Question 1

Alex is willing to pay $10, and Bella is willing to pay $8, for 1 pound of ribeye steak. When the price of ribeye steak increases from $9 to $11,

Accepted Answer

A)   Alex experiences a decrease in consumer surplus, but Bella does not.
B)   Bella experiences a decrease in consumer surplus, but Alex does not.
C)   both Bella and Alex experience a decrease in consumer surplus.
D)   neither Bella nor Alex experiences a decrease in consumer surplus.E) C) and D)
F) B) and D)

Question 2

Figure 7-4 
-Refer to Figure 7-4. Which area represents the increase in consumer surplus when the price falls from P1 to P2?

Accepted Answer

A)   BDF
B)   AFG
C)   ABC
D)   ABDGE) A) and D)
F) B) and C)

Question 3

Table 7-12
The only four producers in a market have the following costs:
 
-Refer to Table 7-12. 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.E) A) and B)
F) C) and D)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not equal to total surplus?

Accepted Answer

A)   consumer surplus - producer surplus
B)   buyers' willingness to pay ­ sellers' costs
C)   value to buyers - amount paid by buyers + amount received by sellers - cost to sellers
D)   value to buyers - cost to sellersE) B) and C)
F) A) and B)

Question 6

Figure 7-21 
-Refer to Figure 7-21. When the price is P1, area A represents

Accepted Answer

A)   total benefit.
B)   producer surplus.
C)   consumer surplus.
D)   None of the above is correct.E) All of the above
F) C) and D)

Question 7

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.E) A) and B)
F) None of the above

Question 8

Figure 7-24 
-Refer to Figure 7-24. If 4 units of the good are produced and sold, then

Accepted Answer

A)   producer surplus is greater than consumer surplus.
B)   consumer surplus is $16.
C)   total surplus is minimized.
D)   total surplus is not maximized.E) A) and B)
F) B) and C)

Question 9

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 increases from $0.70 to $1.40, then consumer surplus

Accepted Answer

A)   increases by $2.60.
B)   decreases by $0.70.
C)   decreases by $2.50.
D)   decreases by $2.60.E) B) and C)
F) C) and D)

Question 10

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.E) A) and C)
F) None of the above

Question 11

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following equations is not valid?

Accepted Answer

A)   Consumer surplus = Value to buyers - Amount paid by buyers
B)   Producer surplus = Amount received by sellers - Cost to sellers
C)   Total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers
D)   Total surplus = Value to sellers - Cost to sellersE) None of the above
F) B) and D)

Question 13

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

Accepted Answer

A)   $2.
B)   $6.
C)   $8.
D)   $4.E) A) and B)
F) None of the above

Question 14

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) A) and B)
F) C) and D)

Question 15

If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

Accepted Answer

A)   zero.
B)   negative, and the consumer would not purchase the product.
C)   positive, and the consumer would purchase the product.
D)   There is not enough information given to answer this question.E) A) and B)
F) All of the above

Question 16

Table 7-13
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
 
-Refer to Table 7-13. 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) None of the above
F) All of the above

Question 17

Figure 7-21 
-Refer to Figure 7-21. When the price is P1, area B represents

Accepted Answer

A)   total surplus.
B)   producer surplus.
C)   consumer surplus.
D)   profits.E) None of the above
F) B) and C)

Question 18

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.E) B) and C)
F) B) and D)

Question 19

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

The answer of Answer each of the following questions about...

Question 20

Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field.
 
-Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, who will buy the ticket?

Accepted Answer

A)   Dan
B)   David
C)   Ken
D)   LisaE) All of the above
F) A) and B)

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

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Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

Correct Answer
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Figure 7-24 -Refer to Figure 7-24. If 4 units of the good are produced and sold, then

Correct Answer
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Which of the following is not equal to total surplus?

Correct Answer
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Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, who will buy the ticket?

Correct Answer
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Alex is willing to pay $10, and Bella is willing to pay $8, for 1 pound of ribeye steak. When the price of ribeye steak increases from $9 to $11,

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

Correct Answer
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Figure 7-21 -Refer to Figure 7-21. When the price is P1, area B represents

Correct Answer
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Which of the following equations is not valid?

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

Correct Answer
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The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Correct Answer
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Table 7-12 The only four producers in a market have the following costs: -Refer to Table 7-12. 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
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A demand curve reflects each of the following except the

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

Correct Answer
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Figure 7-4 -Refer to Figure 7-4. Which area represents the increase in consumer surplus when the price falls from P1 to P2?

Correct Answer
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If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

Correct Answer
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Figure 7-21 -Refer to Figure 7-21. When the price is P1, area A represents

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

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

Correct AnswerverifiedShow Answer

Figure 7-24 -Refer to Figure 7-24. If 4 units of the good are produced and sold, then

Correct AnswerverifiedShow Answer

Which of the following is not equal to total surplus?

Correct AnswerverifiedShow Answer

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, who will buy the ticket?

Correct AnswerverifiedShow Answer

Alex is willing to pay $10, and Bella is willing to pay $8, for 1 pound of ribeye steak. When the price of ribeye steak increases from $9 to $11,

Correct AnswerverifiedShow Answer

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

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Figure 7-21 -Refer to Figure 7-21. When the price is P1, area B represents

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Which of the following equations is not valid?

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

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Correct AnswerverifiedShow Answer

Table 7-12 The only four producers in a market have the following costs: -Refer to Table 7-12. 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

A demand curve reflects each of the following except the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 7-4 -Refer to Figure 7-4. Which area represents the increase in consumer surplus when the price falls from P1 to P2?

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If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

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Figure 7-21 -Refer to Figure 7-21. When the price is P1, area A represents

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

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