Question 1

Figure 7-24 
-Refer to Figure 7-24. If the government imposes a price floor at $18, then consumer surplus is

Accepted Answer

A)   ABF.
B)   AGH.
C)   HGCD.
D)   HGBF.E) A) and B)
F) A) and C)

Question 2

Scenario 7-1
Suppose market demand is given by the equation 
-Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, what is the change in total consumer surplus in the market?

Accepted Answer

Consumer s...

Question 3

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

Accepted Answer

A)   $300.
B)   $150.
C)   $450.
D)   $125.E) B) and D)
F) None of the above

Question 4

If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would

Accepted Answer

A)   not reduce the shortage of organs.
B)   benefit rich people but not poor people.
C)   be inefficient because markets are not good at allocating scarce resources.
D)   be inferior to a plan imposed by a benevolent dictator.E) B) and C)
F) C) and D)

Question 5

Table 7-11
The following table represents the costs of five possible sellers. 
-Refer to Table 7-11. If the market price is $1,400, the combined total cost of all participating sellers is

Accepted Answer

A)   $5,700.
B)   $1,500.
C)   $1,400.
D)   $4,100.E) B) and D)
F) B) and C)

Question 6

When there is a technological advance in the pork industry, consumer surplus in that market will

Accepted Answer

A)   increase.
B)   decrease.
C)   not change, since technology affects producers and not consumers.
D)   not change, since consumers' willingness to pay is unaffected by the technological advance.E) B) and D)
F) A) and B)

Question 7

Figure 7-11 
-Refer to Figure 7-11. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?

Accepted Answer

A)   $625
B)   $1,250
C)   $2,500
D)   $5,000E) A) and C)
F) C) and D)

Question 8

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is  If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

Accepted Answer

A) True 
 B)False

Question 9

Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market

Accepted Answer

A)   decreases.
B)   is unchanged.
C)   increases.
D)   may increase, decrease, or remain unchanged.E) A) and B)
F) C) and D)

Question 10

Figure 7-11 
-Refer to Figure 7-11. If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?

Accepted Answer

A)   $625
B)   $1,250
C)   $2,500
D)   $5,000E) A) and C)
F) C) and D)

Question 11

If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

Accepted Answer

A)   zero.
B)   negative, and the consumer would not purchase the product.
C)   positive, and the consumer would purchase the product.
D)   There is not enough information given to answer this question.E) All of the above
F) C) and D)

Question 12

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's consumer surplus is

Accepted Answer

A)   $500.
B)   $3,000.
C)   $3,500.
D)   $6,500.E) All of the above
F) None of the above

Question 13

Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20. Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30.
Which of the following statements is correct?

Accepted Answer

A)   Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been a buyer.
B)   Brent's consumer surplus is the smallest of the three individual consumer surpluses.
C)   For the three individuals together, consumer surplus amounts to $60.
D)   The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener.E) A) and D)
F) None of the above

Question 14

Figure 7-30 
-Refer to Figure 7-30. If the market equilibrium price is $120, how much is total consumer surplus?

Accepted Answer

Consumer s...

Question 15

If the government allowed a free market for transplant organs such as kidneys to exist, the

Accepted Answer

A)   shortage of organs would be eliminated, and there would be no surplus of organs.
B)   shortage of organs would be eliminated, but a surplus of organs would develop.
C)   shortage of organs would persist.
D)   overall well-being of society would remain unchanged.E) A) and B)
F) A) and C)

Question 16

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

Accepted Answer

A)   profits and costs to firms
B)   consumer and producer surplus
C)   the equilibrium price and quantity
D)   incomes of and prices paid by buyersE) A) and D)
F) A) and B)

Question 17

Which of the following is true when the price of a good or service rises?

Accepted Answer

A)   Buyers who were already buying the good or service are better off.
B)   Some buyers exit the market.
C)   The total consumer surplus in the market increases.
D)   The total value of purchases before and after the price change is the same.E) All 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 the market price for the good is $20, who will purchase the good?

Accepted Answer

A)   Danita only
B)   Carolyn and Danita only
C)   Ashleigh, Barb, and Carolyn only
D)   All four buyers would purchase the good.E) All of the above
F) B) and D)

Question 19

Table 7-11
The following table represents the costs of five possible sellers. 
-Refer to Table 7-11. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 4 if the price is

Accepted Answer

A)   $860.
B)   $1,050.
C)   $1,650.
D)   $1,400.E) None of the above
F) A) and C)

Question 20

Table 7-1 
-Refer to Table 7-1. If the market price is $105,

Accepted Answer

A)   Calvin's consumer surplus is $45 and total consumer surplus is $85.
B)   Sam's consumer surplus is $30 and total consumer surplus is $90.
C)   Andrew's consumer surplus is $15 and total consumer surplus is $67.50.
D)   Lori's consumer surplus is ­$2 and total consumer surplus is $100.E) A) and B)
F) B) and D)

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

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's consumer surplus is

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Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 4 if the price is

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When there is a technological advance in the pork industry, consumer surplus in that market will

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Figure 7-24 -Refer to Figure 7-24. If the government imposes a price floor at $18, then consumer surplus is

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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 the market price for the good is $20, who will purchase the good?

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Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,400, the combined total cost of all participating sellers is

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Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, what is the change in total consumer surplus in the market?

Correct AnswerverifiedConsumer s...View AnswerShow Answer

If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would

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Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

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Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price is $120, how much is total consumer surplus?

Correct AnswerverifiedConsumer s...View AnswerShow Answer

Figure 7-11 -Refer to Figure 7-11. If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?

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Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

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Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market

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Which of the following is true when the price of a good or service rises?

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If the government allowed a free market for transplant organs such as kidneys to exist, the

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

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Figure 7-11 -Refer to Figure 7-11. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?

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If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

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Table 7-1 -Refer to Table 7-1. If the market price is $105,

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Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20. Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30. Which of the following statements is correct?

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Consumer s...
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