Question 1

Table 7-16
The following table represents the costs of five possible sellers.
Seller Cost $) 
 
-Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?

Accepted Answer

A)   $90
B)   $110
C)   $130
D)   $140E) All of the above
F) C) and D)

Question 2

Scenario 7-1
Suppose market demand is given by the equation 
-Refer to Scenario 7-1. If the market equilibrium price rises from $10 to $15, what is the change in total consumer surplus in the market?

Accepted Answer

Consumer s...

Question 3

Figure 7-15 
-Refer to Figure 7-15. 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 B)
F) A) and C)

Question 4

Figure 7-32 
-Refer to Figure 7-32. How much are consumer surplus, producer surplus, and total surplus at the market equilibrium price?

Accepted Answer

.Consumer surplus is...

Question 5

ABC Company incurs a cost of 50 cents to produce a dozen eggs, while XYZ Company incurs a cost of 70 cents to produce a dozen eggs. Which of the following price increases would cause both companies to experience an increase in producer surplus?

Accepted Answer

A)   The price of a dozen eggs increases from 40 cents to 55 cents.
B)   The price of a dozen eggs increases from 55 cents to 70 cents.
C)   The price of a dozen eggs increases from 55 cents to 75 cents.
D)   All of these price increases would cause both companies to experience a loss in producer surplus.E) C) and D)
F) None of the above

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Inefficiency can be caused in a market by the presence of

Accepted Answer

A)   market power.
B)   externalities.
C)   imperfectly competitive markets.
D)   All of the above are correct.E) A) and C)
F) C) and D)

Question 8

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

Question 9

Which of the following is not true when the price of a good or service falls?

Accepted Answer

A)   Buyers who were already buying the good or service are better off.
B)   Some new buyers, who are now willing to buy, enter 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) A) and D)
F) A) and C)

Question 10

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $200.

Accepted Answer

A) True 
 B)False

Question 11

Welfare economics is the study of

Accepted Answer

A)   taxes and subsidies.
B)   how technology is best put to use in the production of goods and services.
C)   government welfare programs for needy people.
D)   how the allocation of resources affects economic well-being.E) B) and C)
F) None of the above

Question 12

If the cost of producing sofas decreases, then consumer surplus in the sofa market will

Accepted Answer

A)   increase.
B)   decrease.
C)   remain constant.
D)   increase for some buyers and decrease for other buyers.E) A) and B)
F) C) and D)

Question 13

A seller's opportunity cost measures the

Accepted Answer

A)   value of everything she must give up to produce a good.
B)   amount she is paid for a good minus her cost of providing it.
C)   consumer surplus.
D)   out of pocket expenses to produce a good but not the value of her time.E) B) and C)
F) None of the above

Question 14

Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will

Accepted Answer

A)   decrease, and producer surplus in the industry will decrease.
B)   increase, and producer surplus in the industry will increase.
C)   decrease, and producer surplus in the industry will increase.
D)   increase, and producer surplus in the industry will decrease.E) All of the above
F) A) and B)

Question 15

Economists normally assume people's preferences should be

Accepted Answer

A)   respected.
B)   adjusted.
C)   overruled.
D)   ignored.E) B) and C)
F) C) and D)

Question 16

Figure 7-10 
-Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2?

Accepted Answer

A)   BCG
B)   ACH
C)   ABGD
D)   AHGBE) A) and C)
F) C) and D)

Question 17

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is

Accepted Answer

A)   $800.
B)   $300.
C)   $200.
D)   $500.E) C) and D)
F) B) and C)

Question 18

Table 7-7
 
-Refer to Table 7-7. You have two essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the two tickets. Who makes the winning bids, and what do they offer to pay for the tickets?

Accepted Answer

A)   Michael and Earvin; more than $350 but less than or equal to $400
B)   Michael and Earvin; more than $400 but less than or equal to $500
C)   Earvin and Larry; more than $300 but less than or equal to $350
D)   Larry and Charles; less than $300E) A) and B)
F) C) and D)

Question 19

Figure 7-27 
-Refer to Figure 7-27. Sellers whose costs are greater than the equilibrium price are represented by segment

Accepted Answer

A)   AC.
B)   CK.
C)   BC.
D)   CH.E) A) and C)
F) A) and B)

Question 20

What do economists call the highest amount a consumer will pay to purchase a good?

Accepted Answer

The maximu...

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

Figure 7-32 -Refer to Figure 7-32. How much are consumer surplus, producer surplus, and total surplus at the market equilibrium price?

Correct Answer
verified
.Consumer surplus is...
View Answer

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

Correct Answer
verified

Figure 7-10 -Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2?

Correct Answer
verified

Economists normally assume people's preferences should be

Correct Answer
verified

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price rises from $10 to $15, what is the change in total consumer surplus in the market?

Correct Answer
verified
Consumer s...
View Answer

Correct Answer
verified

Inefficiency can be caused in a market by the presence of

Correct Answer
verified

What do economists call the highest amount a consumer will pay to purchase a good?

Correct Answer
verified
The maximu...
View Answer

Table 7-16 The following table represents the costs of five possible sellers. Seller Cost $) -Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?

Correct Answer
verified

If the cost of producing sofas decreases, then consumer surplus in the sofa market will

Correct Answer
verified

Which of the following is not true when the price of a good or service falls?

Correct Answer
verified

A seller's opportunity cost measures the

Correct Answer
verified

Figure 7-27 -Refer to Figure 7-27. Sellers whose costs are greater than the equilibrium price are represented by segment

Correct Answer
verified

Figure 7-15 -Refer to Figure 7-15. When the price falls from P2 to P1, producer surplus

Correct Answer
verified

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is

Correct Answer
verified

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $200.

Correct Answer
verified

Welfare economics is the study of

Correct Answer
verified

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

Correct Answer
verified

ABC Company incurs a cost of 50 cents to produce a dozen eggs, while XYZ Company incurs a cost of 70 cents to produce a dozen eggs. Which of the following price increases would cause both companies to experience an increase in producer surplus?

Correct Answer
verified

Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will

Correct Answer
verified

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

Figure 7-32 -Refer to Figure 7-32. How much are consumer surplus, producer surplus, and total surplus at the market equilibrium price?

Correct Answerverified.Consumer surplus is...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Figure 7-10 -Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2?

Correct AnswerverifiedShow Answer

Economists normally assume people's preferences should be

Correct AnswerverifiedShow Answer

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price rises from $10 to $15, what is the change in total consumer surplus in the market?

Correct AnswerverifiedConsumer s...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Inefficiency can be caused in a market by the presence of

Correct AnswerverifiedShow Answer

What do economists call the highest amount a consumer will pay to purchase a good?

Correct AnswerverifiedThe maximu...View AnswerShow Answer

Table 7-16 The following table represents the costs of five possible sellers. Seller Cost $) -Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?

Correct AnswerverifiedShow Answer

If the cost of producing sofas decreases, then consumer surplus in the sofa market will

Correct AnswerverifiedShow Answer

Which of the following is not true when the price of a good or service falls?

Correct AnswerverifiedShow Answer

A seller's opportunity cost measures the

Correct AnswerverifiedShow Answer

Figure 7-27 -Refer to Figure 7-27. Sellers whose costs are greater than the equilibrium price are represented by segment

Correct AnswerverifiedShow Answer

Figure 7-15 -Refer to Figure 7-15. When the price falls from P2 to P1, producer surplus

Correct AnswerverifiedShow Answer

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is

Correct AnswerverifiedShow Answer

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $200.

Correct AnswerverifiedShow Answer

Welfare economics is the study of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

ABC Company incurs a cost of 50 cents to produce a dozen eggs, while XYZ Company incurs a cost of 70 cents to produce a dozen eggs. Which of the following price increases would cause both companies to experience an increase in producer surplus?

Correct AnswerverifiedShow Answer

Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will

Correct AnswerverifiedShow Answer

Correct Answer
verified
.Consumer surplus is...
View Answer

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Consumer s...
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The maximu...
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