Question 1

Steak and chicken are substitutes. A sharp reduction in the supply of steak would

Accepted Answer

A)   increase consumer surplus in the market for steak and decrease producer surplus in the market for chicken.
B)   increase consumer surplus in the market for steak and increase producer surplus in the market for chicken.
C)   decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken.
D)   decrease consumer surplus in the market for steak and decrease producer surplus in the market for chicken.E) A) and D)
F) C) and D)

Question 2

Figure 7-3 
-Refer to Figure 7-3. When the price rises from P1 to P2, which of the following statements is not true?

Accepted Answer

A)   The buyers who still buy the good are worse off because they now pay more.
B)   Some buyers leave the market because they are not willing to buy the good at the higher price.
C)   Buyers place a higher value on the good after the price increase.
D)   Consumer surplus in the market falls.E) C) and D)
F) B) and D)

Question 3

Table 7-7
 
-Refer to Table 7-7. You have an extra ticket 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 ticket. Who makes the winning bid, and what does he offer to pay for the ticket?

Accepted Answer

A)   Michael; $501
B)   Michael; more than $400 but less than or equal to $500
C)   Earvin; $400
D)   Earvin; more than $350 but less than or equal to $400E) A) and B)
F) None of the above

Question 4

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

Question 5

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

Question 6

Figure 7-31 
-Refer to Figure 7-31. If the market equilibrium price is $25, how much is total producer surplus in this market?

Accepted Answer

Total prod...

Question 7

Table 7-11
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-11. If the market price is $1,200, the producer surplus in the market is

Accepted Answer

A)   $100.
B)   $800.
C)   $400.
D)   $500.E) A) and B)
F) A) and C)

Question 8

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
 
-Refer to Table 7-2. Which of the following is not true?

Accepted Answer

A)   At a price of $9.00, no buyer is willing to purchase Vanilla Coke.
B)   At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not buying one.
C)   At a price of $4.00, total consumer surplus in the market will be $9.00.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 9

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) A) and D)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

PlayStations and PlayStation games are complementary goods. A technological advance in the production of PlayStations will

Accepted Answer

A)   increase consumer surplus in the market for PlayStations and decrease producer surplus in the market for PlayStation games.
B)   increase consumer surplus in the market for PlayStations and increase producer surplus in the market for PlayStation games.
C)   decrease consumer surplus in the market for PlayStations and increase producer surplus in the market for PlayStation games.
D)   decrease consumer surplus in the market for PlayStations and decrease producer surplus in the market for PlayStation games.E) B) and D)
F) All of the above

Question 12

Consumer surplus in a market can be represented by the

Accepted Answer

A)   area below the demand curve and above the price.
B)   distance from the demand curve to the horizontal axis.
C)   distance from the demand curve to the vertical axis.
D)   area below the demand curve and above the horizontal axis.E) A) and D)
F) A) and C)

Question 13

If the current allocation of resources in the market for wallpaper is efficient, then it must be the case that

Accepted Answer

A)   producer surplus equals consumer surplus in the market for wallpaper.
B)   the market for wallpaper is in equilibrium.
C)   on the last unit of wallpaper that was produced and sold, the value to buyers exceeded the cost to sellers.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 14

Scenario 7-2
Suppose market demand and market supply are given by the equations: 
-Refer to Scenario 7-2. How much is total consumer surplus at the equilibrium price in this market?

Accepted Answer

Total consumer surpl...

Question 15

Scenario 7-1
Suppose market demand is given by the equation 
-Refer to Scenario 7-1. If the market equilibrium price is $10, how much is total consumer surplus in this market?

Accepted Answer

Consumer s...

Question 16

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

Accepted Answer

Total producer surpl...

Question 17

Table 7-20
 
-Refer to Table 7-20. How much is total producer surplus at the equilibrium price in this market?

Accepted Answer

Total producer surpl...

Question 18

Figure 7-10 
-Refer to Figure 7-10. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Accepted Answer

A)   BCG
B)   ACH
C)   DGH
D)   ABGDE) All of the above
F) A) and D)

Question 19

Figure 7-8 
-Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

Accepted Answer

A)   $150.
B)   $325.
C)   $650.
D)   $675.E) None of the above
F) A) and B)

Question 20

If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets?

Accepted Answer

A)   Consumer surplus increases.
B)   Consumer surplus decreases.
C)   Consumer surplus will not change consumer surplus; only producer surplus changes.
D)   Consumer surplus depends on what event led to the increase in the price of oak lumber.E) All of the above
F) C) and D)

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

Table 7-20 -Refer to Table 7-20. How much is total producer surplus at the equilibrium price in this market?

Correct Answer
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Total producer surpl...
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Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. How much is total consumer surplus at the equilibrium price in this market?

Correct Answer
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Total consumer surpl...
View Answer

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

Correct Answer
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Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. Which of the following is not true?

Correct Answer
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Figure 7-10 -Refer to Figure 7-10. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Correct Answer
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If the current allocation of resources in the market for wallpaper is efficient, then it must be the case that

Correct Answer
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Total surplus in a market will increase when the government

Correct Answer
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Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price is $25, how much is total producer surplus in this market?

Correct Answer
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Total prod...
View Answer

Correct Answer
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Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price is $10, how much is total consumer surplus in this market?

Correct Answer
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Consumer s...
View Answer

Steak and chicken are substitutes. A sharp reduction in the supply of steak would

Correct Answer
verified

Figure 7-8 -Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

Correct Answer
verified

If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets?

Correct Answer
verified

A seller's opportunity cost measures the

Correct Answer
verified

Consumer surplus in a market can be represented by the

Correct Answer
verified

PlayStations and PlayStation games are complementary goods. A technological advance in the production of PlayStations will

Correct Answer
verified

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

Correct Answer
verified
Total producer surpl...
View Answer

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,200, the producer surplus in the market is

Correct Answer
verified

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

Correct Answer
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Figure 7-3 -Refer to Figure 7-3. When the price rises from P1 to P2, which of the following statements is not true?

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

Table 7-20 -Refer to Table 7-20. How much is total producer surplus at the equilibrium price in this market?

Correct AnswerverifiedTotal producer surpl...View AnswerShow Answer

Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. How much is total consumer surplus at the equilibrium price in this market?

Correct AnswerverifiedTotal consumer surpl...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. Which of the following is not true?

Correct AnswerverifiedShow Answer

Figure 7-10 -Refer to Figure 7-10. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Correct AnswerverifiedShow Answer

If the current allocation of resources in the market for wallpaper is efficient, then it must be the case that

Correct AnswerverifiedShow Answer

Total surplus in a market will increase when the government

Correct AnswerverifiedShow Answer

Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price is $25, how much is total producer surplus in this market?

Correct AnswerverifiedTotal prod...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price is $10, how much is total consumer surplus in this market?

Correct AnswerverifiedConsumer s...View AnswerShow Answer

Steak and chicken are substitutes. A sharp reduction in the supply of steak would

Correct AnswerverifiedShow Answer

Figure 7-8 -Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

Correct AnswerverifiedShow Answer

If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets?

Correct AnswerverifiedShow Answer

A seller's opportunity cost measures the

Correct AnswerverifiedShow Answer

Consumer surplus in a market can be represented by the

Correct AnswerverifiedShow Answer

PlayStations and PlayStation games are complementary goods. A technological advance in the production of PlayStations will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedTotal producer surpl...View AnswerShow Answer

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,200, the producer surplus in the market is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 7-3 -Refer to Figure 7-3. When the price rises from P1 to P2, which of the following statements is not true?

Correct AnswerverifiedShow Answer

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Total producer surpl...
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Total consumer surpl...
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Total prod...
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Consumer s...
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Total producer surpl...
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