Question 1

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is

Accepted Answer

A)   $800.
B)   $300.
C)   $200.
D)   $500.

Question 2

Inefficiency exists in an economy when a good is

Accepted Answer

A)   not being consumed by buyers who value it most highly.
B)   not distributed fairly among buyers.
C)   not produced because buyers do not value it very highly.
D)   being produced with less than all available resources.

Question 3

Figure 7-10 
-Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

Accepted Answer

A)   BCG
B)   ACH
C)   ABGD
D)   AHGB

Question 4

All else equal, a decrease in demand will cause an increase in producer surplus.

Accepted Answer

A) True 
 B)False

Question 5

Many economists believe that restrictions against ticket scalping result in each of the following except

Accepted Answer

A)   a smaller audience for cultural and sporting events.
B)   shorter lines at cultural and sporting events.
C)   less tax revenue for the state.
D)   an increase in ticket prices.

Question 6

Figure 7-27 
-Refer to Figure 7-27. Buyers who value this good more than the equilibrium price are represented by which line segment?

Accepted Answer

A)   AC.
B)   CK.
C)   BC.
D)   CH.

Question 7

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.

Question 8

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $45.

Accepted Answer

A) True 
 B)False

Question 9

PlayStations and PlayStation games are complementary goods. A technological advance in the production of PlayStations will

Accepted Answer

A)   increase consumer surplus in the market for PlayStations and decrease producer surplus in the market for PlayStation games.
B)   increase consumer surplus in the market for PlayStations and increase producer surplus in the market for PlayStation games.
C)   decrease consumer surplus in the market for PlayStations and increase producer surplus in the market for PlayStation games.
D)   decrease consumer surplus in the market for PlayStations and decrease producer surplus in the market for PlayStation games.

Question 10

Figure 7-18 
-Refer to Figure 7-18. Suppose the willingness to pay of the marginal buyer of the 3rd unit is $125. Then total surplus is maximized if

Accepted Answer

A)   1 unit of the good is produced and sold.
B)   2 units of the good are produced and sold.
C)   3 units of the good are produced and sold.
D)   4 units of the good are produced and sold.

Question 11

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)   $5,000

Question 12

Figure 7-34 
-Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase for those consumers who enter the market after the price floor is removed?

Accepted Answer

New consumers entering the mar...

Question 13

What do economists call the highest amount a consumer will pay to purchase a good?

Accepted Answer

The maximu...

Question 14

Figure 7-4 
-Refer to Figure 7-4. Which area represents the increase in consumer surplus when the price falls from P1 to P2?

Accepted Answer

A)   BDF
B)   AFG
C)   ABC
D)   ABDG

Question 15

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, how much consumer surplus do consumers entering the market after the price drop receive?

Accepted Answer

The consumers enteri...

Question 16

Figure 7-16 
-Refer to Figure 7-16. If the price of the good is $600, then producer surplus amounts to

Accepted Answer

A)   $650.
B)   $800.
C)   $900.
D)   $1,000.

Question 17

Figure 7-9 
-Refer to Figure 7-9. If the price of the good is $9.50, then producer surplus is

Accepted Answer

A)   $3.00.
B)   $6.50.
C)   $10.50.
D)   $8.50.

Question 18

Figure 7-32 
-Refer to Figure 7-32. If the government imposed a price ceiling at $20 in this market, how much are consumer surplus, producer surplus, and total surplus?

Accepted Answer

Consumer surplus is ...

Question 19

If the cost of producing sofas decreases, then consumer surplus in the sofa market will

Accepted Answer

A)   increase.
B)   decrease.
C)   remain constant.
D)   increase for some buyers and decrease for other buyers.

Question 20

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 market

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

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase for those consumers who enter the market after the price floor is removed?

Correct AnswerverifiedNew consumers entering the mar...View AnswerShow Answer

What do economists call the highest amount a consumer will pay to purchase a good?

Correct AnswerverifiedThe maximu...View AnswerShow Answer

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

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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 $150, what is the producer surplus?

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Figure 7-16 -Refer to Figure 7-16. If the price of the good is $600, then producer surplus amounts to

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Figure 7-4 -Refer to Figure 7-4. Which area represents the increase in consumer surplus when the price falls from P1 to P2?

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

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Figure 7-27 -Refer to Figure 7-27. Buyers who value this good more than the equilibrium price are represented by which line segment?

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Figure 7-10 -Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

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If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $45.

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Figure 7-9 -Refer to Figure 7-9. If the price of the good is $9.50, then producer surplus is

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All else equal, a decrease in demand will cause an increase in producer surplus.

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Figure 7-32 -Refer to Figure 7-32. If the government imposed a price ceiling at $20 in this market, how much are consumer surplus, producer surplus, and total surplus?

Correct AnswerverifiedConsumer surplus is ...View AnswerShow Answer

Inefficiency exists in an economy when a good is

Correct AnswerverifiedShow Answer

If the cost of producing sofas decreases, then consumer surplus in the sofa market will

Correct AnswerverifiedShow Answer

PlayStations and PlayStation games are complementary goods. A technological advance in the production of PlayStations will

Correct AnswerverifiedShow Answer

Figure 7-18 -Refer to Figure 7-18. Suppose the willingness to pay of the marginal buyer of the 3rd unit is $125. Then total surplus is maximized if

Correct AnswerverifiedShow Answer

Many economists believe that restrictions against ticket scalping result in each of the following except

Correct AnswerverifiedShow Answer

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, how much consumer surplus do consumers entering the market after the price drop receive?

Correct AnswerverifiedThe consumers enteri...View AnswerShow Answer

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is

Correct AnswerverifiedShow Answer

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New consumers entering the mar...
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The maximu...
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Consumer surplus is ...
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The consumers enteri...
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