Question 1

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, what will be the selling price?

Accepted Answer

A)  slightly more than $20.
B)  slightly more than $25.
C)  slightly more than $50.
D)  slightly more than $60.E) None of the above
F) C) and D)

Question 2

Producer surplus is

Accepted Answer

A)  measured using the demand curve for a good.
B)  always a negative number for sellers in a competitive market.
C)  the amount a seller is paid minus the cost of production.
D)  the opportunity cost of production minus the cost of producing goods that go unsold.E) All of the above
F) B) and C)

Question 3

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

Accepted Answer

A)  40.
B)  200.
C)  8.
D)  50.E) A) and B)
F) None of the above

Question 4

Figure 7-13 
-Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producers in the market?

Accepted Answer

A)  $1,200
B)  $2,400
C)  $3,600
D)  $4,800E) B) and D)
F) B) and C)

Question 5

Table 7-11
The only four producers in a market have the following costs:
Seller
Cost
Evan
$50
Selena
$100
Angie
$150
Kris
$200
-Refer to Table 7-11. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

Accepted Answer

A)  $200.
B)  $300.
C)  $450.
D)  $600.E) A) and C)
F) C) and D)

Question 6

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Accepted Answer

A) True 
 B)False

Question 7

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Accepted Answer

A) True 
 B)False

Question 8

Figure 7-15 
-Refer to Figure 7-15. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Accepted Answer

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

Question 9

Figure 7-34 
-Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the government removed the price ceiling, by how much would total producer surplus change?

Accepted Answer

Total producer surplus with th...

Question 10

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

Question 11

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

Question 12

Total surplus is

Accepted Answer

A)  equal to consumer surplus minus producer surplus.
B)  equal to the total value to buyers minus the total cost to sellers.
C)  equal to consumers' willingness to pay plus producers' cost.
D)  greater than the sum of consumer surplus plus producer surplus.E) A) and B)
F) None of the above

Question 13

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

Question 14

Figure 7-21 
-Refer to Figure 7-21. When the price is P1, area B+C represents

Accepted Answer

A)  total surplus.
B)  producer surplus.
C)  consumer surplus.
D)  None of the above is correct.E) None of the above
F) All of the above

Question 15

Figure 7-29 
-Refer to Figure 7-29. Which of the following statements is correct?

Accepted Answer

A)  The market is in equilibrium at Q1.
B)  At Q2, the cost to sellers exceeds the value to buyers.
C)  At Q4, the value to buyers is less than the cost to sellers.
D)  At Q3, the market is producing too much output.E) C) and D)
F) A) and C)

Question 16

Figure 7-11 
-Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

Accepted Answer

A)  Producer surplus increases by $3,125.
B)  Producer surplus increases by $5,625.
C)  Producer surplus decreases by $3,125.
D)  Producer surplus decreases by $5,625.E) A) and B)
F) B) and C)

Question 17

Total surplus in a market can be measured as the area below the supply curve plus the area above the demand curve, up to the point of equilibrium.

Accepted Answer

A) True 
 B)False

Question 18

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is

Accepted Answer

A)  $650.
B)  $150.
C)  $250.
D)  $400.E) A) and B)
F) None of the above

Question 19

Producer surplus directly measures

Accepted Answer

A)  the well-being of society as a whole.
B)  the well-being of buyers and sellers.
C)  the well-being of sellers.
D)  sellers' willingness to sell.E) A) and D)
F) B) and D)

Question 20

Total surplus is

Accepted Answer

A)  the total cost to sellers of providing the good minus the total value of the good to buyers.
B)  the total value of the good to buyers minus the cost to sellers of providing the good.
C)  the difference between consumer surplus and sellers' cost.
D)  always smaller than producer surplus.E) A) and B)
F) A) and C)

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

Table 7-11 The only four producers in a market have the following costs: Seller Cost Evan $50 Selena $100 Angie $150 Kris $200 -Refer to Table 7-11. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

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At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

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Figure 7-11 -Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

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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

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Figure 7-15 -Refer to Figure 7-15. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

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Figure 7-29 -Refer to Figure 7-29. Which of the following statements is correct?

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Total surplus is

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Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

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Total surplus is

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Figure 7-21 -Refer to Figure 7-21. When the price is P1, area B+C represents

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Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the government removed the price ceiling, by how much would total producer surplus change?

Correct AnswerverifiedTotal producer surplus with th...View AnswerShow Answer

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

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

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Total surplus in a market can be measured as the area below the supply curve plus the area above the demand curve, up to the point of equilibrium.

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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, what will be the selling price?

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If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

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Producer surplus is

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Producer surplus directly measures

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Figure 7-13 -Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producers in the market?

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Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is

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