

Correct AnswerverifiedTotal producer surpl...View AnswerShow Answer

Figure 7-24 -Refer to Figure 7-24. If 10 units of the good are produced and sold, then

Correct AnswerverifiedShow Answer

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Those consumers who were alrea...
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New consumers entering the mar...
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His produc...
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Total producer surpl...
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