Question 1

Figure 7-9 
-Refer to Figure 7-9.If the supply curve is S and the demand curve shifts from D to D',what is the increase in producer surplus to existing producers?

Accepted Answer

A)   $625
B)   $2,500
C)   $3,125
D)   $5,625E) B) and C)
F) A) and B)

Question 2

Table 7-10
 
-Refer to Table 7-10.You and your best friend want to hire a professional photographer to take pictures of your two families.The table shows the costs of the four potential sellers in the local photography market.You and your friend take bids from the sellers.Who offers the two winning bids,and what do they offer to charge for the photography sessions?

Accepted Answer

A)   LeBron and Kobe; more than $450 but less than $600
B)   Kevin and Steve; more than $450 but less than $600
C)   LeBron and Kobe; more than $700
D)   Kevin and Steve; less than $400E) C) and D)
F) B) and C)

Question 3

Michael values a stainless steel refrigerator for his new house at $3,500,but he succeeds in buying one for $3,000.Michael's consumer surplus is

Accepted Answer

A)   $500.
B)   $3,000.
C)   $3,500.
D)   $6,500.E) B) and C)
F) All of the above

Question 4

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

Question 5

If the United States legally allowed for a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.

Accepted Answer

A) True 
 B)False

Question 6

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) None of the above
F) A) and D)

Question 7

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Accepted Answer

A)   $15.
B)   $30.
C)   $45.
D)   $90.E) A) and B)
F) A) and C)

Question 8

If the United States changed its laws to allow for the legal sale of a kidney,which of the following is likely to occur?

Accepted Answer

A)   The price of kidneys would rise to balance supply and demand.
B)   The gains from trade would make both buyers and sellers better off.
C)   Thousands of lives would be saved.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 9

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

Question 10

The marginal seller is the seller who

Accepted Answer

A)   cannot compete with the other sellers in the market.
B)   would leave the market first if the price were any lower.
C)   can produce at the lowest cost.
D)   has the largest producer surplus.E) A) and B)
F) A) and D)

Question 11

If Gina sells a shirt for $40,and her producer surplus from the sale is $32,her cost must have been

Accepted Answer

A)   $72.
B)   $32.
C)   $8.
D)   We would have to know the consumer surplus in order to make this determination.E) All of the above
F) A) and D)

Question 12

Table 7-5
For each of three potential buyers of oranges,the table displays the willingness to pay for the first three oranges of the day.Assume Alex,Barb,and Carlos are the only three buyers of oranges,and only three oranges can be supplied per day.
 
-Refer to Table 7-5.Who experiences the largest gain in consumer surplus when the price of an orange decreases from $1.05 to $0.75?

Accepted Answer

A)   Allison
B)   Bob
C)   Charisse
D)   Allison and Bob experience the same gain in consumer surplus,and Charisse's gain is zero.E) None of the above
F) A) and D)

Question 13

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) B) and C)
F) C) and D)

Question 14

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)   $2.50.
B)   $6.50.
C)   $8.00.
D)   $10.00.E) None of the above
F) All of the above

Question 16

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

Accepted Answer

A)   $150.
B)   $200.
C)   $350.
D)   $550.E) All of the above
F) A) and C)

Question 17

Welfare economics is the study of

Accepted Answer

A)   taxes and subsidies.
B)   how technology is best put to use in the production of goods and services.
C)   government welfare programs for needy people.
D)   how the allocation of resources affects economic well-being.E) A) and D)
F) B) and C)

Question 18

Figure 7-20 
-Refer to Figure 7-20.At equilibrium,consumer surplus is

Accepted Answer

A)   $36.
B)   $72.
C)   $108.
D)   $144.E) A) and B)
F) C) and D)

Question 19

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 C)
F) B) and C)

Question 20

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

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

If the United States legally allowed for a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.

Correct Answer
verified

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

Correct Answer
verified

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Correct Answer
verified

The marginal seller is the seller who

Correct Answer
verified

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Correct Answer
verified

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

Correct Answer
verified

Figure 7-20 -Refer to Figure 7-20.At equilibrium,consumer surplus is

Correct Answer
verified

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

Correct Answer
verified

When markets fail,public policy can

Correct Answer
verified

Correct Answer
verified

Michael values a stainless steel refrigerator for his new house at $3,500,but he succeeds in buying one for $3,000.Michael's consumer surplus is

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S and the demand curve shifts from D to D',what is the increase in producer surplus to existing producers?

Correct Answer
verified

Welfare economics is the study of

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

If Gina sells a shirt for $40,and her producer surplus from the sale is $32,her cost must have been

Correct Answer
verified

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 Answer
verified

If the United States changed its laws to allow for the legal sale of a kidney,which of the following is likely to occur?

Correct Answer
verified

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

If the United States legally allowed for a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.

Correct AnswerverifiedShow Answer

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

Correct AnswerverifiedShow Answer

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Correct AnswerverifiedShow Answer

The marginal seller is the seller who

Correct AnswerverifiedShow Answer

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 7-20 -Refer to Figure 7-20.At equilibrium,consumer surplus is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When markets fail,public policy can

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Michael values a stainless steel refrigerator for his new house at $3,500,but he succeeds in buying one for $3,000.Michael's consumer surplus is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S and the demand curve shifts from D to D',what is the increase in producer surplus to existing producers?

Correct AnswerverifiedShow Answer

Welfare economics is the study of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If Gina sells a shirt for $40,and her producer surplus from the sale is $32,her cost must have been

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

If the United States changed its laws to allow for the legal sale of a kidney,which of the following is likely to occur?

Correct AnswerverifiedShow Answer

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