Question 1

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

Accepted Answer

A)  $150.
B)  $350.
C)  $500.
D)  $850.E) A) and B)
F) A) and C)

Question 2

Willingness to pay

Accepted Answer

A)  measures the value that a buyer places on a good.
B)  is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept.
C)  is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept.
D)  is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.E) B) and C)
F) C) and D)

Question 3

Even though participants in the economy are motivated by self-interest,the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.

Accepted Answer

A) True 
 B)False

Question 4

Figure 7-4
 
-Refer to Figure 7-4.Which area represents producer surplus when the price is P₁?

Accepted Answer

A)  BCE
B)  ACF
C)  ABED
D)  DEFE) A) and B)
F) A) and D)

Question 5

When there is a technological advance in the ice cream industry,consumer surplus in that market will

Accepted Answer

A)  increase.
B)  decrease.
C)  not change, since technology affects producers and not consumers.
D)  not change, since consumers' willingness to pay is unaffected by the technological advance.E) B) and C)
F) All of the above

Question 6

Figure 7-9
 
-Refer to Figure 7-9.If 40 units of the good are being bought and sold,then

Accepted Answer

A)  cost to sellers is equal to the value to buyers.
B)  the value to buyers is greater than the cost to sellers.
C)  the cost to sellers is greater than the value to buyers.
D)  producer surplus would be greater than consumer surplus.E) All of the above
F) A) and C)

Question 7

Figure 7-3.
On the graph below, Q represents the quantity of the good and P represents the good's price.
 
-Refer to Figure 7-3.If the price of the good is $6,then consumer surplus is

Accepted Answer

A)  $4.
B)  $6.
C)  $8.
D)  $10.E) None of the above
F) All of the above

Question 8

Market Supply and Demand for Pepperoni Pizza
Table 7-5
 
-Refer to Table 7-5.The equilibrium or market-clearing price is

Accepted Answer

A)  $10.00.
B)  $8.00.
C)  $6.00.
D)  $4.00.E) A) and D)
F) None of the above

Question 9

The area below a demand curve and above the price measures

Accepted Answer

A)  producer surplus.
B)  consumer surplus.
C)  excess supply.
D)  willingness to pay.E) All of the above
F) C) and D)

Question 10

Kristi and Rebecca sell lemonade on the corner.It costs them 7 cents to make each cup.On a certain day,they sell 40 cups,and their producer surplus for that day amounts to $15.20.Kristi and Rebecca sold each cup for

Accepted Answer

A)  15 cents.
B)  30 cents.
C)  45 cents.
D)  55 cents.E) A) and C)
F) All of the above

Question 11

The study of how the allocation of resources affects economic well-being is called

Accepted Answer

A)  consumer economics.
B)  macroeconomics.
C)  willingness-to-pay economics.
D)  welfare economics.E) B) and D)
F) A) and B)

Question 12

A seller's willingness to sell is

Accepted Answer

A)  measured by the seller's cost of production.
B)  to her supply curve as a buyer's willingness to buy is to his demand curve.
C)  less than the price received if producer surplus is a positive number.
D)  All of the above are correct.E) C) and D)
F) A) and B)

Question 13

Cost is a measure of the

Accepted Answer

A)  seller's willingness to sell.
B)  seller's producer surplus.
C)  producer shortage.
D)  seller's willingness to buy.E) A) and B)
F) B) and C)

Question 14

The following table represents the costs of five possible sellers.
Table 7-4
 
-Refer to Table 7-4.If the market price is $1,000,the producer surplus in the market is

Accepted Answer

A)  $700.
B)  $750.
C)  $2,250.
D)  $3,700.E) None of the above
F) C) and D)

Question 15

At Nick's Bakery,the cost to make homemade chocolate cake is $3 per cake.As a result of selling three cakes,Nick experiences a producer surplus in the amount of $19.50.Nick must be selling his cakes for

Accepted Answer

A)  $6.50 each.
B)  $7.50 each.
C)  $9.50 each.
D)  $10.50 each.E) A) and D)
F) None of the above

Question 16

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.E) None of the above
F) All of the above

Question 17

Table 7-1
 
-Refer to Table 7-1.If the table represents the willingness to pay of four buyers and the price of the product is $15,then who would be willing to purchase the product?

Accepted Answer

A)  Mike
B)  Mike and Sandy
C)  Mike, Sandy, and Jonathan
D)  Mike, Sandy, Jonathan, and HaleyE) All of the above
F) A) and B)

Question 18

Economists tend to see ticket scalping as

Accepted Answer

A)  a way for a few to profit without producing anything of value.
B)  an inequitable interference in the orderly process of ticket distribution.
C)  a way of increasing the efficiency of ticket distribution.
D)  an unproductive activity which should be made illegal everywhere.E) B) and C)
F) A) and D)

Question 19

Market Supply and Demand for Pepperoni Pizza
Table 7-5
 
-Refer to Table 7-5.As the table suggests,the demand curve is a straight line and so is the supply curve.Take this into account and suppose the price is $8,with only 4 pizzas being bought and sold.Producer surplus amounts to

Accepted Answer

A)  $24.
B)  $28.
C)  $32.
D)  $40.E) B) and C)
F) All of the above

Question 20

Free markets allocate (a)the supply of goods to the buyers who value them most highly and (b)the demand for goods to the sellers who can produce them at least cost.

Accepted Answer

A) True 
 B)False

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

Table 7-1 -Refer to Table 7-1.If the table represents the willingness to pay of four buyers and the price of the product is $15,then who would be willing to purchase the product?

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Figure 7-9 -Refer to Figure 7-9.If 40 units of the good are being bought and sold,then

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Cost is a measure of the

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The area below a demand curve and above the price measures

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The study of how the allocation of resources affects economic well-being is called

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Willingness to pay

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The following table represents the costs of five possible sellers. Table 7-4 -Refer to Table 7-4.If the market price is $1,000,the producer surplus in the market is

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Figure 7-3. On the graph below, Q represents the quantity of the good and P represents the good's price. -Refer to Figure 7-3.If the price of the good is $6,then consumer surplus is

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When there is a technological advance in the ice cream industry,consumer surplus in that market will

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Figure 7-4 -Refer to Figure 7-4.Which area represents producer surplus when the price is P₁?

Correct AnswerverifiedShow Answer

Even though participants in the economy are motivated by self-interest,the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.

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 willingness to pay is

Correct AnswerverifiedShow Answer

Free markets allocate (a)the supply of goods to the buyers who value them most highly and (b)the demand for goods to the sellers who can produce them at least cost.

Correct AnswerverifiedShow Answer

Market Supply and Demand for Pepperoni Pizza Table 7-5 -Refer to Table 7-5.As the table suggests,the demand curve is a straight line and so is the supply curve.Take this into account and suppose the price is $8,with only 4 pizzas being bought and sold.Producer surplus amounts to

Correct AnswerverifiedShow Answer

Kristi and Rebecca sell lemonade on the corner.It costs them 7 cents to make each cup.On a certain day,they sell 40 cups,and their producer surplus for that day amounts to $15.20.Kristi and Rebecca sold each cup for

Correct AnswerverifiedShow Answer

At Nick's Bakery,the cost to make homemade chocolate cake is $3 per cake.As a result of selling three cakes,Nick experiences a producer surplus in the amount of $19.50.Nick must be selling his cakes for

Correct AnswerverifiedShow Answer

Inefficiency exists in an economy when a good is

Correct AnswerverifiedShow Answer

Market Supply and Demand for Pepperoni Pizza Table 7-5 -Refer to Table 7-5.The equilibrium or market-clearing price is

Correct AnswerverifiedShow Answer

Economists tend to see ticket scalping as

Correct AnswerverifiedShow Answer

A seller's willingness to sell is

Correct AnswerverifiedShow Answer

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