Question 1

Table 7-13
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. 
-Refer to Table 7-13. The equilibrium market price for 10 piano lessons is $300. What is the total producer surplus in the market?

Accepted Answer

The answer of Table 7-13
The numbers reveal the opportunity costs...

Question 2

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

Question 3

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) None of the above

Question 4

Figure 7-24 
-Refer to Figure 7-24. If 6 units of the good are produced and sold, then

Accepted Answer

A)   consumer surplus is greater than producer surplus.
B)   producer surplus is maximized.
C)   the sum of consumer surplus and producer surplus is maximized.
D)   consumer surplus equals producer surplus.E) B) and C)
F) C) and D)

Question 5

Figure 7-12 
-Refer to Figure 7-12. If the equilibrium price is $350, what is the producer surplus?

Accepted Answer

A)   $60,000
B)   $15,000
C)   $30,000
D)   $70,000E) All of the above
F) A) and D)

Question 6

Figure 7-6 
-Refer to Figure 7-6. At the equilibrium price, consumer surplus is

Accepted Answer

A)   $1,600.
B)   $800.
C)   $1,400.
D)   $700.E) A) and B)
F) C) and D)

Question 7

Figure 7-34 
-Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total consumer surplus?

Accepted Answer

Total consumer surpl...

Question 8

Table 7-13
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. 
-Refer to Table 7-13. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. The bids are required to be rounded to the nearest dollar. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. Your parents have given you $450 to spend on piano lessons. You believe that the sellers with higher opportunity costs offer higher quality lessons. You want the highest quality lessons that you can afford, but you can spend any remaining money on dinner with friends. From whom will you take lessons, and how much money will you spend?

Accepted Answer

A)   Peter; $450
B)   Cindy; $450
C)   Greg; $401
D)   Cindy; $401E) None of the above
F) A) and D)

Question 9

Figure 7-34 
-Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the government removed the price ceiling, by how much would total producer surplus increase for those producers entering the market after the price ceiling is removed?

Accepted Answer

When the price ceiling is remo...

Question 10

Figure 7-23 
-Refer to Figure 7-23. At equilibrium, producer surplus is represented by the area

Accepted Answer

A)   F.
B)   F+G.
C)   D+H+F.
D)   D+H+F+G+I.E) A) and B)
F) All of the above

Question 11

Which of the following will cause no change in producer surplus?

Accepted Answer

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

Question 12

The area below the demand curve and above the supply curve measures the producer surplus in a market.

Accepted Answer

A) True 
 B)False

Question 13

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

Question 14

Table 7-6
For each of three potential buyers of apples, the table displays the willingness to pay for the first three apples of the day. Assume Xavier, Yadier, and Zavi are the only three buyers of apples, and only three apples can be supplied per day. 
-Refer to Table 7-6. If the market price of an apple increases from $1.40 to $1.60, then consumer surplus

Accepted Answer

A)   decreases by $0.15.
B)   decreases by $0.30.
C)   decreases by $0.45.
D)   increases by $0.15.E) B) and D)
F) B) and C)

Question 15

Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last tomato you bought this week, you paid a price exactly equal to your willingness to pay. Then

Accepted Answer

A)   you should buy more tomatoes before the end of the week.
B)   you already have bought too many tomatoes this week.
C)   your consumer surplus on the last tomato you bought is zero.
D)   your consumer surplus on all of the tomatoes you have bought this week is zero.E) C) and D)
F) All of the above

Question 16

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $45.

Accepted Answer

A) True 
 B)False

Question 17

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 price of Vanilla Coke is $6.90, who will purchase the good?

Accepted Answer

A)   all five individuals
B)   Megan, Mallory and Audrey
C)   David, Laura and Megan
D)   David and LauraE) All of the above
F) A) and D)

Question 18

Figure 7-32 
-Refer to Figure 7-32. At what price will total surplus be maximized in this market?

Accepted Answer

.Total surplus will ...

Question 19

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) None of the above
F) C) and D)

Question 20

Figure 7-15 
-Refer to Figure 7-15. When the price falls from P2 to P1, which of the following would not be true?

Accepted Answer

A)   The sellers who still sell the good are worse off because they now receive less.
B)   Some sellers leave the market because they are not willing to sell the good at the lower price.
C)   The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price.
D)   Producer surplus would fall by area A + B.E) A) and B)
F) B) and C)

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

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $45.

Correct Answer
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Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. The equilibrium market price for 10 piano lessons is $300. What is the total producer surplus in the market?

Correct Answer
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Figure 7-12 -Refer to Figure 7-12. If the equilibrium price is $350, what is the producer surplus?

Correct Answer
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Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the government removed the price ceiling, by how much would total producer surplus increase for those producers entering the market after the price ceiling is removed?

Correct Answer
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When the price ceiling is remo...
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Which of the following will cause no change in producer surplus?

Correct Answer
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Figure 7-23 -Refer to Figure 7-23. At equilibrium, producer surplus is represented by the area

Correct Answer
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Figure 7-15 -Refer to Figure 7-15. When the price falls from P2 to P1, which of the following would not be true?

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. If the price of Vanilla Coke is $6.90, who will purchase the good?

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

Correct Answer
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Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last tomato you bought this week, you paid a price exactly equal to your willingness to pay. Then

Correct Answer
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Correct Answer
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Correct Answer
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Figure 7-34 -Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total consumer surplus?

Correct Answer
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Total consumer surpl...
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The marginal seller is the seller

Correct Answer
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The area below the demand curve and above the supply curve measures the producer surplus in a market.

Correct Answer
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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?

Correct Answer
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We can say that the allocation of resources is efficient if

Correct Answer
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Figure 7-24 -Refer to Figure 7-24. If 6 units of the good are produced and sold, then

Correct Answer
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Figure 7-6 -Refer to Figure 7-6. At the equilibrium price, consumer surplus is

Correct Answer
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Figure 7-32 -Refer to Figure 7-32. At what price will total surplus be maximized in this market?

Correct Answer
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.Total surplus will ...
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Exam 7: Consumers, Producers, and the Efficiency of Markets

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $45.

Correct AnswerverifiedShow Answer

Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. The equilibrium market price for 10 piano lessons is $300. What is the total producer surplus in the market?

Correct AnswerverifiedShow Answer

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price is $350, what is the producer surplus?

Correct AnswerverifiedShow Answer

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the government removed the price ceiling, by how much would total producer surplus increase for those producers entering the market after the price ceiling is removed?

Correct AnswerverifiedWhen the price ceiling is remo...View AnswerShow Answer

Which of the following will cause no change in producer surplus?

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Figure 7-23 -Refer to Figure 7-23. At equilibrium, producer surplus is represented by the area

Correct AnswerverifiedShow Answer

Figure 7-15 -Refer to Figure 7-15. When the price falls from P2 to P1, which of the following would not be true?

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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. If the price of Vanilla Coke is $6.90, who will purchase the good?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last tomato you bought this week, you paid a price exactly equal to your willingness to pay. Then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 7-34 -Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total consumer surplus?

Correct AnswerverifiedTotal consumer surpl...View AnswerShow Answer

The marginal seller is the seller

Correct AnswerverifiedShow Answer

The area below the demand curve and above the supply curve measures the producer surplus in a market.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

We can say that the allocation of resources is efficient if

Correct AnswerverifiedShow Answer

Figure 7-24 -Refer to Figure 7-24. If 6 units of the good are produced and sold, then

Correct AnswerverifiedShow Answer

Figure 7-6 -Refer to Figure 7-6. At the equilibrium price, consumer surplus is

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Figure 7-32 -Refer to Figure 7-32. At what price will total surplus be maximized in this market?

Correct Answerverified.Total surplus will ...View AnswerShow Answer

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When the price ceiling is remo...
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Total consumer surpl...
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.Total surplus will ...
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