Question 1

Producer surplus equals

Accepted Answer

A)   Value to buyers - Amount paid by buyers.
B)   Amount received by sellers - Costs of sellers.
C)   Value to buyers - Costs of sellers.
D)   Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers.

Question 2

Table 7-11
 
-Refer to Table 7-11.At a price of $2.00,total surplus is

Accepted Answer

A)   larger than it would be at the equilibrium price.
B)   smaller than it would be at the equilibrium price.
C)   the same as it would be at the equilibrium price.
D)   There is insufficient information to make this determination.

Question 3

Chuck would be willing to pay $20 to attend a dog show,but he buys a ticket for $15.Chuck values the dog show at

Accepted Answer

A)   $5.
B)   $15.
C)   $20.
D)   $35.

Question 4

Figure 7-21 
-Refer to Figure 7-21.Sellers whose costs are less than the equilibrium price are represented by which line segment?

Accepted Answer

A)   AC.
B)   CK.
C)   BC.
D)   CH.

Question 5

A simultaneous increase 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.

Question 6

Figure 7-17 
-Refer to Figure 7-17.Which area represents consumer surplus when the price is P1?

Accepted Answer

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

Question 7

An example of normative analysis is studying

Accepted Answer

A)   how market forces produce equilibrium.
B)   surpluses and shortages.
C)   whether equilibrium outcomes are socially desirable.
D)   income distributions.

Question 8

Figure 7-9 
-Refer to Figure 7-9.If the supply curve is S',the demand curve is D,and the equilibrium price is $150,what is the producer surplus?

Accepted Answer

A)   $625
B)   $1,250
C)   $2,500
D)   $5,000

Question 9

Suppose Katie,Kendra,and Kristen each purchase a particular type of cell phone at a price of $80.Katie's willingness to pay was $100,Kendra's willingness to pay was $95,and Kristen's willingness to pay was $80.Which of the following statements is correct?

Accepted Answer

A)   For the three individuals together,consumer surplus amounts to $35.
B)   Having bought the cell phone,Kristen is better off than she would have been had she not bought it.
C)   Had the price of the cell phone been $95 rather than $80,Katie and Kendra definitely would have been buyers and Kristen definitely would not have been a buyer.
D)   The fact that all three individuals paid $80 for the same type of cell phone indicates that each one placed the same value on that cell phone.

Question 10

Answer each of the following questions about supply and producer surplus.
a.
What is producer surplus,and how is it measured?
b.
What is the relationship between the cost to sellers and the supply curve?
c.
Other things equal,what happens to producer surplus when the price of a good rises? Illustrate your answer on a supply curve.

Accepted Answer

a. Producer surplus measures the benefit...

Question 11

Producer surplus is the amount a seller is paid minus the cost of production.

Accepted Answer

A) True 
 B)False

Question 12

We can say that the allocation of resources is efficient if

Accepted Answer

A)   producer surplus is maximized.
B)   consumer surplus is maximized.
C)   total surplus is maximized.
D)   sellers' costs are minimized.

Question 13

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Accepted Answer

A)   Consumer surplus decreases.
B)   Consumer surplus remains unchanged.
C)   Consumer surplus increases.
D)   Consumer surplus may increase,decrease,or remain unchanged.

Question 14

Figure 7-8 
-Refer to Figure 7-8.Which area represents producer surplus when the price is P2?

Accepted Answer

A)   BCG
B)   ACH
C)   ABGD
D)   AHGB

Question 15

Efficiency refers to whether a market outcome is fair,while equality refers to whether the maximum amount of output was produced from a given number of inputs.

Accepted Answer

A) True 
 B)False

Question 16

Raisin bran and milk are complements.An increase in the price of raisins will

Accepted Answer

A)   increase consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk.
B)   increase consumer surplus in the market for raisin bran and increase producer surplus in the market for milk.
C)   decrease consumer surplus in the market for raisin bran and increase producer surplus in the market for milk.
D)   decrease consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk.

Question 17

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.

Question 18

According to many economists,government restrictions on ticket scalping do all of the following except

Accepted Answer

A)   inconvenience the public.
B)   reduce the audience for cultural and sports events.
C)   waste police officers' time.
D)   keep the cost of tickets to all consumers low.

Question 19

If the current allocation of resources in the market for wallpaper is efficient,then it must be the case that

Accepted Answer

A)   producer surplus equals consumer surplus in the market for wallpaper.
B)   the market for wallpaper is in equilibrium.
C)   on the last unit of wallpaper that was produced and sold,the value to buyers exceeded the cost to sellers.
D)   All of the above are correct.

Question 20

Figure 7-18 
-Refer to Figure 7-18.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.

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

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

Correct Answer
verified

According to many economists,government restrictions on ticket scalping do all of the following except

Correct Answer
verified

Producer surplus is the amount a seller is paid minus the cost of production.

Correct Answer
verified

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S',the demand curve is D,and the equilibrium price is $150,what is the producer surplus?

Correct Answer
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Producer surplus equals

Correct Answer
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What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Correct Answer
verified

An example of normative analysis is studying

Correct Answer
verified

Efficiency refers to whether a market outcome is fair,while equality refers to whether the maximum amount of output was produced from a given number of inputs.

Correct Answer
verified

Chuck would be willing to pay $20 to attend a dog show,but he buys a ticket for $15.Chuck values the dog show at

Correct Answer
verified

Table 7-11 -Refer to Table 7-11.At a price of $2.00,total surplus is

Correct Answer
verified

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
verified

Figure 7-21 -Refer to Figure 7-21.Sellers whose costs are less than the equilibrium price are represented by which line segment?

Correct Answer
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Figure 7-18 -Refer to Figure 7-18.If 110 units of the good are being bought and sold,then

Correct Answer
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Figure 7-17 -Refer to Figure 7-17.Which area represents consumer surplus when the price is P1?

Correct Answer
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Correct Answer
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a. Producer surplus measures the benefit...
View Answer

If the current allocation of resources in the market for wallpaper is efficient,then it must be the case that

Correct Answer
verified

Raisin bran and milk are complements.An increase in the price of raisins will

Correct Answer
verified

We can say that the allocation of resources is efficient if

Correct Answer
verified

Suppose Katie,Kendra,and Kristen each purchase a particular type of cell phone at a price of $80.Katie's willingness to pay was $100,Kendra's willingness to pay was $95,and Kristen's willingness to pay was $80.Which of the following statements is correct?

Correct Answer
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Figure 7-8 -Refer to Figure 7-8.Which area represents producer surplus when the price is P2?

Correct Answer
verified

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

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

Correct AnswerverifiedShow Answer

According to many economists,government restrictions on ticket scalping do all of the following except

Correct AnswerverifiedShow Answer

Producer surplus is the amount a seller is paid minus the cost of production.

Correct AnswerverifiedShow Answer

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S',the demand curve is D,and the equilibrium price is $150,what is the producer surplus?

Correct AnswerverifiedShow Answer

Producer surplus equals

Correct AnswerverifiedShow Answer

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Correct AnswerverifiedShow Answer

An example of normative analysis is studying

Correct AnswerverifiedShow Answer

Efficiency refers to whether a market outcome is fair,while equality refers to whether the maximum amount of output was produced from a given number of inputs.

Correct AnswerverifiedShow Answer

Chuck would be willing to pay $20 to attend a dog show,but he buys a ticket for $15.Chuck values the dog show at

Correct AnswerverifiedShow Answer

Table 7-11 -Refer to Table 7-11.At a price of $2.00,total surplus is

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 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

Figure 7-21 -Refer to Figure 7-21.Sellers whose costs are less than the equilibrium price are represented by which line segment?

Correct AnswerverifiedShow Answer

Figure 7-18 -Refer to Figure 7-18.If 110 units of the good are being bought and sold,then

Correct AnswerverifiedShow Answer

Figure 7-17 -Refer to Figure 7-17.Which area represents consumer surplus when the price is P1?

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Producer surplus measures the benefit...View AnswerShow Answer

If the current allocation of resources in the market for wallpaper is efficient,then it must be the case that

Correct AnswerverifiedShow Answer

Raisin bran and milk are complements.An increase in the price of raisins will

Correct AnswerverifiedShow Answer

We can say that the allocation of resources is efficient if

Correct AnswerverifiedShow Answer

Suppose Katie,Kendra,and Kristen each purchase a particular type of cell phone at a price of $80.Katie's willingness to pay was $100,Kendra's willingness to pay was $95,and Kristen's willingness to pay was $80.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Figure 7-8 -Refer to Figure 7-8.Which area represents producer surplus when the price is P2?

Correct AnswerverifiedShow Answer

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a. Producer surplus measures the benefit...
View Answer

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