Question 1

Given the following two equations:
1)
Total Surplus = Consumer Surplus + Producer Surplus
2)
Total Surplus = Value to Buyers - Cost to Sellers
Show how equation (1) can be used to derive equation (2).

Accepted Answer

Start with the equation: Total Surplus =...

Question 2

Table 7-1 
-Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product?

Accepted Answer

A)  Calvin
B)  Calvin and Sam
C)  Calvin, Sam, and Andrew
D)  Calvin, Sam, Andrew, and LoriE) B) and C)
F) B) and D)

Question 3

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound,

Accepted Answer

A)  Henry experiences an increase in consumer surplus, but Janine does not.
B)  Janine experiences an increase in consumer surplus, but Henry does not.
C)  both Janine and Henry experience an increase in consumer surplus.
D)  neither Janine nor Henry experiences an increase in consumer surplus.E) All of the above
F) A) and B)

Question 4

Figure 7-30 
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

Accepted Answer

Consumer s...

Question 5

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's willingness to pay is

Accepted Answer

A)  $500.
B)  $3,000.
C)  $3,500.
D)  $6,500.E) All of the above
F) A) and B)

Question 6

Figure 7-33 
-Refer to Figure 7-33. How much is total consumer surplus in this market at the equilibrium price?

Accepted Answer

Total consumer surpl...

Question 7

Figure 7-22 
-Refer to Figure 7-22. At the equilibrium price, consumer surplus is

Accepted Answer

A)  $1,000.
B)  $2,000.
C)  $3,500.
D)  $500.E) B) and C)
F) A) and D)

Question 8

Figure 7-15 
-Refer to Figure 7-15. When the price rises from P1 to P2, what area represents the increase in producer surplus?

Accepted Answer

A)  A
B)  A+B
C)  A+B+C
D)  GE) A) and B)
F) A) and C)

Question 9

We can say that the allocation of resources is efficient if

Accepted Answer

A)  producer surplus is maximized.
B)  consumer surplus is maximized.
C)  total surplus is maximized.
D)  sellers' costs are minimized.E) B) and C)
F) B) and D)

Question 10

Figure 7-18 rd unit is $125. Then total surplus is maximized if A) 1 unit of the good is produced and sold. B) 2 units of the good are produced and sold. C) 3 units of the good are produced and sold. D) 4 units of the good are produced and sold." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 7-18. Suppose the willingness to pay of the marginal buyer of the 3rd unit is $125. Then total surplus is maximized if

Accepted Answer

A)  1 unit of the good is produced and sold.
B)  2 units of the good are produced and sold.
C)  3 units of the good are produced and sold.
D)  4 units of the good are produced and sold.E) None of the above
F) B) and C)

Question 11

Table 7-17
The following table shows the willingness to pay for a good for the only four consumers in a market. 
-Refer to Table 7-17. If the price of the good is $20, how much is the total consumer surplus?

Accepted Answer

Total cons...

Question 12

Moving production from a high-cost producer to a low-cost producer will

Accepted Answer

A)  lower total surplus.
B)  raise total surplus.
C)  lower producer surplus.
D)  raise producer surplus but lower consumer surplus.E) All of the above
F) A) and D)

Question 13

Figure 7-11 
-Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

Accepted Answer

A)  Producer surplus increases by $3,125.
B)  Producer surplus increases by $5,625.
C)  Producer surplus decreases by $3,125.
D)  Producer surplus decreases by $5,625.E) B) and D)
F) B) and C)

Question 14

Producer surplus directly measures

Accepted Answer

A)  the well-being of society as a whole.
B)  the well-being of buyers and sellers.
C)  the well-being of sellers.
D)  sellers' willingness to sell.E) A) and D)
F) A) and C)

Question 15

Table 7-15
The following table represents the costs of five possible sellers. 
-Refer to Table 7-15. Suppose each of the five sellers can supply at most one unit of the good. At which of the following prices would the market quantity supplied be exactly three units?

Accepted Answer

A)  $20
B)  $50
C)  $90
D)  $120E) A) and B)
F) C) and D)

Question 16

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

Question 17

Which of the following will cause an increase in producer surplus?

Accepted Answer

A)  the imposition of a binding price ceiling in the market
B)  buyers expect the price of the good to be lower next month
C)  the price of a substitute increases
D)  income increases and buyers consider the good to be inferiorE) A) and D)
F) B) and C)

Question 18

Table 7-13
The only four producers in a market have the following costs: 
-Refer to Table 7-13. If the sellers bid against each other for the right to sell the good to a single consumer, then the good will sell for

Accepted Answer

A)  $30 or slightly more.
B)  $40 or slightly less.
C)  $55 or slightly less.
D)  $65 or slightly less.E) B) and C)
F) A) and D)

Question 19

Economists tend to see ticket scalping as

Accepted Answer

A)  a way for a few to profit without producing anything of value.
B)  an inequitable interference in the orderly process of ticket distribution.
C)  a way of increasing the efficiency of ticket distribution.
D)  an unproductive activity which should be made illegal everywhere.E) B) and D)
F) All of the above

Question 20

Figure 7-16 
-Refer to Figure 7-16. Suppose the price of the good is $450. Then, on the first unit of the good that is sold, producer surplus is

Accepted Answer

A)  $250, and on the second unit of the good that is sold, producer surplus is $100.
B)  $250, and on the second unit of the good that is sold, producer surplus is $150.
C)  $350, and on the second unit of the good that is sold, producer surplus is $100.
D)  $350, and on the second unit of the good that is sold, producer surplus is $150.E) B) and C)
F) All of the above

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

We can say that the allocation of resources is efficient if

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Table 7-13 The only four producers in a market have the following costs: -Refer to Table 7-13. If the sellers bid against each other for the right to sell the good to a single consumer, then the good will sell for

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Figure 7-15 -Refer to Figure 7-15. When the price rises from P1 to P2, what area represents the increase in producer surplus?

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Table 7-17 The following table shows the willingness to pay for a good for the only four consumers in a market. -Refer to Table 7-17. If the price of the good is $20, how much is the total consumer surplus?

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Figure 7-16 -Refer to Figure 7-16. Suppose the price of the good is $450. Then, on the first unit of the good that is sold, producer surplus is

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Given the following two equations: 1) Total Surplus = Consumer Surplus + Producer Surplus 2) Total Surplus = Value to Buyers - Cost to Sellers Show how equation (1) can be used to derive equation (2).

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Table 7-1 -Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product?

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Moving production from a high-cost producer to a low-cost producer will

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Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound,

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Figure 7-18 -Refer to Figure 7-18. Suppose the willingness to pay of the marginal buyer of the 3rd unit is $125. Then total surplus is maximized if

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Which of the following will cause an increase in producer surplus?

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

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Figure 7-22 -Refer to Figure 7-22. At the equilibrium price, consumer surplus is

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Producer surplus directly measures

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Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

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Figure 7-11 -Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

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Table 7-15 The following table represents the costs of five possible sellers. -Refer to Table 7-15. Suppose each of the five sellers can supply at most one unit of the good. At which of the following prices would the market quantity supplied be exactly three units?

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Figure 7-33 -Refer to Figure 7-33. How much is total consumer surplus in this market at the equilibrium price?

Correct AnswerverifiedTotal consumer surpl...View AnswerShow Answer

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's willingness to pay is

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Economists tend to see ticket scalping as

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Total cons...
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Start with the equation: Total Surplus =...
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Figure 7-18 -Refer to Figure 7-18. Suppose the willingness to pay of the marginal buyer of the 3^rd unit is $125. Then total surplus is maximized if

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Consumer s...
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Total consumer surpl...
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