Question 1

Which of the following does a demand curve NOT reflect

Accepted Answer

A)  the willingness to pay of all buyers in the market
B)  the value each buyer in the market places on the good
C)  the highest price buyers are willing to pay for each quantity
D)  the ability of buyers to obtain the quantity they desire

Question 2

Table 7-2
 
-Refer to Table 7-2.If the market price is $6.90,who will purchase the good

Accepted Answer

A)  David, Laura, and Ty
B)  Ty, Mallory, and Audrey
C)  Laura and Ty
D)  David and Laura

Question 3

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Accepted Answer

A) True 
 B)False

Question 4

Figure 7-5
 
-Refer to Figure 7-5.What area represents producer surplus when the price is P₁

Accepted Answer

A)  A
B)  B
C)  C
D)  D

Question 5

Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

Accepted Answer

A) True 
 B)False

Question 6

Suppose that the equilibrium price in the market for widgets is $8.If a law increased the minimum legal price for widgets to $9,what would happen to producer surplus

Accepted Answer

A)  It would necessarily increase even if the higher price resulted in a surplus of widgets.
B)  It would necessarily decrease because the higher price would create a surplus of widgets.
C)  It might increase or decrease.
D)  It would be unaffected.

Question 7

Table 7-4
 
-Refer to Table 7-4.At the equilibrium price,what would producer surplus be

Accepted Answer

A)  $18
B)  $24
C)  $36
D)  $48

Question 8

Figure 7-6
​
 
-Refer to Figure 7-6.At the equilibrium price,what would total surplus be

Accepted Answer

A)  $480
B)  $640
C)  $1120
D)  $1280

Question 9

What does producer surplus equal

Accepted Answer

A)  value to buyers minus amount paid by buyers
B)  amount received by sellers minus costs of sellers
C)  amount received by sellers minus amount paid by buyers
D)  value to buyers minus amount received by sellers

Question 10

Figure 7-4
 
-Refer to Figure 7-4.At the price of P₁,what is producer surplus

Accepted Answer

A)  A
B)  A + B
C)  B + C
D)  C + D

Question 11

How can we define consumer surplus in a market

Accepted Answer

A)  It is the area below the demand curve and above the price.
B)  It is the distance from the demand curve to the horizontal axis.
C)  It is the distance from the demand curve to the vertical axis.
D)  It is the area below the demand curve and above the horizontal axis.

Question 12

Figure 7-4
 
-Refer to Figure 7-4.When the price falls from P₂ to P₁,what happens to producer surplus

Accepted Answer

A)  It decreases by an amount equal to A.
B)  It decreases by an amount equal to A + C.
C)  It decreases by an amount equal to A + B.
D)  It increases by an amount equal to A + B.

Question 13

Figure 7-3
 
-Refer to Figure 7-3.Which area represents the increase in producer surplus when the price rises from P₁ to P₂

Accepted Answer

A)  ACF
B)  BCE
C)  ABED
D)  AFEB

Question 14

What will result if production is moved from a high-cost producer to a low-cost producer

Accepted Answer

A)  lower total surplus
B)  higher total surplus
C)  lower producer surplus
D)  higher producer surplus but lower consumer surplus

Question 15

Suppose Lauren,Leslie,and Lyndsay all purchase bulletin boards for their rooms for $20 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lyndsay's willingness to pay was $30.What is the total consumer surplus for these three

Accepted Answer

A)  $10
B)  $20
C)  $30
D)  $40

Question 16

Table 7-4
 
-Refer to Table 7-4.What is the equilibrium or market-clearing price

Accepted Answer

A)  $3
B)  $6
C)  $9
D)  $12

Question 17

Consider the following equation: P = 100 - 2Q.Answer the following questions.
a.What is the consumer surplus when price is equal to $60
b.What is the change of the consumer surplus when price changes to $40

Accepted Answer

a.CS($60) = 1/2*40*20 = 400
b....

Question 18

What does the equilibrium of supply and demand in a market do

Accepted Answer

A)  It maximizes the prices at which producers are willing to sell.
B)  It minimizes the prices that consumers are willing to pay.
C)  It produces both an efficient and equitable market outcome.
D)  It maximizes the total benefits received by buyers and sellers.

Question 19

Shannon buys a new audio system for her car for $335.She receives consumer surplus of $25 on her purchase.What is her willingness to pay

Accepted Answer

A)  $25
B)  $300
C)  $335
D)  $360

Question 20

Market demand is given as QD = 280 - 4P.Market supply is given as QS = - 40 + 2P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Accepted Answer

A)  $800
B)  $1200
C)  $2400
D)  $3600

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

Figure 7-3 -Refer to Figure 7-3.Which area represents the increase in producer surplus when the price rises from P₁ to P₂

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What does producer surplus equal

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Table 7-2 -Refer to Table 7-2.If the market price is $6.90,who will purchase the good

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Figure 7-4 -Refer to Figure 7-4.When the price falls from P₂ to P₁,what happens to producer surplus

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Figure 7-5 -Refer to Figure 7-5.What area represents producer surplus when the price is P₁

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Figure 7-6 ​ -Refer to Figure 7-6.At the equilibrium price,what would total surplus be

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Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

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Which of the following does a demand curve NOT reflect

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The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

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How can we define consumer surplus in a market

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Shannon buys a new audio system for her car for $335.She receives consumer surplus of $25 on her purchase.What is her willingness to pay

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What does the equilibrium of supply and demand in a market do

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What will result if production is moved from a high-cost producer to a low-cost producer

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Suppose that the equilibrium price in the market for widgets is $8.If a law increased the minimum legal price for widgets to $9,what would happen to producer surplus

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Figure 7-4 -Refer to Figure 7-4.At the price of P₁,what is producer surplus

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Consider the following equation: P = 100 - 2Q.Answer the following questions. a.What is the consumer surplus when price is equal to $60 b.What is the change of the consumer surplus when price changes to $40

Correct Answerverifieda.CS($60) = 1/2*40*20 = 400b....View AnswerShow Answer

Market demand is given as QD = 280 - 4P.Market supply is given as QS = - 40 + 2P.In a perfectly competitive equilibrium,what will be the value of producer surplus

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Table 7-4 -Refer to Table 7-4.At the equilibrium price,what would producer surplus be

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Table 7-4 -Refer to Table 7-4.What is the equilibrium or market-clearing price

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Suppose Lauren,Leslie,and Lyndsay all purchase bulletin boards for their rooms for $20 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lyndsay's willingness to pay was $30.What is the total consumer surplus for these three

Correct AnswerverifiedShow Answer

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Figure 7-6 -Refer to Figure 7-6.At the equilibrium price,what would total surplus be

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a.CS($60) = 1/24020 = 400
b....
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Market demand is given as Q_D= 280 - 4P.Market supply is given as Q_S= - 40 + 2P.In a perfectly competitive equilibrium,what will be the value of producer surplus

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