Question 1

If the demand for a good or service decreases,producer surplus

Accepted Answer

A)   increases.
B)   decreases.
C)   remains the same.
D)   may increase,decrease,or remain the same.E) None of the above
F) A) and C)

Question 2

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

Accepted Answer

A)   $8.
B)   $12.
C)   $16.
D)   $32.E) A) and C)
F) B) and D)

Question 3

Which of the following is correct?

Accepted Answer

A)   Efficiency deals with the size of the economic pie,and equality deals with how fairly the pie is sliced.
B)   Equality can be judged on positive grounds whereas efficiency requires normative judgments.
C)   Efficiency is more difficult to evaluate than equality.
D)   Equality and efficiency are both maximized in a society when total surplus is maximized.E) B) and C)
F) None of the above

Question 4

At Nick's Bakery,the cost to make homemade chocolate cake is $3 per cake.As a result of selling three cakes,Nick experiences a producer surplus in the amount of $19.50.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) None of the above
F) A) and B)

Question 5

Suppose Larry,Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

Accepted Answer

A)   a resistance price.
B)   willingness to pay.
C)   consumer surplus.
D)   producer surplus.E) None of the above
F) B) and C)

Question 6

Table 7-8
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
 
-Refer to Table 7-8.You wish to purchase 10 piano lessons,so you take bids from each of the sellers.The bids are required to be rounded to the nearest dollar.You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons.Your parents have given you $450 to spend on piano lessons.You believe that the sellers with higher opportunity costs offer higher quality lessons.You want the highest quality lessons that you can afford,but you can spend any remaining money on dinner with friends.From whom will you take lessons,and how much money will you spend?

Accepted Answer

A)   Peter;$450
B)   Cindy;$450
C)   Greg;$401
D)   Cindy;$401E) C) and D)
F) A) and D)

Question 7

David tunes pianos in his spare time for extra income.Buyers of his service are willing to pay $135 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)   $-15.
B)   $20.
C)   $30.
D)   $75.E) C) and D)
F) B) and D)

Question 8

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

Accepted Answer

A)   BCG
B)   ACH
C)   DGH
D)   ABGDE) All of the above
F) A) and D)

Question 9

Figure 7-7 
-Refer to Figure 7-7.Which area represents producer surplus when the price is P2?

Accepted Answer

A)   BCG
B)   ACH
C)   ABGD
D)   AHGBE) C) and D)
F) B) and C)

Question 10

Willingness to pay

Accepted Answer

A)   measures the value that a buyer places on a good.
B)   is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept.
C)   is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept.
D)   is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.E) A) and B)
F) None of the above

Question 11

A demand curve reflects each of the following except the

Accepted Answer

A)   willingness to pay of all buyers in the market.
B)   value each buyer in the market places on the good.
C)   highest price buyers are willing to pay for each quantity.
D)   ability of buyers to obtain the quantity they desire.E) None of the above
F) A) and B)

Question 12

Table 7-5
For each of three potential buyers of oranges,the table displays the willingness to pay for the first three oranges of the day.Assume Alex,Barb,and Carlos are the only three buyers of oranges,and only three oranges can be supplied per day.
 
-Refer to Table 7-5.Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40?

Accepted Answer

A)   Alex
B)   Barb
C)   Carlos
D)   All three individuals experience the same loss of consumer surplus.E) None of the above
F) All of the above

Question 13

In a market,the marginal buyer is the buyer

Accepted Answer

A)   whose willingness to pay is higher than that of all other buyers and potential buyers.
B)   whose willingness to pay is lower than that of all other buyers and potential buyers.
C)   who is willing to buy exactly one unit of the good.
D)   who would be the first to leave the market if the price were any higher.E) A) and D)
F) A) and C)

Question 14

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 15

Dallas buys strawberries,and he would be willing to pay more than he now pays.Suppose that Dallas has a change in his tastes such that he values strawberries more than before.If the market price is the same as before,then

Accepted Answer

A)   Dallas's consumer surplus would be unaffected.
B)   Dallas's consumer surplus would increase.
C)   Dallas's consumer surplus would decrease.
D)   Dallas would be wise to buy fewer strawberries than before.E) A) and D)
F) B) and C)

Question 16

Table 7-1
 
-Refer to Table 7-1.If the price of the product is $22,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) A) and B)
F) A) and D)

Question 17

Figure 7-15 
-Refer to Figure 7-15.If 40 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 would be greater than consumer surplus.E) All of the above
F) A) and B)

Question 18

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

Accepted Answer

A)   maximizes costs of the seller.
B)   maximizes tax revenue for the government.
C)   maximizes the combined welfare of buyers and sellers.
D)   minimizes the expenditure of buyers.E) None of the above
F) A) and B)

Question 19

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

Accepted Answer

A)   $0 or slightly more.
B)   $50 or slightly less.
C)   $150 or slightly less.
D)   $200 or slightly more.E) A) and B)
F) B) and C)

Question 20

Consumer surplus can be measured as the area between the demand curve and the supply curve.

Accepted Answer

A) True 
 B)False

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

At Nick's Bakery,the cost to make homemade chocolate cake is $3 per cake.As a result of selling three cakes,Nick experiences a producer surplus in the amount of $19.50.Nick must be selling his cakes for

Correct Answer
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A demand curve reflects each of the following except the

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

Correct Answer
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If the demand for a good or service decreases,producer surplus

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,consumer surplus is

Correct Answer
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Welfare economics is the study of

Correct Answer
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Figure 7-7 -Refer to Figure 7-7.Which area represents producer surplus when the price is P2?

Correct Answer
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The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

Correct Answer
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Suppose Larry,Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

Correct Answer
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Consumer surplus can be measured as the area between the demand curve and the supply curve.

Correct Answer
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Table 7-1 -Refer to Table 7-1.If the price of the product is $22,then who would be willing to purchase the product?

Correct Answer
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In a market,the marginal buyer is the buyer

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

Correct Answer
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Figure 7-15 -Refer to Figure 7-15.If 40 units of the good are being bought and sold,then

Correct Answer
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Dallas buys strawberries,and he would be willing to pay more than he now pays.Suppose that Dallas has a change in his tastes such that he values strawberries more than before.If the market price is the same as before,then

Correct Answer
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Willingness to pay

Correct Answer
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Which of the following is correct?

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

At Nick's Bakery,the cost to make homemade chocolate cake is $3 per cake.As a result of selling three cakes,Nick experiences a producer surplus in the amount of $19.50.Nick must be selling his cakes for

Correct AnswerverifiedShow Answer

A demand curve reflects each of the following except the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the demand for a good or service decreases,producer surplus

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Welfare economics is the study of

Correct AnswerverifiedShow Answer

Figure 7-7 -Refer to Figure 7-7.Which area represents producer surplus when the price is P2?

Correct AnswerverifiedShow Answer

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

Correct AnswerverifiedShow Answer

Suppose Larry,Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

Correct AnswerverifiedShow Answer

Consumer surplus can be measured as the area between the demand curve and the supply curve.

Correct AnswerverifiedShow Answer

Table 7-1 -Refer to Table 7-1.If the price of the product is $22,then who would be willing to purchase the product?

Correct AnswerverifiedShow Answer

In a market,the marginal buyer is the buyer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 7-15 -Refer to Figure 7-15.If 40 units of the good are being bought and sold,then

Correct AnswerverifiedShow Answer

Dallas buys strawberries,and he would be willing to pay more than he now pays.Suppose that Dallas has a change in his tastes such that he values strawberries more than before.If the market price is the same as before,then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Willingness to pay

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Which of the following is correct?

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