Question 1

Which of the following statements is not correct?

Accepted Answer

A)  An invisible hand leads buyers and sellers to an equilibrium that maximizes total surplus.
B)  Market power can cause markets to be inefficient.
C)  Externalities can cause markets to be inefficient.
D)  The invisible hand can remedy all types of market failures.

Question 2

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 Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. 
-Refer to Table 7-5. If the market price of an orange is $0.70, then the market quantity of oranges demanded per day is

Accepted Answer

A)  5.
B)  6.
C)  4.
D)  7.

Question 3

Figure 7-24 
-Refer to Figure 7-24. If the government imposes a price ceiling at $12, then producer surplus is

Accepted Answer

A)  CDI.
B)  BDF.
C)  BCIF.
D)  HGCD.

Question 4

Which of the following events would increase producer surplus?

Accepted Answer

A)  Sellers' costs stay the same and the price of the good increases.
B)  Sellers' costs increase and the price of the good stays the same.
C)  Sellers' costs increase and the price of the good decreases.
D)  All of the above are correct.

Question 5

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.

Question 6

When the demand for a good increases and the supply of the good remains unchanged, consumer surplus

Accepted Answer

A)  decreases.
B)  is unchanged.
C)  increases.
D)  may increase, decrease, or remain unchanged.

Question 7

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Accepted Answer

A) True 
 B)False

Question 8

Figure 7-23 
-Refer to Figure 7-23. The efficient price-quantity combination is

Accepted Answer

A)  P1 and Q1.
B)  P2 and Q2.
C)  P3 and Q1.
D)  P4 and 0.

Question 9

Table 7-11
The only four producers in a market have the following costs:
Seller
Cost
Evan
$50
Selena
$100
Angie
$150
Kris
$200
-Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for

Accepted Answer

A)  $50 or slightly more.
B)  $100 or slightly less.
C)  $150 or slightly less.
D)  $200 or slightly more.

Question 10

Table 7-16 
-Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Accepted Answer

A)  $44.
B)  $56.
C)  $72.
D)  $96.

Question 11

Table 7-16 
-Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, consumer surplus will be

Accepted Answer

A)  $21.
B)  $28.
C)  $36.
D)  $42.

Question 12

If the government imposes a binding price floor in a market, then the consumer surplus in that market will decrease.

Accepted Answer

A) True 
 B)False

Question 13

A seller's willingness to sell is

Accepted Answer

A)  measured by the seller's cost of production.
B)  related to her supply curve, just as a buyer's willingness to buy is related to his demand curve.
C)  less than the price received if producer surplus is a positive number.
D)  All of the above are correct.

Question 14

Figure 7-24 
-Refer to Figure 7-24. The equilibrium allocation of resources is

Accepted Answer

A)  efficient because total surplus is maximized at the equilibrium.
B)  efficient because consumer surplus is maximized at the equilibrium.
C)  inefficient because consumer surplus is larger than producer surplus at the equilibrium.
D)  inefficient because producer surplus is not maximized.

Question 15

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

Accepted Answer

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

Question 16

Figure 7-23 
-Refer to Figure 7-23. At equilibrium, consumer surplus is represented by the area

Accepted Answer

A)  A.
B)  A+B+C.
C)  D+H+F.
D)  A+B+C+D+H+F.

Question 17

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

Accepted Answer

Consumer s...

Question 18

Consumer surplus is the

Accepted Answer

A)  amount of a good consumers get without paying anything.
B)  amount a consumer pays minus the amount the consumer is willing to pay.
C)  amount a consumer is willing to pay minus the amount the consumer actually pays.
D)  value of a good to a consumer.

Question 19

Figure 7-6 
-Refer to Figure 7-6. At the equilibrium price, consumer surplus is

Accepted Answer

A)  $1,600.
B)  $800.
C)  $1,400.
D)  $700.

Question 20

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is

Accepted Answer

A)  $150.
B)  $350.
C)  $500.
D)  $850.

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

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Correct Answer
verified

If the government imposes a binding price floor in a market, then the consumer surplus in that market will decrease.

Correct Answer
verified

Figure 7-6 -Refer to Figure 7-6. At the equilibrium price, consumer surplus is

Correct Answer
verified

Table 7-11 The only four producers in a market have the following costs: Seller Cost Evan $50 Selena $100 Angie $150 Kris $200 -Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for

Correct Answer
verified

Figure 7-23 -Refer to Figure 7-23. The efficient price-quantity combination is

Correct Answer
verified

A seller's willingness to sell is

Correct Answer
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Willingness to pay

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

Correct Answer
verified

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is

Correct Answer
verified

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

Correct Answer
verified
Consumer s...
View Answer

When the demand for a good increases and the supply of the good remains unchanged, consumer surplus

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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Table 7-16 -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, consumer surplus will be

Correct Answer
verified

Consumer surplus is the

Correct Answer
verified

Figure 7-23 -Refer to Figure 7-23. At equilibrium, consumer surplus is represented by the area

Correct Answer
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Figure 7-24 -Refer to Figure 7-24. The equilibrium allocation of resources is

Correct Answer
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Which of the following events would increase producer surplus?

Correct Answer
verified

Table 7-16 -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Correct Answer
verified

Figure 7-24 -Refer to Figure 7-24. If the government imposes a price ceiling at $12, then producer surplus is

Correct Answer
verified

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

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Correct AnswerverifiedShow Answer

If the government imposes a binding price floor in a market, then the consumer surplus in that market will decrease.

Correct AnswerverifiedShow Answer

Figure 7-6 -Refer to Figure 7-6. At the equilibrium price, consumer surplus is

Correct AnswerverifiedShow Answer

Table 7-11 The only four producers in a market have the following costs: Seller Cost Evan $50 Selena $100 Angie $150 Kris $200 -Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for

Correct AnswerverifiedShow Answer

Figure 7-23 -Refer to Figure 7-23. The efficient price-quantity combination is

Correct AnswerverifiedShow Answer

A seller's willingness to sell is

Correct AnswerverifiedShow Answer

Willingness to pay

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

Correct AnswerverifiedShow Answer

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedConsumer s...View AnswerShow Answer

When the demand for a good increases and the supply of the good remains unchanged, consumer surplus

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 7-16 -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, consumer surplus will be

Correct AnswerverifiedShow Answer

Consumer surplus is the

Correct AnswerverifiedShow Answer

Figure 7-23 -Refer to Figure 7-23. At equilibrium, consumer surplus is represented by the area

Correct AnswerverifiedShow Answer

Figure 7-24 -Refer to Figure 7-24. The equilibrium allocation of resources is

Correct AnswerverifiedShow Answer

Which of the following events would increase producer surplus?

Correct AnswerverifiedShow Answer

Table 7-16 -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

Correct AnswerverifiedShow Answer

Figure 7-24 -Refer to Figure 7-24. If the government imposes a price ceiling at $12, then producer surplus is

Correct AnswerverifiedShow Answer

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Consumer s...
View Answer

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