Question 1

Inefficiency exists in an economy when a good is

Accepted Answer

A)   not being consumed by buyers who value it most highly.
B)   not distributed fairly among buyers.
C)   not produced because buyers do not value it very highly.
D)   being produced with less than all available resources.E) C) and D)
F) None of the above

Question 2

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.If the market price of an orange is $1.20,then consumer surplus amounts to

Accepted Answer

A)   $0.70.
B)   $1.10.
C)   $1.40.
D)   $5.00.E) None of the above
F) A) and D)

Question 3

Janine would be willing to pay $50 to see Les Misérables,but she buys a ticket for only $30.Janine values the performance at

Accepted Answer

A)   $20.
B)   $30.
C)   $50.
D)   $80.E) All of the above
F) B) and C)

Question 4

Figure 7-19
 
-Refer to Figure 7-19.If the price were P3,consumer surplus would be represented by the area

Accepted Answer

A)   A.
B)   A+B+C.
C)   D+H+F.
D)   A+B+C+D+H+F.E) B) and C)
F) A) and B)

Question 5

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Accepted Answer

A)   $15.
B)   $30.
C)   $45.
D)   $90.E) A) and B)
F) A) and C)

Question 6

The marginal seller is the seller

Accepted Answer

A)   for whom the marginal cost of producing one more unit of output is the lowest among all sellers, and the marginal buyer is the buyer for whom the marginal benefit of one more unit of the good is the highest among all buyers.
B)   who supplies the smallest quantity of the good among all sellers, and the marginal buyer is the buyer who demands the smallest quantity of the good among all buyers.
C)   who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher.
D)   who has the largest producer surplus, and the marginal buyer is the buyer who has the largest consumer surplus.E) None of the above
F) All of the above

Question 7

Figure 7-19
 
-Refer to Figure 7-19.The efficient price-quantity combination is

Accepted Answer

A)   P1 and Q1.
B)   P2 and Q2.
C)   P3 and Q1.
D)   P4 and 0.E) None of the above
F) B) and D)

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.If the market price is $5.50,the consumer surplus in the market will be

Accepted Answer

A)   $3.00.
B)   $4.50.
C)   $15.50.
D)   $21.00.E) B) and D)
F) A) and D)

Question 9

Free markets allocate (a)the supply of goods to the buyers who value them most highly and (b)the demand for goods to the sellers who can produce them at least cost.

Accepted Answer

A) True 
 B)False

Question 10

Table 7-8
The only four producers in a market have the following costs:
 
-Refer to Table 7-8.If the sellers bid against each other for the right to sell the good to a consumer,then the producer surplus will be

Accepted Answer

A)   $0 or slightly more.
B)   $50 or slightly less.
C)   $150 or slightly less.
D)   $200 or slightly more.E) None of the above
F) All of the above

Question 11

Anita sharpens knives in her spare time for extra income.Buyers of her service are willing to pay $3.50 per knife for as many knives as Anita is willing to sharpen.On a particular day,she is willing to sharpen the first knife for $2.00,the second knife for $2.50,the third knife for $3.00,and the fourth knife for $3.50.Assume Anita is rational in deciding how many knives to sharpen.Her producer surplus is

Accepted Answer

A)   $3.50.
B)   $3.00.
C)   $2.00.
D)   $0.50.E) A) and B)
F) B) and D)

Question 12

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

Question 13

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Accepted Answer

A) True 
 B)False

Question 14

At present,the maximum legal price for a human kidney is $0.The price of $0 maximizes

Accepted Answer

A)   consumer surplus but not producer surplus.
B)   producer surplus but not consumer surplus.
C)   both consumer and producer surplus.
D)   neither consumer nor producer surplus.E) B) and C)
F) A) and B)

Question 15

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

Accepted Answer

A)   an increase in the production cost of the good
B)   a technological improvement in the production of the good
C)   a decrease in the number of sellers of the good
D)   the imposition of a binding price floor in the marketE) B) and C)
F) A) and D)

Question 16

When the supply of a good increases and the demand for the good remains unchanged,consumer surplus

Accepted Answer

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

Question 17

The study of how the allocation of resources affects economic well-being is called

Accepted Answer

A)   consumer economics.
B)   macroeconomics.
C)   willingness-to-pay economics.
D)   welfare economics.E) A) and B)
F) C) and D)

Question 18

For any given quantity,the price on a demand curve represents the marginal buyer's willingness to pay.

Accepted Answer

A) True 
 B)False

Question 19

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 4 if the price is

Accepted Answer

A)   $770.
B)   $970.
C)   $1,170.
D)   $1,370.E) B) and C)
F) A) and D)

Question 20

An increase in price increases consumer surplus.

Accepted Answer

A) True 
 B)False

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

Figure 7-19 -Refer to Figure 7-19.The efficient price-quantity combination is

Correct Answer
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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 4 if the price is

Correct Answer
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Table 7-8 The only four producers in a market have the following costs: -Refer to Table 7-8.If the sellers bid against each other for the right to sell the good to a consumer,then the producer surplus will be

Correct Answer
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Efficiency in a market is achieved when

Correct Answer
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The marginal seller is the seller

Correct Answer
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An increase in price increases consumer surplus.

Correct Answer
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Figure 7-19 -Refer to Figure 7-19.If the price were P3,consumer surplus would be represented by the area

Correct Answer
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Free markets allocate (a)the supply of goods to the buyers who value them most highly and (b)the demand for goods to the sellers who can produce them at least cost.

Correct Answer
verified

Inefficiency exists in an economy when a good is

Correct Answer
verified

When the supply of a good increases and the demand for the good remains unchanged,consumer surplus

Correct Answer
verified

At present,the maximum legal price for a human kidney is $0.The price of $0 maximizes

Correct Answer
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Which of the following will cause an increase in consumer surplus?

Correct Answer
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Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Correct Answer
verified

For any given quantity,the price on a demand curve represents the marginal buyer's willingness to pay.

Correct Answer
verified

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Correct Answer
verified

Janine would be willing to pay $50 to see Les Misérables,but she buys a ticket for only $30.Janine values the performance at

Correct Answer
verified

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2.If the market price is $5.50,the consumer surplus in the market will be

Correct Answer
verified

The study of how the allocation of resources affects economic well-being is called

Correct Answer
verified

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

Figure 7-19 -Refer to Figure 7-19.The efficient price-quantity combination is

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 4 if the price is

Correct AnswerverifiedShow Answer

Table 7-8 The only four producers in a market have the following costs: -Refer to Table 7-8.If the sellers bid against each other for the right to sell the good to a consumer,then the producer surplus will be

Correct AnswerverifiedShow Answer

Efficiency in a market is achieved when

Correct AnswerverifiedShow Answer

The marginal seller is the seller

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An increase in price increases consumer surplus.

Correct AnswerverifiedShow Answer

Figure 7-19 -Refer to Figure 7-19.If the price were P3,consumer surplus would be represented by the area

Correct AnswerverifiedShow Answer

Free markets allocate (a)the supply of goods to the buyers who value them most highly and (b)the demand for goods to the sellers who can produce them at least cost.

Correct AnswerverifiedShow Answer

Inefficiency exists in an economy when a good is

Correct AnswerverifiedShow Answer

When the supply of a good increases and the demand for the good remains unchanged,consumer surplus

Correct AnswerverifiedShow Answer

At present,the maximum legal price for a human kidney is $0.The price of $0 maximizes

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Correct AnswerverifiedShow Answer

For any given quantity,the price on a demand curve represents the marginal buyer's willingness to pay.

Correct AnswerverifiedShow Answer

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Correct AnswerverifiedShow Answer

Janine would be willing to pay $50 to see Les Misérables,but she buys a ticket for only $30.Janine values the performance at

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.If the market price is $5.50,the consumer surplus in the market will be

Correct AnswerverifiedShow Answer

The study of how the allocation of resources affects economic well-being is called

Correct AnswerverifiedShow Answer

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