Question 1

Consumer surplus

Accepted Answer

A)   is the amount of a good that a consumer can buy at a price below equilibrium price.
B)   is the amount a consumer is willing to pay minus the amount the consumer actually pays.
C)   is the number of consumers who are excluded from a market because of scarcity.
D)   measures how much a seller values a good.E) None of the above
F) B) and D)

Question 2

Figure 7-18 
-Refer to Figure 7-18.At the equilibrium price,total surplus is

Accepted Answer

A)   $480.
B)   $640.
C)   $1,120.
D)   $1,280.E) A) and B)
F) C) and D)

Question 3

Welfare economics is the study of how

Accepted Answer

A)   the allocation of resources affects economic well-being.
B)   a price ceiling compares to a price floor.
C)   the government helps poor people.
D)   a consumer's optimal choice affects her demand curve.E) A) and B)
F) C) and D)

Question 4

Welfare economics is the study of

Accepted Answer

A)   the well-being of less fortunate people.
B)   welfare programs in the United States.
C)   how the allocation of resources affects economic well-being.
D)   the effect of income redistribution on work effort.E) A) and B)
F) A) and C)

Question 5

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 C)
F) A) and D)

Question 6

If the price of oak lumber increases,what happens to consumer surplus in the market for oak cabinets?

Accepted Answer

A)   Consumer surplus increases.
B)   Consumer surplus decreases.
C)   Consumer surplus will not change consumer surplus;only producer surplus changes.
D)   Consumer surplus depends on what event led to the increase in the price of oak lumber.E) C) and D)
F) B) and D)

Question 7

Figure 7-9 
-Refer to Figure 7-9.If the supply curve is S,the demand curve is D,and the equilibrium price is $100,what is the producer surplus?

Accepted Answer

A)   $625
B)   $1,250
C)   $2,500
D)   $5,000E) A) and D)
F) C) and D)

Question 8

Figure 7-13 
-Refer to Figure 7-13.If the price of the good is $300,then producer surplus amounts to

Accepted Answer

A)   $100.
B)   $200.
C)   $300.
D)   $400.E) All of the above
F) A) and B)

Question 9

Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs.St.Louis Cardinal's baseball game at Wrigley Field.
 
-Refer to Table 7-4.If you have a ticket that you sell to the group in an auction,who will buy the ticket?

Accepted Answer

A)   Dan
B)   David
C)   Ken
D)   LisaE) A) and B)
F) All of the above

Question 10

Efficiency is related to the size of the economic pie,whereas equality is related to how the pie gets sliced and distributed.

Accepted Answer

A) True 
 B)False

Question 11

Suppose you sell a kayak for $600,but you were willing to sell it for $450.The buyer was willing to pay $650.The total surplus is $200.

Accepted Answer

A) True 
 B)False

Question 12

Figure 7-19 
-Refer to Figure 7-19.At equilibrium,consumer surplus is represented by the area

Accepted Answer

A)   A.
B)   A+B+C.
C)   D+H+F.
D)   A+B+C+D+H+F.E) A) and C)
F) A) and B)

Question 13

The "invisible hand" is

Accepted Answer

A)   used to describe the welfare system in the United States.
B)   a concept developed by Adam Smith to describe the virtues of free markets.
C)   a concept used by J.M.Keynes to describe the role of government in guiding the allocation of resources in the economy.
D)   a term used by some economists to characterize the role of government in an economy - inevitable but invisible.E) C) and D)
F) A) and D)

Question 14

Suppose there is an early freeze in California that reduces the size of the lemon crop.What happens to consumer surplus in the market for lemons?

Accepted Answer

A)   Consumer surplus increases.
B)   Consumer surplus decreases.
C)   Consumer surplus is not affected by this change in market forces.
D)   We would have to know whether the demand for lemons is elastic or inelastic to make this determination.E) A) and C)
F) All of the above

Question 15

Raisin bran and milk are complements.An increase 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 B)

Question 16

Total surplus in a market is equal to

Accepted Answer

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

Question 17

Chuck would be willing to pay $20 to attend a dog show,but he buys a ticket for $15.Chuck values the dog show at

Accepted Answer

A)   $5.
B)   $15.
C)   $20.
D)   $35.E) A) and D)
F) A) and B)

Question 18

Producer surplus is the area

Accepted Answer

A)   under the supply curve.
B)   between the supply and demand curves.
C)   below the price and above the supply curve.
D)   under the demand curve and above the price.E) B) and C)
F) None of the above

Question 19

Caroline sharpens knives in her spare time for extra income.Buyers of her service are willing to pay $2.95 per knife for as many knives as Caroline is willing to sharpen.On a particular day,she is willing to sharpen the first knife for $2.00,the second knife for $2.25,the third knife for $2.75,and the fourth knife for $3.50.Assume Caroline is rational in deciding how many knives to sharpen.Her producer surplus is

Accepted Answer

A)   $0.95.
B)   $1.15.
C)   $1.30.
D)   $1.85.E) None of the above
F) C) and D)

Question 20

Figure 7-12 
-Refer to Figure 7-12.When the price rises from P1 to P2,which area represents the increase in producer surplus due to new producers entering the market?

Accepted Answer

A)   A
B)   B
C)   A+B
D)   GE) B) and D)
F) A) and B)

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

Efficiency is related to the size of the economic pie,whereas equality is related to how the pie gets sliced and distributed.

Correct Answer
verified

Suppose you sell a kayak for $600,but you were willing to sell it for $450.The buyer was willing to pay $650.The total surplus is $200.

Correct Answer
verified

Suppose there is an early freeze in California that reduces the size of the lemon crop.What happens to consumer surplus in the market for lemons?

Correct Answer
verified

Consumer surplus

Correct Answer
verified

Raisin bran and milk are complements.An increase in the price of raisins will

Correct Answer
verified

Producer surplus is the area

Correct Answer
verified

Figure 7-13 -Refer to Figure 7-13.If the price of the good is $300,then producer surplus amounts to

Correct Answer
verified

Welfare economics is the study of how

Correct Answer
verified

Figure 7-18 -Refer to Figure 7-18.At the equilibrium price,total surplus is

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Figure 7-12 -Refer to Figure 7-12.When the price rises from P1 to P2,which area represents the increase in producer surplus due to new producers entering the market?

Correct Answer
verified

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S,the demand curve is D,and the equilibrium price is $100,what is the producer surplus?

Correct Answer
verified

Chuck would be willing to pay $20 to attend a dog show,but he buys a ticket for $15.Chuck values the dog show at

Correct Answer
verified

The "invisible hand" is

Correct Answer
verified

If the price of oak lumber increases,what happens to consumer surplus in the market for oak cabinets?

Correct Answer
verified

Figure 7-19 -Refer to Figure 7-19.At equilibrium,consumer surplus is represented by the area

Correct Answer
verified

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs.St.Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4.If you have a ticket that you sell to the group in an auction,who will buy the ticket?

Correct Answer
verified

Total surplus in a market is equal to

Correct Answer
verified

Correct Answer
verified

Welfare economics is the study of

Correct Answer
verified

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

Efficiency is related to the size of the economic pie,whereas equality is related to how the pie gets sliced and distributed.

Correct AnswerverifiedShow Answer

Suppose you sell a kayak for $600,but you were willing to sell it for $450.The buyer was willing to pay $650.The total surplus is $200.

Correct AnswerverifiedShow Answer

Suppose there is an early freeze in California that reduces the size of the lemon crop.What happens to consumer surplus in the market for lemons?

Correct AnswerverifiedShow Answer

Consumer surplus

Correct AnswerverifiedShow Answer

Raisin bran and milk are complements.An increase in the price of raisins will

Correct AnswerverifiedShow Answer

Producer surplus is the area

Correct AnswerverifiedShow Answer

Figure 7-13 -Refer to Figure 7-13.If the price of the good is $300,then producer surplus amounts to

Correct AnswerverifiedShow Answer

Welfare economics is the study of how

Correct AnswerverifiedShow Answer

Figure 7-18 -Refer to Figure 7-18.At the equilibrium price,total surplus is

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Figure 7-12 -Refer to Figure 7-12.When the price rises from P1 to P2,which area represents the increase in producer surplus due to new producers entering the market?

Correct AnswerverifiedShow Answer

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S,the demand curve is D,and the equilibrium price is $100,what is the producer surplus?

Correct AnswerverifiedShow Answer

Chuck would be willing to pay $20 to attend a dog show,but he buys a ticket for $15.Chuck values the dog show at

Correct AnswerverifiedShow Answer

The "invisible hand" is

Correct AnswerverifiedShow Answer

If the price of oak lumber increases,what happens to consumer surplus in the market for oak cabinets?

Correct AnswerverifiedShow Answer

Figure 7-19 -Refer to Figure 7-19.At equilibrium,consumer surplus is represented by the area

Correct AnswerverifiedShow Answer

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs.St.Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4.If you have a ticket that you sell to the group in an auction,who will buy the ticket?

Correct AnswerverifiedShow Answer

Total surplus in a market is equal to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Welfare economics is the study of

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified