Question 1

Tom tunes pianos in his spare time for extra income.Buyers of his service are willing to pay $155 per tuning.One particular week,Tom is willing to tune the first piano for $120,the second piano for $125,the third piano for $140,and the fourth piano for $160.Assume Tom is rational in deciding how many pianos to tune.His producer surplus is

Accepted Answer

A)   $95.
B)   $80.
C)   $75.
D)   $60.E) A) and D)
F) C) and D)

Question 2

Table 7-6
 
-Refer to Table 7-6.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.Michael and Earvin each offer to pay $360 for a ticket,and you sell them the two tickets.What is the total consumer surplus in the market?

Accepted Answer

A)   $720
B)   $180
C)   $140
D)   $40E) A) and B)
F) A) and C)

Question 3

Which of the following is not correct?

Accepted Answer

A)   Market power can cause markets to be inefficient.
B)   When the decisions of buyers and sellers affect nonparticipants,markets may be inefficient.
C)   The tools of welfare economics cannot help economists when markets are inefficient.
D)   Externalities can cause markets to be inefficient.E) B) and C)
F) A) and D)

Question 4

Producer surplus equals the

Accepted Answer

A)   value to buyers minus the amount paid by buyers.
B)   value to buyers minus the cost to sellers.
C)   amount received by sellers minus the cost to sellers.
D)   amount received by sellers minus the amount paid by buyers.E) A) and B)
F) All of the above

Question 5

At Nick's Bakery,the cost to make homemade chocolate cake is $3 per cake.As a result of selling three cakes,Nick experiences a producer surplus in the amount of $19.50.Nick must be selling his cakes for

Accepted Answer

A)   $6.50 each.
B)   $7.50 each.
C)   $9.50 each.
D)   $10.50 each.E) A) and D)
F) A) and C)

Question 6

Figure 7-16 
-Refer to Figure 7-16.For quantities greater than M,the value to the marginal buyer is

Accepted Answer

A)   greater than the cost to the marginal seller,so increasing the quantity increases total surplus.
B)   less than the cost to the marginal seller,so increasing the quantity increases total surplus.
C)   greater than the cost to the marginal seller,so decreasing the quantity increases total surplus.
D)   less than the cost to the marginal seller,so decreasing the quantity increases total surplus.E) B) and C)
F) A) and D)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Table 7-7
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-7.Suppose each of the five sellers can supply at most one unit of the good.The market quantity supplied is exactly 3 if the price is

Accepted Answer

A)   $670.
B)   $770.
C)   $970.
D)   $1,170.E) A) and B)
F) A) and C)

Question 9

Total surplus in a market will increase when the government

Accepted Answer

A)   imposes a binding price floor or a binding price ceiling on that market.
B)   imposes a tax on that market.
C)   Both a and b are correct.
D)   Neither a nor b is correct.E) A) and B)
F) A) and C)

Question 10

Figure 7-5 
-Refer to Figure 7-5.If the market equilibrium price rises from $25 to $35,how much is the increase in producer surplus to the producers supplying units at the initial $25 price?

Accepted Answer

The increase in prod...

Question 11

Efficiency in a market is achieved when

Accepted Answer

A)   a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs.
B)   the sum of producer surplus and consumer surplus is maximized.
C)   all firms are producing the good at the same low cost per unit.
D)   no buyer is willing to pay more than the equilibrium price for any unit of the good.E) None of the above
F) C) and D)

Question 12

Figure 7-20 
-Refer to Figure 7-20.At equilibrium,consumer surplus is measured by the area

Accepted Answer

A)   ACG.
B)   AFG.
C)   KBG.
D)   CFG.E) B) and C)
F) A) and B)

Question 13

At any quantity,the price given by the supply curve shows the cost of the lowest-cost seller.

Accepted Answer

A) True 
 B)False

Question 14

Chad is willing to pay $5.00 to get his first cup of morning latté;he is willing to pay $4.50 for a second cup.He buys his first cup from a vendor selling latté for $3.75 per cup.He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup.Chad buys a second cup.Which of the following statements is correct?

Accepted Answer

A)   Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté.
B)   Chad's consumer surplus on his second cup of latté was larger than his consumer surplus on his first cup of latté.
C)   Chad is irrational in that he is willing to pay a different price for his second cup of latté than what he is willing to pay for his first cup of latté.
D)   Chad places a higher value on his second cup of latté than on his first cup of latté.E) B) and C)
F) C) and D)

Question 15

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 Alex,Barb,and Carlos are the only three buyers of oranges,and only three oranges can be supplied per day.
 
-Refer to Table 7-5.The market quantity of oranges demanded per day is exactly 5 if the price of an orange,P,satisfies

Accepted Answer

A)   $1.00 
B)   $0.80 
C)   $0.80 
D)   $0.75 < P < $0.80.E) None of the above
F) B) and C)

Question 16

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

Question 17

Figure 7-20 
-Refer to Figure 7-20.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 total surplus is maximized when 10 units of output are produced and sold.E) A) and B)
F) B) and C)

Question 18

Figure 7-1 
-Refer to Figure 7-1.If the price of the good is $100,then consumer surplus amounts to

Accepted Answer

A)   $50.
B)   $75.
C)   $100.
D)   $125.E) A) and D)
F) B) and C)

Question 19

If Darby values a soccer ball at $50,and she pays $40 for it,her consumer surplus is $10.

Accepted Answer

A) True 
 B)False

Question 20

Table 7-7
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-7.If the price is $1,000,

Accepted Answer

A)   Bobby is an eager supplier.
B)   Dianne is an eager supplier.
C)   Abby's producer surplus is $500.
D)   All of the above are correct.E) All of the above
F) A) and B)

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

Correct Answer
verified

Total surplus in a market will increase when the government

Correct Answer
verified

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
verified

Producer surplus equals the

Correct Answer
verified

Efficiency in a market is achieved when

Correct Answer
verified

Figure 7-20 -Refer to Figure 7-20.The equilibrium allocation of resources is

Correct Answer
verified

At any quantity,the price given by the supply curve shows the cost of the lowest-cost seller.

Correct Answer
verified

At Nick's Bakery,the cost to make homemade chocolate cake is $3 per cake.As a result of selling three cakes,Nick experiences a producer surplus in the amount of $19.50.Nick must be selling his cakes for

Correct Answer
verified

Table 7-7 The following table represents the costs of five possible sellers. -Refer to Table 7-7.Suppose each of the five sellers can supply at most one unit of the good.The market quantity supplied is exactly 3 if the price is

Correct Answer
verified

If Darby values a soccer ball at $50,and she pays $40 for it,her consumer surplus is $10.

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Which of the following is not correct?

Correct Answer
verified

Figure 7-20 -Refer to Figure 7-20.At equilibrium,consumer surplus is measured by the area

Correct Answer
verified

Figure 7-16 -Refer to Figure 7-16.For quantities greater than M,the value to the marginal buyer is

Correct Answer
verified

Table 7-7 The following table represents the costs of five possible sellers. -Refer to Table 7-7.If the price is $1,000,

Correct Answer
verified

Figure 7-1 -Refer to Figure 7-1.If the price of the good is $100,then consumer surplus amounts to

Correct Answer
verified

Figure 7-5 -Refer to Figure 7-5.If the market equilibrium price rises from $25 to $35,how much is the increase in producer surplus to the producers supplying units at the initial $25 price?

Correct Answer
verified
The increase in prod...
View Answer

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

Total surplus in a market will increase when the government

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

Producer surplus equals the

Correct AnswerverifiedShow Answer

Efficiency in a market is achieved when

Correct AnswerverifiedShow Answer

Figure 7-20 -Refer to Figure 7-20.The equilibrium allocation of resources is

Correct AnswerverifiedShow Answer

At any quantity,the price given by the supply curve shows the cost of the lowest-cost seller.

Correct AnswerverifiedShow Answer

At Nick's Bakery,the cost to make homemade chocolate cake is $3 per cake.As a result of selling three cakes,Nick experiences a producer surplus in the amount of $19.50.Nick must be selling his cakes for

Correct AnswerverifiedShow Answer

Table 7-7 The following table represents the costs of five possible sellers. -Refer to Table 7-7.Suppose each of the five sellers can supply at most one unit of the good.The market quantity supplied is exactly 3 if the price is

Correct AnswerverifiedShow Answer

If Darby values a soccer ball at $50,and she pays $40 for it,her consumer surplus is $10.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Figure 7-20 -Refer to Figure 7-20.At equilibrium,consumer surplus is measured by the area

Correct AnswerverifiedShow Answer

Figure 7-16 -Refer to Figure 7-16.For quantities greater than M,the value to the marginal buyer is

Correct AnswerverifiedShow Answer

Table 7-7 The following table represents the costs of five possible sellers. -Refer to Table 7-7.If the price is $1,000,

Correct AnswerverifiedShow Answer

Figure 7-1 -Refer to Figure 7-1.If the price of the good is $100,then consumer surplus amounts to

Correct AnswerverifiedShow Answer

Figure 7-5 -Refer to Figure 7-5.If the market equilibrium price rises from $25 to $35,how much is the increase in producer surplus to the producers supplying units at the initial $25 price?

Correct AnswerverifiedThe increase in prod...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The increase in prod...
View Answer

Correct Answer
verified