Question 1

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) B) and D)
F) A) and D)

Question 2

Figure 7-18 
-Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

Accepted Answer

A)   $100, then the price of the good is $130.
B)   $130, then the price of the good is $120.
C)   $160, then the price of the good is $100.
D)   $120, then the price of the good is $90.E) A) and B)
F) A) and C)

Question 3

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175, the price of the tickets is $625.

Accepted Answer

A) True 
 B)False

Question 4

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

Accepted Answer

A) True 
 B)False

Question 5

Table 7-7 
-Refer to Table 7-7. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You offer to sell the tickets for $400. How many tickets do you sell, and what is the total consumer surplus in the market?

Accepted Answer

A)   one ticket; $100
B)   two tickets; $100
C)   two tickets; $0
D)   three tickets; $0E) B) and C)
F) C) and D)

Question 6

The distinction between efficiency and equality can be described as follows:

Accepted Answer

A)   Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains from trade among buyers and sellers.
B)   Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers.
C)   Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost.
D)   Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.E) A) and D)
F) None of the above

Question 7

Figure 7-30 
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Accepted Answer

Consumers entering t...

Question 8

If the government imposes a binding price ceiling in a market, then the producer surplus in that market will increase.

Accepted Answer

A) True 
 B)False

Question 9

Figure 7-30 
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

Accepted Answer

Consumer s...

Question 10

All else equal, an increase in demand will always increase consumer surplus.

Accepted Answer

A) True 
 B)False

Question 11

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 12

A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that

Accepted Answer

A)   both the value of MP3 players to consumers and the cost of producing MP3 players has increased.
B)   both the value of MP3 players to consumers and the cost of producing MP3 players has decreased.
C)   the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased.
D)   the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased.E) B) and D)
F) A) and C)

Question 13

Figure 7-8 
-Refer to Figure 7-8. At the equilibrium price, consumer surplus is

Accepted Answer

A)   $1,050.
B)   $1,225.
C)   $1,575.
D)   $2,450.E) A) and C)
F) All of the above

Question 14

Table 7-14
The only four producers in a market have the following costs: 
-Refer to Table 7-14. If the sellers bid against each other for the right to sell the good to a single consumer, then the producer surplus will be

Accepted Answer

A)   $0 or slightly more.
B)   $5 or slightly less.
C)   $10 or slightly less.
D)   $25 or slightly less.E) A) and B)
F) A) and C)

Question 15

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is

Accepted Answer

A)   $800.
B)   $300.
C)   $200.
D)   $500.E) B) and D)
F) A) and C)

Question 16

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

Question 17

Total surplus is represented by the area

Accepted Answer

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

Question 18

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

Accepted Answer

A)   $700
B)   $2,300
C)   $3,000
D)   $3,700E) All of the above
F) C) and D)

Question 19

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) A) and B)

Question 20

Figure 7-21 
-Refer to Figure 7-21. Which area represents producer surplus when the price is P1?

Accepted Answer

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

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

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

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, what will be the selling price?

Correct Answer
verified

Figure 7-21 -Refer to Figure 7-21. Which area represents producer surplus when the price is P1?

Correct Answer
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If the government imposes a binding price ceiling in a market, then the producer surplus in that market will increase.

Correct Answer
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Figure 7-8 -Refer to Figure 7-8. At the equilibrium price, consumer surplus is

Correct Answer
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A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that

Correct Answer
verified

Table 7-14 The only four producers in a market have the following costs: -Refer to Table 7-14. If the sellers bid against each other for the right to sell the good to a single consumer, then the producer surplus will be

Correct Answer
verified

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

Correct Answer
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Consumer s...
View Answer

Total surplus is represented by the area

Correct Answer
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Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Correct Answer
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Consumers entering t...
View Answer

Figure 7-18 -Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

Correct Answer
verified

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175, the price of the tickets is $625.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

All else equal, an increase in demand will always increase consumer surplus.

Correct Answer
verified

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

Correct Answer
verified

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

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is

Correct Answer
verified

If an allocation of resources is efficient, then

Correct Answer
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The distinction between efficiency and equality can be described as follows:

Correct Answer
verified

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

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

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, what will be the selling price?

Correct AnswerverifiedShow Answer

Figure 7-21 -Refer to Figure 7-21. Which area represents producer surplus when the price is P1?

Correct AnswerverifiedShow Answer

If the government imposes a binding price ceiling in a market, then the producer surplus in that market will increase.

Correct AnswerverifiedShow Answer

Figure 7-8 -Refer to Figure 7-8. At the equilibrium price, consumer surplus is

Correct AnswerverifiedShow Answer

A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that

Correct AnswerverifiedShow Answer

Table 7-14 The only four producers in a market have the following costs: -Refer to Table 7-14. If the sellers bid against each other for the right to sell the good to a single consumer, then the producer surplus will be

Correct AnswerverifiedShow Answer

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

Correct AnswerverifiedConsumer s...View AnswerShow Answer

Total surplus is represented by the area

Correct AnswerverifiedShow Answer

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Correct AnswerverifiedConsumers entering t...View AnswerShow Answer

Figure 7-18 -Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

Correct AnswerverifiedShow Answer

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175, the price of the tickets is $625.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

All else equal, an increase in demand will always increase consumer surplus.

Correct AnswerverifiedShow Answer

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

Correct AnswerverifiedShow Answer

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

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is

Correct AnswerverifiedShow Answer

If an allocation of resources is efficient, then

Correct AnswerverifiedShow Answer

The distinction between efficiency and equality can be described as follows:

Correct AnswerverifiedShow Answer

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Consumer s...
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Consumers entering t...
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