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

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Question 101

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If a consumer places a value of $20 on a particular good and if the price of the good is $25,then the

A) consumer has consumer surplus of $5 if he buys the good.
B) consumer does not purchase the good.
C) price of the good will rise due to market forces.
D) market is out of equilibrium.

E) A) and D)
F) B) and C)

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Question 102

Multiple Choice

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Figure 7-15 -Refer to Figure 7-15.The efficient price is

A) $22,and the efficient quantity is 40.
B) $22,and the efficient quantity is 110.
C) $16,and the efficient quantity is 80.
D) $8,and the efficient quantity is 40.

E) None of the above
F) A) and D)

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Question 103

Multiple Choice

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Economists tend to see ticket scalping as

Economists generally believe that,although there may be advantages to society from ticket-scalping,the costs to society of this activity outweigh the benefits.

Figure 7-11 -Refer to Figure 7-11.When the price rises from P1 to P2,which area represents the increase in producer surplus to existing producers?

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,the market quantity of oranges demanded per day is

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

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

Total surplus is represented by the area

Figure 7-4 -Refer to Figure 7-4.If the government imposes a price floor of $120 in this market,then consumer surplus will decrease by

Market failure is the inability of

Figure 7-8 -Refer to Figure 7-8.If the supply curve is S and the demand curve shifts from D to D',what is the increase in producer surplus to existing producers?

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

If the United States legally allowed for a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.

Table 7-8 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-8.The equilibrium market price for 10 piano lessons is $300.What is the total producer surplus in the market?

Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

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

Efficiency refers to whether a market outcome is fair,while equality refers to whether the maximum amount of output was produced from a given number of inputs.

Denise values a stainless steel dishwasher for her new house at $500,but she succeeds in buying one for $350.Denise's consumer surplus is

Which of the following is correct?