Question 1

Noah drinks Dr.Pepper.He can buy as many cans of Dr.Pepper as he wishes at a price of $0.50 per can.On a particular day,he is willing to pay $0.95 for the first can,$0.80 for the second can,$0.60 for the third can,and $0.40 for the fourth can.Assume Noah is rational in deciding how many cans to buy.His consumer surplus is

Accepted Answer

A)   $0.50.
B)   $0.85.
C)   $1.05.
D)   $1.20.E) C) and D)
F) All of the above

Question 2

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 tickets sell for $20 each,then what is the total consumer surplus in the market?

Accepted Answer

A)   $5
B)   $30
C)   $40
D)   $75E) B) and D)
F) B) and C)

Question 3

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
 
-Refer to Table 7-3.If there is only one unit of the good and if the buyers bid against each other for the right to purchase it,then the consumer surplus will be

Accepted Answer

A)   $0 or slightly more.
B)   $10 or slightly less.
C)   $30 or slightly more.
D)   $45 or slightly less.E) B) and D)
F) C) and D)

Question 4

Unless markets are perfectly competitive,they may fail to maximize the total benefits to buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 5

David tunes pianos in his spare time for extra income.Buyers of his service are willing to pay $150 per tuning.One particular week,David is willing to tune the first piano for $115,the second piano for $125,the third piano for $140,and the fourth piano for $175.Assume David is rational in deciding how many pianos to tune.His producer surplus is

Accepted Answer

A)   $25.
B)   $35.
C)   $70.
D)   $95.E) A) and B)
F) A) and C)

Question 6

When markets fail,public policy can potentially remedy the problem and increase economic efficiency.

Accepted Answer

A) True 
 B)False

Question 7

Tammy loves donuts.The table shown reflects the value Tammy places on each donut she eats:
  
a.
Use this information to construct Tammy's demand curve for donuts.
b.
If the price of donuts is $0.20,how many donuts will Tammy buy?
c.
Show Tammy's consumer surplus on your graph.How much consumer surplus would she have at a price of $0.20?
d.
If the price of donuts rose to $0.40,how many donuts would she purchase now? What would happen to Tammy's consumer surplus? Show this change on your graph.

Accepted Answer

a.b.
At a price of $0.20,Tammy would buy...

Question 8

Figure 7-9 
-Refer to Figure 7-9.If the equilibrium price rises from $50 to $200,what is the producer surplus to new producers?

Accepted Answer

A)   $625
B)   $3,750
C)   $5,625
D)   $10,000E) A) and D)
F) A) and B)

Question 9

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
 
-Refer to Table 7-3.If the market price for the good is $30,who will purchase the good?

Accepted Answer

A)   Carlos only
B)   Carlos and Quilana only
C)   Carlos,Quilana,and Wilbur only
D)   Wilbur and Ming-la onlyE) B) and C)
F) A) and D)

Question 10

Table 7-1
 
-Refer to Table 7-1.If the price of the product is $15,then who would be willing to purchase the product?

Accepted Answer

A)   Mike
B)   Mike and Sandy
C)   Mike,Sandy,and Jonathan
D)   Mike,Sandy,Jonathan,and HaleyE) None of the above
F) A) and B)

Question 11

Figure 7-14 
-Refer to Figure 7-14.Which area represents producer surplus when the price is P1?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) B) and D)
F) C) and D)

Question 12

The area below the price and above the supply curve measures the producer surplus in a market.

Accepted Answer

A) True 
 B)False

Question 13

Figure 7-1 
-Refer to Figure 7-1.When the price is P2,consumer surplus is

Accepted Answer

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

Question 14

Table 7-9
 
-Refer to Table 7-9.Both the demand curve and the supply curve are straight lines.At equilibrium,producer surplus is

Accepted Answer

A)   $24.
B)   $32.
C)   $48.
D)   $64.E) A) and B)
F) B) and C)

Question 15

Figure 7-17 
-Refer to Figure 7-17.At equilibrium,consumer surplus is

Accepted Answer

A)   $36.
B)   $72.
C)   $108.
D)   $144.E) B) and C)
F) All of the above

Question 16

Table 7-1
 
-Refer to Table 7-1.If the price of the product is $18,then the total consumer surplus is

Accepted Answer

A)   $38.
B)   $42.
C)   $46.
D)   $72.E) C) and D)
F) None of the above

Question 17

Producer surplus is

Accepted Answer

A)   represented on a graph by the area below the demand curve and above the supply curve.
B)   the amount a seller is paid minus the cost of production.
C)   also referred to as excess supply.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 18

Figure 7-1 
-Refer to Figure 7-1.Area C represents the

Accepted Answer

A)   decrease in consumer surplus that results from a downward-sloping demand curve.
B)   consumer surplus to new consumers who enter the market when the price falls from P2 to P1.
C)   increase in producer surplus when quantity sold increases from Q2 to Q1.
D)   decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2.E) B) and C)
F) C) and D)

Question 19

Suppose consumer income increases.If grass seed is a normal good,the equilibrium price of grass seed will

Accepted Answer

A)   decrease,and producer surplus in the industry will decrease.
B)   increase,and producer surplus in the industry will increase.
C)   decrease,and producer surplus in the industry will increase.
D)   increase,and producer surplus in the industry will decrease.E) A) and C)
F) B) and C)

Question 20

Figure 7-15 
-Refer to Figure 7-15.If 110 units of the good are being bought and sold,then

Accepted Answer

A)   the marginal cost to sellers is equal to the marginal value to buyers.
B)   the marginal value to buyers is greater than the marginal cost to sellers.
C)   the marginal cost to sellers is greater than the marginal value to buyers.
D)   producer surplus is greater than consumer surplus.E) None of the above
F) A) and B)

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

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3.If there is only one unit of the good and if the buyers bid against each other for the right to purchase it,then the consumer surplus will be

Correct Answer
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Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3.If the market price for the good is $30,who will purchase the good?

Correct Answer
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Suppose consumer income increases.If grass seed is a normal good,the equilibrium price of grass seed will

Correct Answer
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Table 7-1 -Refer to Table 7-1.If the price of the product is $18,then the total consumer surplus is

Correct Answer
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Table 7-9 -Refer to Table 7-9.Both the demand curve and the supply curve are straight lines.At equilibrium,producer surplus is

Correct Answer
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Producer surplus is

Correct Answer
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a.b.
At a price of $0.20,Tammy would buy...
View Answer

Correct Answer
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The area below the price and above the supply curve measures the producer surplus in a market.

Correct Answer
verified

Figure 7-1 -Refer to Figure 7-1.When the price is P2,consumer surplus is

Correct Answer
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Figure 7-17 -Refer to Figure 7-17.At equilibrium,consumer surplus is

Correct Answer
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Figure 7-9 -Refer to Figure 7-9.If the equilibrium price rises from $50 to $200,what is the producer surplus to new producers?

Correct Answer
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Figure 7-15 -Refer to Figure 7-15.If 110 units of the good are being bought and sold,then

Correct Answer
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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 tickets sell for $20 each,then what is the total consumer surplus in the market?

Correct Answer
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Unless markets are perfectly competitive,they may fail to maximize the total benefits to buyers and sellers.

Correct Answer
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Table 7-1 -Refer to Table 7-1.If the price of the product is $15,then who would be willing to purchase the product?

Correct Answer
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Figure 7-1 -Refer to Figure 7-1.Area C represents the

Correct Answer
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Figure 7-14 -Refer to Figure 7-14.Which area represents producer surplus when the price is P1?

Correct Answer
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When markets fail,public policy can potentially remedy the problem and increase economic efficiency.

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

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3.If there is only one unit of the good and if the buyers bid against each other for the right to purchase it,then the consumer surplus will be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3.If the market price for the good is $30,who will purchase the good?

Correct AnswerverifiedShow Answer

Suppose consumer income increases.If grass seed is a normal good,the equilibrium price of grass seed will

Correct AnswerverifiedShow Answer

Table 7-1 -Refer to Table 7-1.If the price of the product is $18,then the total consumer surplus is

Correct AnswerverifiedShow Answer

Table 7-9 -Refer to Table 7-9.Both the demand curve and the supply curve are straight lines.At equilibrium,producer surplus is

Correct AnswerverifiedShow Answer

Producer surplus is

Correct AnswerverifiedShow Answer

Correct Answerverifieda.b.At a price of $0.20,Tammy would buy...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The area below the price and above the supply curve measures the producer surplus in a market.

Correct AnswerverifiedShow Answer

Figure 7-1 -Refer to Figure 7-1.When the price is P2,consumer surplus is

Correct AnswerverifiedShow Answer

Figure 7-17 -Refer to Figure 7-17.At equilibrium,consumer surplus is

Correct AnswerverifiedShow Answer

Figure 7-9 -Refer to Figure 7-9.If the equilibrium price rises from $50 to $200,what is the producer surplus to new producers?

Correct AnswerverifiedShow Answer

Figure 7-15 -Refer to Figure 7-15.If 110 units of the good are being bought and sold,then

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 tickets sell for $20 each,then what is the total consumer surplus in the market?

Correct AnswerverifiedShow Answer

Unless markets are perfectly competitive,they may fail to maximize the total benefits to buyers and sellers.

Correct AnswerverifiedShow Answer

Table 7-1 -Refer to Table 7-1.If the price of the product is $15,then who would be willing to purchase the product?

Correct AnswerverifiedShow Answer

Figure 7-1 -Refer to Figure 7-1.Area C represents the

Correct AnswerverifiedShow Answer

Figure 7-14 -Refer to Figure 7-14.Which area represents producer surplus when the price is P1?

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When markets fail,public policy can potentially remedy the problem and increase economic efficiency.

Correct AnswerverifiedShow Answer

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a.b.
At a price of $0.20,Tammy would buy...
View Answer

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