Question 1

Figure 7-12 
-Refer to Figure 7-12.When the price falls from P2 to P1,producer surplus

Accepted Answer

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

Question 2

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 3

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

Accepted Answer

A) True 
 B)False

Question 4

Given the following two equations:
  Show how equation (1)can be used to derive equation (2).

Accepted Answer

Start with the equation: Total Surplus =...

Question 5

Table 7-11
 
-Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If 6 units are bought and sold,then total surplus is

Accepted Answer

A)   $18 lower than it would be if the equilibrium number of units were bought and sold.
B)   $22 lower than it would be if the equilibrium number of units were bought and sold.
C)   $26 lower than it would be if the equilibrium number of units were bought and sold.
D)   $6 higher than it would be if the equilibrium number of units were bought and sold.E) A) and C)
F) B) and C)

Question 6

One of the basic principles of economics is that markets are usually a good way to organize economic activity.This principle is explained by the study of

Accepted Answer

A)   factor markets.
B)   energy markets.
C)   welfare economics.
D)   labor economics.E) A) and C)
F) B) and C)

Question 7

If the government allowed a free market for transplant organs such as kidneys to exist,the

Accepted Answer

A)   shortage of organs would be eliminated,and there would be no surplus of organs.
B)   shortage of organs would be eliminated,but a surplus of organs would develop.
C)   shortage of organs would persist.
D)   overall well-being of society would remain unchanged.E) A) and C)
F) B) and C)

Question 8

All else equal,what happens to consumer surplus if the price of a good increases?

Accepted Answer

A)   Consumer surplus increases.
B)   Consumer surplus decreases.
C)   Consumer surplus is unchanged.
D)   Consumer surplus may increase,decrease,or remain unchanged.E) A) and C)
F) None of the above

Question 9

Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
 
-Refer to Table 7-3.Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Accepted Answer

A)   Quilana
B)   Wilbur
C)   Ming-la
D)   All three buyers experience the same loss of consumer surplus.E) A) and B)
F) None of the above

Question 10

Figure 7-12 
-Refer to Figure 7-12.Area A represents

Accepted Answer

A)   producer surplus to new producers entering the market as the result of an increase in price from P1 to P2.
B)   the increase in consumer surplus that results from an upward-sloping supply curve.
C)   the increase in total surplus when sellers are willing and able to increase supply from Q1 to Q2.
D)   the increase in producer surplus to those producers already in the market when the price increases from P1 to P2.E) B) and C)
F) All of the above

Question 11

Figure 7-11 
-Refer to Figure 7-11.If the government imposes a price ceiling of $70 in this market,then producer surplus will decrease by

Accepted Answer

A)   $50.
B)   $125.
C)   $150.
D)   $200.E) None of the above
F) B) and D)

Question 12

The distinction between efficiency and equality can be described as follows:

Accepted Answer

A)   Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains from trade among buyers and sellers.
B)   Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers.
C)   Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost.
D)   Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.E) None of the above
F) C) and D)

Question 13

Table 7-9
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
 
-Refer to Table 7-9.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) A) and D)
F) C) and D)

Question 14

Table 7-8
The only four producers in a market have the following costs:
 
-Refer to Table 7-8.If Evan,Selena,Angie,and Kris sell the good,and the resulting producer surplus is $700,then the price must have been

Accepted Answer

A)   $200.
B)   $300.
C)   $500.
D)   $700.E) C) and D)
F) B) and D)

Question 15

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.E) A) and B)
F) A) and C)

Question 16

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

Accepted Answer

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

Question 17

Unless markets are perfectly competitive,they may fail to maximize the total benefits to buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 18

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

Question 19

The maximum price that a buyer will pay for a good is called the

Accepted Answer

A)   cost.
B)   willingness to pay.
C)   equity.
D)   efficiency.E) A) and D)
F) A) and C)

Question 20

Billie Jo values a stainless steel dishwasher for her new house at $500,but she succeeds in buying one for $425.Billie Jo's willingness to pay for the dishwasher is

Accepted Answer

A)   $150.
B)   $425.
C)   $500.
D)   $850.E) B) and C)
F) A) and C)

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

Table 7-8 The only four producers in a market have the following costs: -Refer to Table 7-8.If Evan,Selena,Angie,and Kris sell the good,and the resulting producer surplus is $700,then the price must have been

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

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

Correct Answer
verified

If the government allowed a free market for transplant organs such as kidneys to exist,the

Correct Answer
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All else equal,what happens to consumer surplus if the price of a good increases?

Correct Answer
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Unless markets are perfectly competitive,they may fail to maximize the total benefits to buyers and sellers.

Correct Answer
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Figure 7-11 -Refer to Figure 7-11.If the government imposes a price ceiling of $70 in this market,then producer surplus will decrease by

Correct Answer
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Figure 7-12 -Refer to Figure 7-12.When the price falls from P2 to P1,producer surplus

Correct Answer
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The maximum price that a buyer will pay for a good is called the

Correct Answer
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Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3.Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

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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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
verified

The distinction between efficiency and equality can be described as follows:

Correct Answer
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Given the following two equations: Show how equation (1)can be used to derive equation (2).

Correct Answer
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Start with the equation: Total Surplus =...
View Answer

Figure 7-12 -Refer to Figure 7-12.Area A represents

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

Correct Answer
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Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If 6 units are bought and sold,then total surplus is

Correct Answer
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Billie Jo values a stainless steel dishwasher for her new house at $500,but she succeeds in buying one for $425.Billie Jo's willingness to pay for the dishwasher is

Correct Answer
verified

One of the basic principles of economics is that markets are usually a good way to organize economic activity.This principle is explained by the study of

Correct Answer
verified

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

Table 7-8 The only four producers in a market have the following costs: -Refer to Table 7-8.If Evan,Selena,Angie,and Kris sell the good,and the resulting producer surplus is $700,then the price must have been

Correct AnswerverifiedShow Answer

Which of the following events would increase producer surplus?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the government allowed a free market for transplant organs such as kidneys to exist,the

Correct AnswerverifiedShow Answer

All else equal,what happens to consumer surplus if the price of a good increases?

Correct AnswerverifiedShow Answer

Unless markets are perfectly competitive,they may fail to maximize the total benefits to buyers and sellers.

Correct AnswerverifiedShow Answer

Figure 7-11 -Refer to Figure 7-11.If the government imposes a price ceiling of $70 in this market,then producer surplus will decrease by

Correct AnswerverifiedShow Answer

Figure 7-12 -Refer to Figure 7-12.When the price falls from P2 to P1,producer surplus

Correct AnswerverifiedShow Answer

The maximum price that a buyer will pay for a good is called the

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.Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Correct AnswerverifiedShow Answer

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

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.

Correct AnswerverifiedShow Answer

The distinction between efficiency and equality can be described as follows:

Correct AnswerverifiedShow Answer

Given the following two equations: Show how equation (1)can be used to derive equation (2).

Correct AnswerverifiedStart with the equation: Total Surplus =...View AnswerShow Answer

Figure 7-12 -Refer to Figure 7-12.Area A represents

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If 6 units are bought and sold,then total surplus is

Correct AnswerverifiedShow Answer

Billie Jo values a stainless steel dishwasher for her new house at $500,but she succeeds in buying one for $425.Billie Jo's willingness to pay for the dishwasher is

Correct AnswerverifiedShow Answer

One of the basic principles of economics is that markets are usually a good way to organize economic activity.This principle is explained by the study of

Correct AnswerverifiedShow Answer

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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
verified

Correct Answer
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Correct Answer
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Start with the equation: Total Surplus =...
View Answer

Correct Answer
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