Question 1

Table 7-8
During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase. 
-Refer to Table 7-8. The price that Chad paid for a latte on the first day is

Accepted Answer

A)  $3.75.
B)  $6.25.
C)  $5.00.
D)  $5.50.E) A) and B)
F) All of the above

Question 2

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) B) and D)
F) All of the above

Question 3

Figure 7-28 
-Refer to Figure 7-28. At the quantity Q3,

Accepted Answer

A)  the market is in equilibrium.
B)  consumer surplus is maximized.
C)  the sum of consumer surplus and producer surplus is maximized.
D)  the marginal value to buyers is less than the marginal cost to sellers.E) B) and D)
F) B) and C)

Question 4

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

Accepted Answer

A)  $36.
B)  $72.
C)  $54.
D)  $18.E) B) and C)
F) A) and D)

Question 5

Figure 7-23 
-Refer to Figure 7-23. At equilibrium, producer surplus is represented by the area

Accepted Answer

A)  F.
B)  F+G.
C)  D+H+F.
D)  D+H+F+G+I.E) B) and C)
F) A) and D)

Question 6

Figure 7-30 
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Accepted Answer

Consumers entering t...

Question 7

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) A) and D)
F) None of the above

Question 8

Table 7-11
The only four producers in a market have the following costs: 
-Refer to Table 7-11. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Accepted Answer

A)  $200.
B)  $300.
C)  $450.
D)  $600.E) All of the above
F) B) and D)

Question 9

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

Question 10

Total surplus measures the

Accepted Answer

A)  loss to buyers from paying higher prices plus the benefit to sellers from receiving lower prices.
B)  buyers' willingness to pay less the sellers' costs.
C)  fairness of the distribution of resources in society.
D)  value to the government of goods and services sold in society.E) None of the above
F) A) and C)

Question 11

Consumer surplus can be measured as the area between the demand curve and the supply curve.

Accepted Answer

A) True 
 B)False

Question 12

Figure 7-16 
-Refer to Figure 7-16. Sellers will be unwilling to sell more than

Accepted Answer

A)  1 unit of the good if its price is below $200.
B)  2 units of the good if its price is below $450.
C)  3 units of the good if its price is below $700.
D)  All of the above are correct.E) A) and C)
F) A) and B)

Question 13

Which of the following statements is not correct?

Accepted Answer

A)  An invisible hand leads buyers and sellers to an equilibrium that maximizes total surplus.
B)  Market power can cause markets to be inefficient.
C)  Externalities can cause markets to be inefficient.
D)  The invisible hand can remedy all types of market failures.E) B) and C)
F) A) and D)

Question 14

The French expression used by free-market advocates, which literally translates as "allow them to do," is

Accepted Answer

A)  laissez-faire.
B)  je ne sais pas.
C)  si'l vous plait.
D)  tête-à-tête.E) A) and B)
F) All of the above

Question 15

Which of the following will cause a decrease in producer surplus?

Accepted Answer

A)  the imposition of a binding price ceiling in the market
B)  an increase in the number of buyers of the good
C)  income increases and buyers consider the good to be normal
D)  the price of a complement decreasesE) All of the above
F) B) and C)

Question 16

Figure 7-2 
-Refer to Figure 7-2. If the price of the good is $80, then consumer surplus amounts to

Accepted Answer

A)  $110.
B)  $135.
C)  $160.
D)  $185.E) C) and D)
F) A) and C)

Question 17

Economists say that a market where goods are not consumed by those valuing the goods most highly is

Accepted Answer

A)  laissez-faire..
B)  unequal.
C)  inefficient.
D)  rational.E) B) and D)
F) None of the above

Question 18

Figure 7-17 
-Refer to Figure 7-17. If the demand curve is D and the supply curve shifts left from S to S', what is the change in producer surplus when comparing the new equilibrium with the original equilibrium?

Accepted Answer

A)  Producer surplus increases by $225.
B)  Producer surplus increases by $675.
C)  Producer surplus decreases by $225.
D)  Producer surplus decreases by $675.E) None of the above
F) A) and D)

Question 19

Figure 7-4 
-Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Accepted Answer

A)  BDF
B)  AFG
C)  BCGD
D)  ABCE) A) and B)
F) A) and C)

Question 20

If the current allocation of resources in the market for hammers is inefficient, then it must be the case that

Accepted Answer

A)  producer surplus exceeds consumer surplus in the market for hammers.
B)  consumer surplus exceeds producer surplus in the market for hammers.
C)  the sum of consumer surplus and producer surplus could be increased by moving to a different allocation of resources.
D)  the costs that sellers of hammers are incurring could be reduced by moving to a different allocation of resources.E) B) and C)
F) A) and D)

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

Figure 7-16 -Refer to Figure 7-16. Sellers will be unwilling to sell more than

Correct AnswerverifiedShow Answer

Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Correct AnswerverifiedShow Answer

Figure 7-17 -Refer to Figure 7-17. If the demand curve is D and the supply curve shifts left from S to S', what is the change in producer surplus when comparing the new equilibrium with the original equilibrium?

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

Figure 7-2 -Refer to Figure 7-2. If the price of the good is $80, then consumer surplus amounts to

Correct AnswerverifiedShow Answer

Figure 7-28 -Refer to Figure 7-28. At the quantity Q3,

Correct AnswerverifiedShow Answer

If the current allocation of resources in the market for hammers is inefficient, then it must be the case that

Correct AnswerverifiedShow Answer

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Correct AnswerverifiedConsumers entering t...View AnswerShow 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

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Economists say that a market where goods are not consumed by those valuing the goods most highly is

Correct AnswerverifiedShow Answer

Figure 7-23 -Refer to Figure 7-23. At equilibrium, producer surplus is represented by the area

Correct AnswerverifiedShow Answer

Which of the following will cause a decrease in producer surplus?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 7-11 The only four producers in a market have the following costs: -Refer to Table 7-11. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The French expression used by free-market advocates, which literally translates as "allow them to do," is

Correct AnswerverifiedShow Answer

Table 7-8 During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase. -Refer to Table 7-8. The price that Chad paid for a latte on the first day is

Correct AnswerverifiedShow Answer

Total surplus measures the

Correct AnswerverifiedShow Answer

Consumer surplus can be measured as the area between the demand curve and the supply curve.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Consumers entering t...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified