Question 1

Which of the following is not true when the price of a good or service falls?

Accepted Answer

A)  Buyers who were already buying the good or service are better off.
B)  Some new buyers, who are now willing to buy, enter 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) None of the above
F) A) and C)

Question 2

Figure 7-2 
-Refer to Figure 7-2. If the price of the good is $100, then consumer surplus amounts to

Accepted Answer

A)  $50.
B)  $75.
C)  $100.
D)  $125.E) B) and D)
F) B) and C)

Question 3

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6, producer surplus

Accepted Answer

A)  would necessarily increase even if the higher price resulted in a surplus of widgets.
B)  would necessarily decrease because the higher price would create a surplus of widgets.
C)  might increase or decrease.
D)  would be unaffected.E) B) and C)
F) A) and C)

Question 4

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is

Accepted Answer

A)  $150.
B)  $350.
C)  $500.
D)  $850.E) None of the above
F) C) and D)

Question 5

Table 7-16 
-Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If 6 units are bought and sold, then total surplus is

Accepted Answer

A)  $18 lower than it would be if the equilibrium number of units were bought and sold.
B)  $22 lower than it would be if the equilibrium number of units were bought and sold.
C)  $26 lower than it would be if the equilibrium number of units were bought and sold.
D)  $6 higher than it would be if the equilibrium number of units were bought and sold.E) B) and C)
F) All of the above

Question 6

Figure 7-8 
-Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

Accepted Answer

A)  $150.
B)  $325.
C)  $650.
D)  $675.E) A) and B)
F) A) and C)

Question 7

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

Accepted Answer

A)  an increase in the number of sellers of the good
B)  a decrease in the production cost of the good
C)  sellers expect the price of the good to be lower next month
D)  the imposition of a binding price floor in the marketE) A) and D)
F) All of the above

Question 8

Welfare economics explains which of the following in the market for televisions?

Accepted Answer

A)  The government sets the price of televisions; firms respond to the price by producing a specific level of output.
B)  The government sets the quantity of televisions; firms respond to the quantity by charging a specific price.
C)  The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers.
D)  The market equilibrium price for televisions maximizes consumer welfare and minimizes producer profit.E) All of the above
F) C) and D)

Question 9

Which of the following events would increase producer surplus?

Accepted Answer

A)  Sellers' costs stay the same and the price of the good increases.
B)  Sellers' costs increase and the price of the good stays the same.
C)  Sellers' costs increase and the price of the good decreases.
D)  All of the above are correct.E) C) and D)
F) None of the above

Question 10

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

Accepted Answer

A)  40.
B)  200.
C)  8.
D)  50.E) None of the above
F) B) and C)

Question 11

Figure 7-31 
-Refer to Figure 7-31. If the market equilibrium price is $35, how much is total producer surplus in this market?

Accepted Answer

Total prod...

Question 12

Suppose that the equilibrium price in the market for tomatoes is $3 per pound. If a law reduced the maximum legal price for tomatoes to $2 per pound,

Accepted Answer

A)  any possible increase in consumer surplus would be larger than the loss of producer surplus.
B)  any possible increase in consumer surplus would be smaller than the loss of producer surplus.
C)  the resulting increase in producer surplus would be larger than any possible loss of consumer surplus.
D)  the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus.E) B) and C)
F) A) and B)

Question 13

Figure 7-7 
-Refer to Figure 7-7. What happens to the consumer surplus if the price rises from $100 to $150?

Accepted Answer

A)  The new consumer surplus is half of the original consumer surplus.
B)  The new consumer surplus is 25 percent of the original consumer surplus.
C)  The new consumer surplus is double the original consumer surplus.
D)  The new consumer surplus is triple the original consumer surplus.E) B) and C)
F) B) and D)

Question 14

Markets will always allocate resources efficiently.

Accepted Answer

A) True 
 B)False

Question 15

Table 7-3
The only four consumers in a market have the following willingness to pay for a good: 
-Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Accepted Answer

A)  Quilana
B)  Wilbur
C)  Ming-la
D)  All three buyers experience the same loss of consumer surplus.E) All of the above
F) B) and C)

Question 16

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 tickets sell for $40 each, then what is the total consumer surplus in the market?

Accepted Answer

A)  $90.
B)  $30.
C)  $70.
D)  $110.E) A) and C)
F) None of the above

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 B)

Question 18

Table 7-6
For each of three potential buyers of apples, the table displays the willingness to pay for the first three apples of the day. Assume Xavier, Yadier, and Zavi are the only three buyers of apples, and only three apples can be supplied per day. 
-Refer to Table 7-6. If the market price of an apple is $1.40, then consumer surplus amounts to

Accepted Answer

A)  $0.60.
B)  $1.20.
C)  $1.40.
D)  $3.40E) A) and D)
F) A) and B)

Question 19

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

Accepted Answer

A)  both the value of MP3 players to consumers and the cost of producing MP3 players has increased.
B)  both the value of MP3 players to consumers and the cost of producing MP3 players has decreased.
C)  the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased.
D)  the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased.E) All of the above
F) None of the above

Question 20

The distinction between efficiency and equality can be described as follows:

Accepted Answer

A)  Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains from trade among buyers and sellers.
B)  Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers.
C)  Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost.
D)  Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.E) None of the above
F) A) and C)

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

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

Correct Answer
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The distinction between efficiency and equality can be described as follows:

Correct Answer
verified

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is

Correct Answer
verified

Figure 7-2 -Refer to Figure 7-2. If the price of the good is $100, then consumer surplus amounts to

Correct Answer
verified

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6, producer surplus

Correct Answer
verified

Figure 7-8 -Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

Correct Answer
verified

Suppose that the equilibrium price in the market for tomatoes is $3 per pound. If a law reduced the maximum legal price for tomatoes to $2 per pound,

Correct Answer
verified

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

Correct Answer
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Which of the following is not true when the price of a good or service falls?

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

Correct Answer
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Markets will always allocate resources efficiently.

Correct Answer
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Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

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 tickets sell for $40 each, then what is the total consumer surplus in the market?

Correct Answer
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Which of the following events would increase producer surplus?

Correct Answer
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Figure 7-7 -Refer to Figure 7-7. What happens to the consumer surplus if the price rises from $100 to $150?

Correct Answer
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Correct Answer
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Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Correct Answer
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Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price is $35, how much is total producer surplus in this market?

Correct Answer
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Total prod...
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Table 7-16 -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If 6 units are bought and sold, then total surplus is

Correct Answer
verified

Welfare economics explains which of the following in the market for televisions?

Correct Answer
verified

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

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

Correct AnswerverifiedShow Answer

The distinction between efficiency and equality can be described as follows:

Correct AnswerverifiedShow Answer

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is

Correct AnswerverifiedShow Answer

Figure 7-2 -Refer to Figure 7-2. If the price of the good is $100, then consumer surplus amounts to

Correct AnswerverifiedShow Answer

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6, producer surplus

Correct AnswerverifiedShow Answer

Figure 7-8 -Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

Correct AnswerverifiedShow Answer

Suppose that the equilibrium price in the market for tomatoes is $3 per pound. If a law reduced the maximum legal price for tomatoes to $2 per pound,

Correct AnswerverifiedShow Answer

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

Correct AnswerverifiedShow Answer

Which of the following is not true when the price of a good or service falls?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Markets will always allocate resources efficiently.

Correct AnswerverifiedShow Answer

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

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 tickets sell for $40 each, then what is the total consumer surplus in the market?

Correct AnswerverifiedShow Answer

Which of the following events would increase producer surplus?

Correct AnswerverifiedShow Answer

Figure 7-7 -Refer to Figure 7-7. What happens to the consumer surplus if the price rises from $100 to $150?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Correct AnswerverifiedShow Answer

Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price is $35, how much is total producer surplus in this market?

Correct AnswerverifiedTotal prod...View AnswerShow Answer

Table 7-16 -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If 6 units are bought and sold, then total surplus is

Correct AnswerverifiedShow Answer

Welfare economics explains which of the following in the market for televisions?

Correct AnswerverifiedShow Answer

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Total prod...
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