Question 1

Figure 7-4 
-Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

Accepted Answer

A)   BDF
B)   AFG
C)   BCGD
D)   ABCE) A) and B)
F) B) and C)

Question 2

Figure 7-24 
-Refer to Figure 7-24. At equilibrium, consumer surplus is measured by the area

Accepted Answer

A)   AHG.
B)   AFB.
C)   ABD.
D)   BDF.E) B) and D)
F) A) and B)

Question 3

Producer surplus equals

Accepted Answer

A)   Value to buyers - Amount paid by buyers.
B)   Amount received by sellers - Costs of sellers.
C)   Value to buyers - Costs of sellers.
D)   Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers.E) A) and C)
F) None of the above

Question 4

Table 7-14
The only four producers in a market have the following costs:
 
-Refer to Table 7-14. If Abbey, Bev, and Carl sell the good, and the resulting producer surplus is $55 altogether, then the price must have been

Accepted Answer

A)   $40.
B)   $50.
C)   $60.
D)   $70.E) A) and B)
F) B) and C)

Question 5

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

Accepted Answer

Consumer s...

Question 6

Figure 7-27 
-Refer to Figure 7-27. If the government mandated a price increase from P1 to a higher price, then

Accepted Answer

A)   total surplus would decrease.
B)   consumer surplus would increase.
C)   total surplus would increase, since producer surplus would increase.
D)   total surplus would remain unchanged.E) B) and D)
F) B) and C)

Question 7

Figure 7-34 
-Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. How much is total producer surplus with the price ceiling in place?

Accepted Answer

Total producer surpl...

Question 8

A buyer is willing to buy a product at a price greater than or equal to his willingness to pay, but would refuse to buy a product at a price less than his willingness to pay.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)   Producer surplus increases by $625.
B)   Producer surplus increases by $1,875.
C)   Producer surplus decreases by $625.
D)   Producer surplus decreases by $1,875.E) C) and D)
F) A) and B)

Question 10

Figure 7-22 
-Refer to Figure 7-22. If 40 units of the good are bought and sold, then

Accepted Answer

A)   the marginal cost to sellers is equal to the marginal value to buyers.
B)   the marginal value to buyers is greater than the marginal cost to sellers.
C)   the marginal cost to sellers is greater than the marginal value to buyers.
D)   producer surplus would be greater than consumer surplus.E) B) and D)
F) None of the above

Question 11

Figure 7-15 
-Refer to Figure 7-15. Suppose producer surplus is larger than C but smaller than A+B+C. The price of the good must be

Accepted Answer

A)   lower than P1.
B)   P1.
C)   between P1 and P2.
D)   higher than P2.E) B) and C)
F) A) and D)

Question 12

Figure 7-34 
-Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase?

Accepted Answer

With the removal of the price ...

Question 13

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $35.

Accepted Answer

A) True 
 B)False

Question 14

Figure 7-26 
-Refer to Figure 7-26. At the equilibrium price, producer surplus is

Accepted Answer

A)   $600.
B)   $900.
C)   $1,200.
D)   $1,800.E) All of the above
F) C) and D)

Question 15

Figure 7-31 
-Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the producer surplus for the producers entering the market after the price increase?

Accepted Answer

The producer surplus...

Question 16

Producer surplus is the cost of production minus the amount a seller is paid.

Accepted Answer

A) True 
 B)False

Question 17

Table 7-11
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-11. If the market price is $1,000, the producer surplus in the market is

Accepted Answer

A)   $1000.
B)   $300.
C)   $1,700.
D)   $700.E) B) and C)
F) C) and D)

Question 18

A seller's willingness to sell is

Accepted Answer

A)   measured by the seller's cost of production.
B)   related to her supply curve, just as a buyer's willingness to buy is related to his demand curve.
C)   less than the price received if producer surplus is a positive number.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 19

Figure 7-32 
-Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is consumer surplus?

Accepted Answer

Consumer s...

Question 20

Figure 7-25 
-Refer to Figure 7-25. Suppose the government imposes a price ceiling of $16 in this market. If the buyers with the highest willingness to pay purchase the good, then total surplus will be

Accepted Answer

A)   $256.
B)   $768.
C)   $1,024.
D)   $1,280.E) A) and C)
F) C) and D)

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

Figure 7-22 -Refer to Figure 7-22. If 40 units of the good are bought and sold, then

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Figure 7-25 -Refer to Figure 7-25. Suppose the government imposes a price ceiling of $16 in this market. If the buyers with the highest willingness to pay purchase the good, then total surplus will be

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Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the producer surplus for the producers entering the market after the price increase?

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Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,000, the producer surplus in the market is

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A seller's willingness to sell is

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Figure 7-32 -Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much is consumer surplus?

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Figure 7-24 -Refer to Figure 7-24. At equilibrium, consumer surplus is measured by the area

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Producer surplus is the cost of production minus the amount a seller is paid.

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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. How much is total producer surplus with the price ceiling in place?

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Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase?

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Table 7-14 The only four producers in a market have the following costs: -Refer to Table 7-14. If Abbey, Bev, and Carl sell the good, and the resulting producer surplus is $55 altogether, then the price must have been

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A buyer is willing to buy a product at a price greater than or equal to his willingness to pay, but would refuse to buy a product at a price less than his willingness to pay.

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

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Figure 7-26 -Refer to Figure 7-26. At the equilibrium price, producer surplus is

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Figure 7-27 -Refer to Figure 7-27. If the government mandated a price increase from P1 to a higher price, then

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Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

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If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $35.

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

Correct AnswerverifiedConsumer s...View AnswerShow Answer

Producer surplus equals

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Figure 7-15 -Refer to Figure 7-15. Suppose producer surplus is larger than C but smaller than A+B+C. The price of the good must be

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The producer surplus...
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Consumer s...
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Total producer surpl...
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With the removal of the price ...
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Consumer s...
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