Question 1

Which of the following will cause a decrease in consumer surplus?

Accepted Answer

A)   an increase in the number of sellers of the good
B)   a decrease in the production cost of the good
C)   sellers expect the price of the good to be lower next month
D)   the imposition of a binding price floor in the market

Question 2

The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

Accepted Answer

A)   supply and demand are both limited.
B)   supply is limited and demand is not limited
C)   supply is limited and demand is not limited.
D)   supply and demand are both not limited.

Question 3

Which of the following statements is correct?

Accepted Answer

A)   Buyers always want to pay less and sellers always want to be paid more.
B)   Buyers always want to pay less and sellers always want to be paid less.
C)   Buyers always want to pay more and sellers always want to be paid more.
D)   Buyers always want to pay more and sellers always want to be paid less.

Question 4

Figure 7-10 
-Refer to Figure 7-10.If the equilibrium price rises from $50 to $200,what is the additional producer surplus to initial producers?

Accepted Answer

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

Question 5

The Surgeon General announces that eating apples promotes healthy teeth.As a result,the equilibrium price of apples

Accepted Answer

A)   increases,and producer surplus increases.
B)   increases,and producer surplus decreases.
C)   decreases,and producer surplus increases.
D)   decreases,and producer surplus decreases.

Question 6

Let P represent price;let QS represent quantity supplied;and assume the equation of the supply curve is  .If 90 units of the good are produced and sold,then producer surplus amounts to $1,350.

Accepted Answer

A) True 
 B)False

Question 7

Ticket scalping can increase total surplus in the market for tickets to sporting events.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is true when the price of a good or service rises?

Accepted Answer

A)   Buyers who were already buying the good or service are better off.
B)   Some buyers exit the market.
C)   The total consumer surplus in the market increases.
D)   The total value of purchases before and after the price change is the same.

Question 9

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 10

The lower the price,the lower the producer surplus,all else equal.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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 13

Figure 7-2 
-Refer to Figure 7-2.When the price rises from P1 to P2,consumer surplus

Accepted Answer

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

Question 14

Figure 7-6 
-Refer to Figure 7-6.What happens to the consumer surplus if the price rises from $100 to $150?

Accepted Answer

A)   The new consumer surplus is half of the original consumer surplus.
B)   The new consumer surplus is 25 percent of the original consumer surplus.
C)   The new consumer surplus is double the original consumer surplus.
D)   The new consumer surplus is triple the original consumer surplus.

Question 15

Figure 7-12 
-Refer to Figure 7-12.When the price is P2,producer surplus is

Accepted Answer

A)   A.
B)   A+C.
C)   A+B+C.
D)   D+G.

Question 16

Figure 7-18 
-Refer to Figure 7-18.At the equilibrium price,consumer surplus is

Accepted Answer

A)   $480.
B)   $640.
C)   $1,120.
D)   $1,280.

Question 17

Suppose that the equilibrium price in the market for widgets is $5.If a law reduced the maximum legal price for widgets to $4,

Accepted Answer

A)   any possible increase in consumer surplus would be larger than the loss of producer surplus.
B)   any possible increase in consumer surplus would be smaller than the loss of producer surplus.
C)   the resulting increase in producer surplus would be larger than any possible loss of consumer surplus.
D)   the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus.

Question 18

Which of the Ten Principles of Economics does welfare economics explain more fully?

Accepted Answer

A)   The cost of something is what you give up to get it.
B)   Markets are usually a good way to organize economic activity.
C)   Trade can make everyone better off.
D)   A country's standard of living depends on its ability to produce goods and services.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Total surplus in a market will increase when the government

Accepted Answer

A)   imposes a tax on that market.
B)   imposes a binding price floor on that market.
C)   removes a binding price ceiling from that market.
D)   None of the above is correct.

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

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

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The Surgeon General announces that eating apples promotes healthy teeth.As a result,the equilibrium price of apples

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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?

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Which of the Ten Principles of Economics does welfare economics explain more fully?

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Suppose that the equilibrium price in the market for widgets is $5.If a law reduced the maximum legal price for widgets to $4,

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Total surplus in a market will increase when the government

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The lower the price,the lower the producer surplus,all else equal.

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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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Figure 7-2 -Refer to Figure 7-2.When the price rises from P1 to P2,consumer surplus

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Which of the following statements is correct?

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Figure 7-18 -Refer to Figure 7-18.At the equilibrium price,consumer surplus is

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Let P represent price;let QS represent quantity supplied;and assume the equation of the supply curve is .If 90 units of the good are produced and sold,then producer surplus amounts to $1,350.

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The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when

Correct AnswerverifiedShow Answer

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

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Ticket scalping can increase total surplus in the market for tickets to sporting events.

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Figure 7-6 -Refer to Figure 7-6.What happens to the consumer surplus if the price rises from $100 to $150?

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Which of the following will cause a decrease in consumer surplus?

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Which of the following is true when the price of a good or service rises?

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Figure 7-10 -Refer to Figure 7-10.If the equilibrium price rises from $50 to $200,what is the additional producer surplus to initial producers?

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Figure 7-12 -Refer to Figure 7-12.When the price is P2,producer surplus is

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Let P represent price;let Q^Srepresent quantity supplied;and assume the equation of the supply curve is .If 90 units of the good are produced and sold,then producer surplus amounts to $1,350.

Correct Answer
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