Question 1

When there is a technological advance in the pork 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) All of the above
F) C) and D)

Question 2

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

Question 3

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) None of the above D

Question 4

Figure 7-8 
-Refer to Figure 7-8.Which area represents the increase in producer surplus when the price rises from P1 to P2?

Accepted Answer

A)   BCG
B)   ACH
C)   ABGD
D)   AHGBE) None of the above
F) All of the above D

Question 5

A drought in California destroys many red grapes.As a result of the drought,the consumer surplus in the market for red grapes

Accepted Answer

A)   increases,and the consumer surplus in the market for red wine increases.
B)   increases,and the consumer surplus in the market for red wine decreases.
C)   decreases,and the consumer surplus in the market for red wine increases.
D)   decreases,and the consumer surplus in the market for red wine decreases.E) C) and D)
F) A) and B)

Question 6

When a buyer's willingness to pay for a good is equal to the price of the good,the

Accepted Answer

A)   buyer's consumer surplus for that good is maximized.
B)   buyer will buy as much of the good as the buyer's budget allows.
C)   price of the good exceeds the value that the buyer places on the good.
D)   buyer is indifferent between buying the good and not buying it.E) B) and D)
F) B) and C)

Question 7

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

Accepted Answer

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

Question 8

Motor oil and gasoline are complements.If the price of motor oil increases,consumer surplus in the gasoline market

Accepted Answer

A)   decreases.
B)   is unchanged.
C)   increases.
D)   may increase,decrease,or remain unchanged.E) B) and D)
F) A) and C)

Question 9

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field.Assume the ticket has no resale value.Willie Nelson is performing on the same night,and his concert is your next-best alternative activity.Tickets to see Willie Nelson cost $40.On any given day,you would be willing to pay up to $50 to see and hear Willie Nelson perform.Assume there are no other costs of seeing either event.Based on this information,at a minimum,how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?

Accepted Answer

A)   $0
B)   $10
C)   $40
D)   $50E) All of the above
F) C) and D)

Question 10

A buyer is willing to buy a product at a price greater than or equal to his willingness to pay,but would refuse to buy a product at a price less than his willingness to pay.

Accepted Answer

A) True 
 B)False

Question 11

Figure 7-21 
-Refer to Figure 7-21.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.E) None of the above
F) A) and C)

Question 12

If an allocation of resources is efficient,then

Accepted Answer

A)   consumer surplus is maximized.
B)   producer surplus is maximized.
C)   all potential gains from trade among buyers are sellers are being realized.
D)   the allocation achieves equality as well.E) A) and B)
F) A) and C)

Question 13

Table 7-11
 
-Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If the price is $4 but only 6 units are bought and sold,producer surplus will be

Accepted Answer

A)   $16.
B)   $18.
C)   $24.
D)   $26.E) All of the above
F) None of the above

Question 14

Figure 7-17 
-Refer to Figure 7-17.Which area represents total surplus in the market when the price is P1?

Accepted Answer

A)   A+B
B)   B+C
C)   C+D
D)   A+B+C+DE) None of the above
F) B) and D)

Question 15

Consumer surplus equals the

Accepted Answer

A)   value to buyers minus the amount paid by buyers.
B)   value to buyers minus the cost to sellers.
C)   amount received by sellers minus the cost to sellers.
D)   amount received by sellers minus the amount paid by buyers.E) All of the above
F) None of the above

Question 16

At Nick's Bakery,the cost to make homemade chocolate cake is $4 per cake.As a result of selling five cakes,Nick experiences a producer surplus in the amount of $17.50.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) All of the above
F) A) and B) B

Question 17

Figure 7-21 
-Refer to Figure 7-21.Buyers who value this good less than the equilibrium price are represented by which line segment?

Accepted Answer

A)   AC.
B)   CK.
C)   BC.
D)   CH.E) A) and B)
F) None of the above

Question 18

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) A) and C)
F) C) and D)

Question 19

Henry is willing to pay 45 cents,and Janine is willing to pay 55 cents,for 1 pound of bananas.When the price of bananas falls from 50 cents a pound to 40 cents a pound,

Accepted Answer

A)   Henry experiences an increase in consumer surplus,but Janine does not.
B)   Janine experiences an increase in consumer surplus,but Henry does not.
C)   both Janine and Henry experience an increase in consumer surplus.
D)   neither Janine nor Henry experiences an increase in consumer surplus.E) A) and B)
F) C) and D)

Question 20

Figure 7-1 
-Refer to Figure 7-1.If the price of the good is $250,then consumer surplus amounts to

Accepted Answer

A)   $50.
B)   $100.
C)   $150.
D)   $200.E) A) and B)
F) A) and D)

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

When there is a technological advance in the pork industry,consumer surplus in that market 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
D

Figure 7-8 -Refer to Figure 7-8.Which area represents the increase in producer surplus when the price rises from P1 to P2?

Correct Answer
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D

A drought in California destroys many red grapes.As a result of the drought,the consumer surplus in the market for red grapes

Correct Answer
verified

When a buyer's willingness to pay for a good is equal to the price of the good,the

Correct Answer
verified

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

Correct Answer
verified

Motor oil and gasoline are complements.If the price of motor oil increases,consumer surplus in the gasoline market

Correct Answer
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Correct Answer
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A buyer is willing to buy a product at a price greater than or equal to his willingness to pay,but would refuse to buy a product at a price less than his willingness to pay.

Correct Answer
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Figure 7-21 -Refer to Figure 7-21.Buyers who value this good more than the equilibrium price are represented by which line segment?

Correct Answer
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If an allocation of resources is efficient,then

Correct Answer
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Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If the price is $4 but only 6 units are bought and sold,producer surplus will be

Correct Answer
verified

Figure 7-17 -Refer to Figure 7-17.Which area represents total surplus in the market when the price is P1?

Correct Answer
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Consumer surplus equals the

Correct Answer
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At Nick's Bakery,the cost to make homemade chocolate cake is $4 per cake.As a result of selling five cakes,Nick experiences a producer surplus in the amount of $17.50.Nick must be selling his cakes for

Correct Answer
verified
B

Figure 7-21 -Refer to Figure 7-21.Buyers who value this good less than the equilibrium price are represented by which line segment?

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

Henry is willing to pay 45 cents,and Janine is willing to pay 55 cents,for 1 pound of bananas.When the price of bananas falls from 50 cents a pound to 40 cents a pound,

Correct Answer
verified

Figure 7-1 -Refer to Figure 7-1.If the price of the good is $250,then consumer surplus amounts to

Correct Answer
verified

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

When there is a technological advance in the pork industry,consumer surplus in that market 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 AnswerverifiedD

Figure 7-8 -Refer to Figure 7-8.Which area represents the increase in producer surplus when the price rises from P1 to P2?

Correct AnswerverifiedD

A drought in California destroys many red grapes.As a result of the drought,the consumer surplus in the market for red grapes

Correct AnswerverifiedShow Answer

When a buyer's willingness to pay for a good is equal to the price of the good,the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Motor oil and gasoline are complements.If the price of motor oil increases,consumer surplus in the gasoline market

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A buyer is willing to buy a product at a price greater than or equal to his willingness to pay,but would refuse to buy a product at a price less than his willingness to pay.

Correct AnswerverifiedShow Answer

Figure 7-21 -Refer to Figure 7-21.Buyers who value this good more than the equilibrium price are represented by which line segment?

Correct AnswerverifiedShow Answer

If an allocation of resources is efficient,then

Correct AnswerverifiedShow Answer

Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If the price is $4 but only 6 units are bought and sold,producer surplus will be

Correct AnswerverifiedShow Answer

Figure 7-17 -Refer to Figure 7-17.Which area represents total surplus in the market when the price is P1?

Correct AnswerverifiedShow Answer

Consumer surplus equals the

Correct AnswerverifiedShow Answer

At Nick's Bakery,the cost to make homemade chocolate cake is $4 per cake.As a result of selling five cakes,Nick experiences a producer surplus in the amount of $17.50.Nick must be selling his cakes for

Correct AnswerverifiedB

Figure 7-21 -Refer to Figure 7-21.Buyers who value this good less than the equilibrium price are represented by which line segment?

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

Henry is willing to pay 45 cents,and Janine is willing to pay 55 cents,for 1 pound of bananas.When the price of bananas falls from 50 cents a pound to 40 cents a pound,

Correct AnswerverifiedShow Answer

Figure 7-1 -Refer to Figure 7-1.If the price of the good is $250,then consumer surplus amounts to

Correct AnswerverifiedShow Answer

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D

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D

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B

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