Question 1

When markets fail,public policy can

Accepted Answer

A)   do nothing to improve the situation.
B)   potentially remedy the problem and increase economic efficiency.
C)   always remedy the problem and increase economic efficiency.
D)   in theory,remedy the problem,but in practice,public policy has proven to be ineffective.E) A) and D)
F) B) and C)

Question 2

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 C)
F) A) and D)

Question 3

Raisin bran and milk are complementary goods.A decrease in the price of raisins will

Accepted Answer

A)   increase consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk.
B)   increase consumer surplus in the market for raisin bran and increase producer surplus in the market for milk.
C)   decrease consumer surplus in the market for raisin bran and increase producer surplus in the market for milk.
D)   decrease consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk.E) None of the above
F) A) and D)

Question 4

Total surplus in a market is equal to

Accepted Answer

A)   value to buyers - amount paid by buyers.
B)   amount received by sellers - costs of sellers.
C)   value to buyers - costs of sellers.
D)   amount received by sellers - amount paid by buyers.E) B) and C)
F) A) and B)

Question 5

Ally mows lawns for a living.Ally's out-of-pocket expenses (for equipment,gasoline,and so on) plus the value that she places on her own time amount to her

Accepted Answer

A)   producer surplus.
B)   producer deficit.
C)   cost of mowing lawns.
D)   profit.E) All of the above
F) A) and B)

Question 6

Table 7-9
 
-Refer to Table 7-9.Both the demand curve and the supply curve are straight lines.If the price is $8 but only 4 units are bought and sold,producer surplus will be

Accepted Answer

A)   $24.
B)   $28.
C)   $32.
D)   $40.E) None of the above
F) B) and C)

Question 7

If the government imposes a binding price floor in a market,then the consumer surplus in that market will decrease.

Accepted Answer

A) True 
 B)False

Question 8

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) A) and B)

Question 9

If the price a consumer pays for a product is equal to a consumer's willingness to pay,then the consumer surplus relevant to that purchase is

Accepted Answer

A)   zero.
B)   negative,and the consumer would not purchase the product.
C)   positive,and the consumer would purchase the product.
D)   There is not enough information given to answer this question.E) None of the above
F) A) and D)

Question 10

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.E) None of the above
F) A) and B)

Question 11

Cameron visits a sporting goods store to buy a new set of golf clubs.He is willing to pay $750 for the clubs but buys them on sale for $575.Cameron's consumer surplus from the purchase is

Accepted Answer

A)   $175.
B)   $575.
C)   $750.
D)   $1,325.E) B) and D)
F) C) and D)

Question 12

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) B) and C)
F) A) and C)

Question 13

Which of the following statements is not correct?

Accepted Answer

A)   A seller would be eager to sell her product at a price higher than her cost.
B)   A seller would refuse to sell her product at a price lower than her cost.
C)   A seller would be indifferent about selling her product at a price equal to her cost.
D)   Since sellers cannot set the price for their product,they must be willing to sell their product at any price.E) B) and D)
F) A) and C)

Question 14

Laissez-faire is a French expression which literally means

Accepted Answer

A)   to make do.
B)   to get involved.
C)   whatever works.
D)   allow them to do.E) C) and D)
F) All of the above

Question 15

Chad is willing to pay $5.00 to get his first cup of morning latté;he is willing to pay $4.50 for a second cup.He buys his first cup from a vendor selling latté for $3.75 per cup.He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup.Chad buys a second cup.Which of the following statements is correct?

Accepted Answer

A)   Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté.
B)   Chad's consumer surplus on his second cup of latté was larger than his consumer surplus on his first cup of latté.
C)   Chad is irrational in that he is willing to pay a different price for his second cup of latté than what he is willing to pay for his first cup of latté.
D)   Chad places a higher value on his second cup of latté than on his first cup of latté.E) B) and D)
F) A) and B)

Question 16

Total surplus in a market will increase when the government

Accepted Answer

A)   imposes a binding price floor or a binding price ceiling on that market.
B)   imposes a tax on that market.
C)   Both a and b are correct.
D)   Neither a nor b is correct.E) A) and B)
F) B) and D)

Question 17

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

Accepted Answer

A) True 
 B)False

Question 18

Total surplus is represented by the area below the

Accepted Answer

A)   demand curve and above the price.
B)   price and up to the point of equilibrium.
C)   demand curve and above the supply curve,up to the equilibrium quantity.
D)   demand curve and above the horizontal axis,up to the equilibrium quantity.E) A) and B)
F) C) and D)

Question 19

On a graph,the area below a demand curve and above the price measures

Accepted Answer

A)   producer surplus.
B)   consumer surplus.
C)   deadweight loss.
D)   willingness to pay.E) A) and B)
F) A) and C)

Question 20

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 most if not all types of market failures.E) All of the above
F) A) and D)

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

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

Correct Answer
verified

Total surplus is represented by the area below the

Correct Answer
verified

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

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

Table 7-9 -Refer to Table 7-9.Both the demand curve and the supply curve are straight lines.If the price is $8 but only 4 units are bought and sold,producer surplus will be

Correct Answer
verified

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

Correct Answer
verified

Correct Answer
verified

Ally mows lawns for a living.Ally's out-of-pocket expenses (for equipment,gasoline,and so on) plus the value that she places on her own time amount to her

Correct Answer
verified

Laissez-faire is a French expression which literally means

Correct Answer
verified

If the government imposes a binding price floor in a market,then the consumer surplus in that market will decrease.

Correct Answer
verified

Total surplus in a market is equal to

Correct Answer
verified

When markets fail,public policy can

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Cameron visits a sporting goods store to buy a new set of golf clubs.He is willing to pay $750 for the clubs but buys them on sale for $575.Cameron's consumer surplus from the purchase is

Correct Answer
verified

Raisin bran and milk are complementary goods.A decrease in the price of raisins will

Correct Answer
verified

On a graph,the area below a demand curve and above the price measures

Correct Answer
verified

Total surplus in a market will increase when the government

Correct Answer
verified

If the price a consumer pays for a product is equal to a consumer's willingness to pay,then the consumer surplus relevant to that purchase is

Correct Answer
verified

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

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

Correct AnswerverifiedShow Answer

Total surplus is represented by the area below the

Correct AnswerverifiedShow Answer

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

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

Table 7-9 -Refer to Table 7-9.Both the demand curve and the supply curve are straight lines.If the price is $8 but only 4 units are bought and sold,producer surplus will be

Correct AnswerverifiedShow Answer

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Ally mows lawns for a living.Ally's out-of-pocket expenses (for equipment,gasoline,and so on) plus the value that she places on her own time amount to her

Correct AnswerverifiedShow Answer

Laissez-faire is a French expression which literally means

Correct AnswerverifiedShow Answer

If the government imposes a binding price floor in a market,then the consumer surplus in that market will decrease.

Correct AnswerverifiedShow Answer

Total surplus in a market is equal to

Correct AnswerverifiedShow Answer

When markets fail,public policy can

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Cameron visits a sporting goods store to buy a new set of golf clubs.He is willing to pay $750 for the clubs but buys them on sale for $575.Cameron's consumer surplus from the purchase is

Correct AnswerverifiedShow Answer

Raisin bran and milk are complementary goods.A decrease in the price of raisins will

Correct AnswerverifiedShow Answer

On a graph,the area below a demand curve and above the price measures

Correct AnswerverifiedShow Answer

Total surplus in a market will increase when the government

Correct AnswerverifiedShow Answer

If the price a consumer pays for a product is equal to a consumer's willingness to pay,then the consumer surplus relevant to that purchase is

Correct AnswerverifiedShow Answer

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