Question 1

Which of the following prices could represent Eli's willingness to pay for a baseball glove if he observed the market price of $43 and decided not to buy one?

Accepted Answer

A)   $37
B)   $45
C)   $50
D)   None of these could represent Eli's willingness to pay.E) A) and B)
F) A) and C)

Question 2

If Sam's opportunity cost of a sweater is $37, which of the following prices would he have to observe in the market in order to sell a sweater?

Accepted Answer

A)   $37
B)   $37.01
C)   $50
D)   Sam would sell a sweater at any of these prices.E) None of the above
F) B) and C)

Question 3

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers was $12, then total producer surplus would be:

Accepted Answer

A)   $7.
B)   $9.
C)   $17.
D)   $30.E) All of the above
F) B) and C)

Question 4

What is the producer surplus earned by a seller whose willingness to sell is $10 below the market price of a good?

Accepted Answer

A)   $0
B)   $10
C)   (P* $10) 
D)   None of these is correct.E) B) and C)
F) A) and C)

Question 5

Total surplus:

Accepted Answer

A)   can never be negative.
B)   is always zero in an efficient market.
C)   can be negative when the market is not in equilibrium.
D)   is greater than the sum of consumer and producer surplus.E) A) and D)
F) A) and C)

Question 6

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills increases from $310 to $350, given the scenario described:

Accepted Answer

A)   total consumer surplus would fall by $120.
B)   total consumer surplus would fall by $90.
C)   Collin and Butch would experience a decrease in consumer surplus, but Abe's consumer surplus would rise.
D)   Collin would experience a decrease in consumer surplus, but Abe and Butch would experience a rise in consumer surplus.E) B) and D)
F) All of the above

Question 7

Assume a market that has an equilibrium price of $5. If the market price is set at $9, producer surplus:

Accepted Answer

A)   rises for some producers because of the increased price.
B)   decreases for some producers because of fewer transactions taking place.
C)   Both A and B are true.
D)   Neither of these statements is true.E) A) and D)
F) B) and D)

Question 8

Surplus is:

Accepted Answer

A)   a measure of the value that buyers and sellers get from participating in a market
B)   maximized for individuals whose reservation price equals the market price.
C)   negative for those who do not participate in a market.
D)   All of these are true.E) C) and D)
F) B) and D)

Question 9

At prices above a consumer's reservation price:

Accepted Answer

A)   the opportunity cost is less than the benefit from having the good.
B)   the opportunity cost is greater than the benefit from having the good.
C)   the buyer will purchase the good.
D)   the willingness to pay is greater than the price.E) A) and B)
F) None of the above

Question 10

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $8 to $12, producer surplus would:

Accepted Answer

A)   increase from $8 to $12.
B)   increase by $4 for each producer.
C)   increase by $4 for House Depot.
D)   increase by $7 in total.E) A) and B)
F) B) and D)

Question 11

According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Accepted Answer

A)   deadweight loss will occur.
B)   seven fewer units will be exchanged.
C)   consumer surplus will decrease.
D)   All of these are true.E) All of the above
F) A) and C)

Question 12

1 is in equilibrium at a quantity of 5 units. Producer surplus is: A)  $5. B)  $10. C)  $15. D)  $7.50." class="answers-bank-image d-inline" rel="preload" > Assume the market in the graph shown with demand D and supply S1 is in equilibrium at a quantity of 5 units. Producer surplus is:

Accepted Answer

A)   $5.
B)   $10.
C)   $15.
D)   $7.50.E) A) and C)
F) A) and B)

Question 13

2 at a quantity of 8, consumer surplus is: A)  $32. B)  $11. C)  $7. D)  equal to the producer surplus." class="answers-bank-image d-inline" rel="preload" > Assuming the market is in equilibrium in the graph shown with demand D and supply S2 at a quantity of 8, consumer surplus is:

Accepted Answer

A)   $32.
B)   $11.
C)   $7.
D)   equal to the producer surplus.E) A) and C)
F) A) and B)

Question 14

If Billy's reservation price on a snowboard is $250, how many snowboards would he buy if the market price of snowboards is $500?

Accepted Answer

A)   0
B)   1
C)   2
D)   The amount of snowboards purchased would depend on Billy's income.E) A) and D)
F) A) and B)

Question 15

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $8 to $14, total producer surplus would:

Accepted Answer

A)   increase from $8 to $14.
B)   increase from $1 to $12.
C)   decrease from $14 to $8.
D)   increase from $7 to $30.E) C) and D)
F) A) and C)

Question 16

According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

Accepted Answer

A)   producer surplus will change from (D + 
E)   to (D + E + B + 
C)  .
B)   producer surplus will change from (B + C + D + 
E)   to D only.
C)   producer surplus will change from (D + 
E)   to (D + 
B)  .
D)   producer surplus will change from (D + 
B)   to (D + 
E)  .E) B) and C)
F) A) and D)

Question 17

Surplus refers to:

Accepted Answer

A)   a way of measuring who benefits from transactions and by how much.
B)   the difference between the price the buyer would have paid and the actual price paid.
C)   the difference between the price the seller would have accepted and the actual sell price.
D)   All of these statements are true.E) A) and D)
F) C) and D)

Question 18

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $9 to $13:

Accepted Answer

A)   House Depot's producer surplus would increase by $4.
B)   Lace Hardware Hardware's producer surplus would increase by $3.
C)   Bob's Hardware's producer surplus would remain unchanged.
D)   All of these statements are true.E) A) and B)
F) B) and D)

Question 19

Assume the market is in equilibrium in the graph shown at demand D and supply S1. If the supply curve shifts to S2, and a new equilibrium is reached, equilibrium quantity will increase from 4 to 4.5 units. Which of the following is true?

Accepted Answer

A)   Producer surplus increases by $3.00.
B)   Producer surplus decreases by $8.50.
C)   Producer surplus increases by $7.50.
D)   Producer surplus decreases by $16.E) A) and D)
F) All of the above

Question 20

According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

Accepted Answer

A)   area (B + 
C)   gets transferred from consumer to producer.
B)   area (B + 
C)   gets transferred from producer to consumer.
C)   area B gets transferred from consumer to producer.
D)   area B gets transferred from producer to consumer.E) All of the above
F) None of the above

Exam 5: Efficiency

Surplus refers to:

Correct Answer
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According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

Correct Answer
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Which of the following prices could represent Eli's willingness to pay for a baseball glove if he observed the market price of $43 and decided not to buy one?

Correct Answer
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Assume the market is in equilibrium in the graph shown at demand D and supply S1. If the supply curve shifts to S2, and a new equilibrium is reached, equilibrium quantity will increase from 4 to 4.5 units. Which of the following is true?

Correct Answer
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According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

Correct Answer
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Assume the market in the graph shown with demand D and supply S₁ is in equilibrium at a quantity of 5 units. Producer surplus is:

Correct Answer
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Total surplus:

Correct Answer
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What is the producer surplus earned by a seller whose willingness to sell is $10 below the market price of a good?

Correct Answer
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If Sam's opportunity cost of a sweater is $37, which of the following prices would he have to observe in the market in order to sell a sweater?

Correct Answer
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If Billy's reservation price on a snowboard is $250, how many snowboards would he buy if the market price of snowboards is $500?

Correct Answer
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Correct Answer
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According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Correct Answer
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At prices above a consumer's reservation price:

Correct Answer
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Correct Answer
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Correct Answer
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Assume a market that has an equilibrium price of $5. If the market price is set at $9, producer surplus:

Correct Answer
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Correct Answer
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Correct Answer
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Assuming the market is in equilibrium in the graph shown with demand D and supply S₂ at a quantity of 8, consumer surplus is:

Correct Answer
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Surplus is:

Correct Answer
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Exam 5: Efficiency

Surplus refers to:

Correct AnswerverifiedShow Answer

According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

Correct AnswerverifiedShow Answer

Which of the following prices could represent Eli's willingness to pay for a baseball glove if he observed the market price of $43 and decided not to buy one?

Correct AnswerverifiedShow Answer

Assume the market is in equilibrium in the graph shown at demand D and supply S1. If the supply curve shifts to S2, and a new equilibrium is reached, equilibrium quantity will increase from 4 to 4.5 units. Which of the following is true?

Correct AnswerverifiedShow Answer

According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

Correct AnswerverifiedShow Answer

Assume the market in the graph shown with demand D and supply S1 is in equilibrium at a quantity of 5 units. Producer surplus is:

Correct AnswerverifiedShow Answer

Total surplus:

Correct AnswerverifiedShow Answer

What is the producer surplus earned by a seller whose willingness to sell is $10 below the market price of a good?

Correct AnswerverifiedShow Answer

If Sam's opportunity cost of a sweater is $37, which of the following prices would he have to observe in the market in order to sell a sweater?

Correct AnswerverifiedShow Answer

If Billy's reservation price on a snowboard is $250, how many snowboards would he buy if the market price of snowboards is $500?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

According to the graph shown, if the market goes from equilibrium to having its price set at $10:

Correct AnswerverifiedShow Answer

At prices above a consumer's reservation price:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume a market that has an equilibrium price of $5. If the market price is set at $9, producer surplus:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assuming the market is in equilibrium in the graph shown with demand D and supply S2 at a quantity of 8, consumer surplus is:

Correct AnswerverifiedShow Answer

Surplus is:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Assume the market in the graph shown with demand D and supply S₁ is in equilibrium at a quantity of 5 units. Producer surplus is:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Assuming the market is in equilibrium in the graph shown with demand D and supply S₂ at a quantity of 8, consumer surplus is:

Correct Answer
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Correct Answer
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