Question 1

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction.Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist.This maximum is called

Accepted Answer

A)   deadweight loss.
B)   willingness to pay.
C)   consumer surplus.
D)   producer surplus.E) None of the above
F) B) and C)

Question 2

One of the basic principles of economics is that markets are usually a good way to organize economic activity.This principle is explained by the study of

Accepted Answer

A)   factor markets.
B)   energy markets.
C)   welfare economics.
D)   labor economics.E) All of the above
F) C) and D)

Question 3

Table 7-6
 
-Refer to Table 7-6.You have four 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 offer to sell the tickets for $325.How many tickets do you sell,and what is the total consumer surplus in the market?

Accepted Answer

A)   one ticket;$175
B)   two tickets;$225
C)   three tickets;$225
D)   three tickets;$275E) A) and B)
F) A) and D)

Question 4

Figure 7-13 
-Refer to Figure 7-13.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) C) and D)
F) B) and D)

Question 5

Dawn's bridal boutique is having a sale on evening dresses.The increase in consumer surplus comes from the benefit of the lower prices to

Accepted Answer

A)   only existing customers who now get lower prices on the gowns they were already planning to purchase.
B)   only new customers who enter the market because of the lower prices.
C)   both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices.
D)   Consumer surplus does not increase;it decreases.E) B) and C)
F) A) and D)

Question 6

Consumer surplus is

Accepted Answer

A)   the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
B)   the amount a buyer is willing to pay for a good minus the cost of producing the good.
C)   the amount by which the quantity supplied of a good exceeds the quantity demanded of the good.
D)   a buyer's willingness to pay for a good plus the price of the good.E) B) and C)
F) A) and D)

Question 7

Suppose the demand for peaches decreases.What will happen to producer surplus in the market for peaches?

Accepted Answer

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

Question 8

Figure 7-10 
-Refer to Figure 7-10.If the equilibrium price is $50,what is the producer surplus?

Accepted Answer

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

Question 9

Consumer surplus

Accepted Answer

A)   is closely related to the supply curve for a product.
B)   is represented by a rectangle on a supply-demand graph when the demand curve is a straight,downward-sloping line.
C)   is measured using the demand curve for a product.
D)   does not reflect economic well-being in most markets.E) A) and B)
F) None of the above

Question 10

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) A) and C)
F) All of the above

Question 11

Figure 7-1 
-Refer to Figure 7-1.The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

Accepted Answer

A)   $200.
B)   $150.
C)   $125.
D)   $100.E) None of the above
F) B) and C)

Question 12

Kelly is willing to pay $68 for a pair of shoes for a wedding.She finds a pair at her favorite outlet shoe store for $58.Kelly's consumer surplus is

Accepted Answer

A)   $10.
B)   $28.
C)   $58.
D)   $68.E) B) and C)
F) A) and B)

Question 13

Unless markets are perfectly competitive,they may fail to maximize the total benefits to buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 14

Figure 7-17 
-Refer to Figure 7-17.When the price is P1,area C represents

Accepted Answer

A)   total benefit.
B)   producer surplus.
C)   consumer surplus.
D)   None of the above is correct.E) B) and D)
F) All of the above

Question 15

The decisions of buyers and sellers that affect people who are not participants in the market create

Accepted Answer

A)   market power.
B)   externalities.
C)   profiteering.
D)   market equilibrium.E) A) and D)
F) B) and C)

Question 16

In order to conclude that markets are efficient,we assume that they are perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 17

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

Question 18

Figure 7-4 
-Refer to Figure 7-4.If the market equilibrium price falls from $120 to $80,how much is the increase in consumer surplus to the consumers who were initially in the market at the $120 price?

Accepted Answer

Consumer surplus inc...

Question 19

Figure 7-8 
-Refer to Figure 7-8.Which area represents producer surplus when the price is P1?

Accepted Answer

A)   BCG
B)   ACH
C)   ABGD
D)   DGHE) A) and D)
F) None of the above

Question 20

Figure 7-19 
-Refer to Figure 7-19.At equilibrium,total surplus is represented by the area

Accepted Answer

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

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

Kelly is willing to pay $68 for a pair of shoes for a wedding.She finds a pair at her favorite outlet shoe store for $58.Kelly's consumer surplus is

Correct Answer
verified

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
verified

Figure 7-19 -Refer to Figure 7-19.At equilibrium,total surplus is represented by the area

Correct Answer
verified

Dawn's bridal boutique is having a sale on evening dresses.The increase in consumer surplus comes from the benefit of the lower prices to

Correct Answer
verified

Consumer surplus is

Correct Answer
verified

Unless markets are perfectly competitive,they may fail to maximize the total benefits to buyers and sellers.

Correct Answer
verified

In order to conclude that markets are efficient,we assume that they are perfectly competitive.

Correct Answer
verified

Figure 7-17 -Refer to Figure 7-17.When the price is P1,area C represents

Correct Answer
verified

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

One of the basic principles of economics is that markets are usually a good way to organize economic activity.This principle is explained by the study of

Correct Answer
verified

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction.Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist.This maximum is called

Correct Answer
verified

Figure 7-13 -Refer to Figure 7-13.Sellers will be unwilling to sell more than

Correct Answer
verified

Suppose the demand for peaches decreases.What will happen to producer surplus in the market for peaches?

Correct Answer
verified

Figure 7-8 -Refer to Figure 7-8.Which area represents producer surplus when the price is P1?

Correct Answer
verified

The decisions of buyers and sellers that affect people who are not participants in the market create

Correct Answer
verified

Figure 7-10 -Refer to Figure 7-10.If the equilibrium price is $50,what is the producer surplus?

Correct Answer
verified

Figure 7-4 -Refer to Figure 7-4.If the market equilibrium price falls from $120 to $80,how much is the increase in consumer surplus to the consumers who were initially in the market at the $120 price?

Correct Answer
verified
Consumer surplus inc...
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Consumer surplus

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Figure 7-1 -Refer to Figure 7-1.The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

Correct Answer
verified

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

Kelly is willing to pay $68 for a pair of shoes for a wedding.She finds a pair at her favorite outlet shoe store for $58.Kelly's consumer surplus is

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

Figure 7-19 -Refer to Figure 7-19.At equilibrium,total surplus is represented by the area

Correct AnswerverifiedShow Answer

Dawn's bridal boutique is having a sale on evening dresses.The increase in consumer surplus comes from the benefit of the lower prices to

Correct AnswerverifiedShow Answer

Consumer surplus is

Correct AnswerverifiedShow Answer

Unless markets are perfectly competitive,they may fail to maximize the total benefits to buyers and sellers.

Correct AnswerverifiedShow Answer

In order to conclude that markets are efficient,we assume that they are perfectly competitive.

Correct AnswerverifiedShow Answer

Figure 7-17 -Refer to Figure 7-17.When the price is P1,area C represents

Correct AnswerverifiedShow Answer

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

One of the basic principles of economics is that markets are usually a good way to organize economic activity.This principle is explained by the study of

Correct AnswerverifiedShow Answer

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction.Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist.This maximum is called

Correct AnswerverifiedShow Answer

Figure 7-13 -Refer to Figure 7-13.Sellers will be unwilling to sell more than

Correct AnswerverifiedShow Answer

Suppose the demand for peaches decreases.What will happen to producer surplus in the market for peaches?

Correct AnswerverifiedShow Answer

Figure 7-8 -Refer to Figure 7-8.Which area represents producer surplus when the price is P1?

Correct AnswerverifiedShow Answer

The decisions of buyers and sellers that affect people who are not participants in the market create

Correct AnswerverifiedShow Answer

Figure 7-10 -Refer to Figure 7-10.If the equilibrium price is $50,what is the producer surplus?

Correct AnswerverifiedShow Answer

Figure 7-4 -Refer to Figure 7-4.If the market equilibrium price falls from $120 to $80,how much is the increase in consumer surplus to the consumers who were initially in the market at the $120 price?

Correct AnswerverifiedConsumer surplus inc...View AnswerShow Answer

Consumer surplus

Correct AnswerverifiedShow Answer

Figure 7-1 -Refer to Figure 7-1.The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

Correct AnswerverifiedShow Answer

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Consumer surplus inc...
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