Question 1

The "invisible hand" refers to

Accepted Answer

A)   the marketplace guiding the self-interests of market participants into promoting general economic well-being.
B)   the fact that social planners sometimes have to intervene,even in perfectly competitive markets,to make those markets more efficient.
C)   the equality that results from market forces allocating the goods produced in the market.
D)   the automatic maximization of consumer surplus in free markets.E) A) and B)
F) A) and C)

Question 2

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 3

Figure 7-18 
-Refer to Figure 7-18.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.The increase in producer surplus would be

Accepted Answer

A)   $210.
B)   $360.
C)   $480.
D)   $570.E) All of the above
F) A) and D)

Question 4

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

Accepted Answer

A)   both the value of MP3 players to consumers and the cost of producing MP3 players has increased.
B)   both the value of MP3 players to consumers and the cost of producing MP3 players has decreased.
C)   the value of MP3 players to consumers has decreased,and the cost of producing MP3 players has increased.
D)   the value of MP3 players to consumers has increased,and the cost of producing MP3 players has decreased.E) B) and C)
F) All of the above

Question 5

Welfare economics is the study of

Accepted Answer

A)   taxes and subsidies.
B)   how technology is best put to use in the production of goods and services.
C)   government welfare programs for needy people.
D)   how the allocation of resources affects economic well-being.E) None of the above
F) A) and D)

Question 6

Scenario 7-1
Suppose market demand is given by the equation 
-Refer to Scenario 7-1.If the market equilibrium price falls from $10 to $5,how much additional consumer surplus do consumers initially in the market at the $10 price receive?

Accepted Answer

The consumers initially in the...

Question 7

Figure 7-4 
-Suppose John's cost for performing some carpentry work is $120.If John is paid $200 for the carpentry work,what is his producer surplus?

Accepted Answer

His produc...

Question 8

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field.Assume the ticket has no resale value.Willie Nelson is performing on the same night,and his concert is your next-best alternative activity.Tickets to see Willie Nelson cost $40.On any given day,you would be willing to pay up to $50 to see and hear Willie Nelson perform.Assume there are no other costs of seeing either event.Based on this information,at a minimum,how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?

Accepted Answer

A)   $0
B)   $10
C)   $40
D)   $50E) B) and D)
F) B) and C)

Question 9

Total surplus is represented by the area below the

Accepted Answer

A)   demand curve and above the price.
B)   price and up to the point of equilibrium.
C)   demand curve and above the supply curve,up to the equilibrium quantity.
D)   demand curve and above the horizontal axis,up to the equilibrium quantity.E) All of the above
F) A) and B)

Question 10

Figure 7-13 
-Refer to Figure 7-13.Producer surplus amounts to $300 if the price of the good is

Accepted Answer

A)   $300.
B)   $350.
C)   $400.
D)   $450.E) C) and D)
F) A) and B)

Question 11

The Surgeon General announces that eating chocolate increases tooth decay.As a result,the equilibrium price of chocolate

Accepted Answer

A)   increases,and producer surplus increases.
B)   increases,and producer surplus decreases.
C)   decreases,and producer surplus increases.
D)   decreases,and producer surplus decreases.E) B) and D)
F) A) and D)

Question 12

Table 7-1
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 7-1.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) A) and B)
F) A) and C)

Question 13

Which of the following is not equal to total surplus?

Accepted Answer

A)   consumer surplus - producer surplus
B)   buyers' willingnesses to pay - sellers' costs
C)   value to buyers - amount paid by buyers + amount received by sellers - cost to sellers
D)   value to buyers - cost to sellersE) B) and C)
F) C) and D)

Question 14

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) None of the above
F) All of the above

Question 15

Producer surplus directly measures

Accepted Answer

A)   the well-being of sellers.
B)   production costs.
C)   excess demand.
D)   unsold inventories.E) All of the above
F) A) and D)

Question 16

Figure 7-6 
-Refer to Figure 7-6.What is the consumer surplus if the price is $100?

Accepted Answer

A)   $2,500
B)   $5,000
C)   $10,000
D)   $20,000E) A) and B)
F) B) and C)

Question 17

Ray buys a new tractor for $118,000.He receives consumer surplus of $13,000 on his purchase.Ray's willingness to pay is

Accepted Answer

A)   $13,000.
B)   $105,000.
C)   $118,000.
D)   $131,000.E) A) and B)
F) A) and C)

Question 18

All else equal,an increase in supply will cause an increase in consumer surplus.

Accepted Answer

A) True 
 B)False

Question 19

Figure 7-20 
-Refer to Figure 7-20.At equilibrium,consumer surplus is

Accepted Answer

A)   $36.
B)   $72.
C)   $108.
D)   $144.E) None of the above
F) A) and C)

Question 20

Suppose consumer income increases.If grass seed is a normal good,the equilibrium price of grass seed will

Accepted Answer

A)   decrease,and producer surplus in the industry will decrease.
B)   increase,and producer surplus in the industry will increase.
C)   decrease,and producer surplus in the industry will increase.
D)   increase,and producer surplus in the industry will decrease.E) B) and C)
F) A) and B)

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

Correct Answer
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Total surplus is represented by the area below the

Correct Answer
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A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

Correct Answer
verified

Correct Answer
verified

Producer surplus directly measures

Correct Answer
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Figure 7-4 -Suppose John's cost for performing some carpentry work is $120.If John is paid $200 for the carpentry work,what is his producer surplus?

Correct Answer
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His produc...
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The "invisible hand" refers to

Correct Answer
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Figure 7-13 -Refer to Figure 7-13.Producer surplus amounts to $300 if the price of the good is

Correct Answer
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A seller's opportunity cost measures the

Correct Answer
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Figure 7-6 -Refer to Figure 7-6.What is the consumer surplus if the price is $100?

Correct Answer
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The Surgeon General announces that eating chocolate increases tooth decay.As a result,the equilibrium price of chocolate

Correct Answer
verified

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1.If the market equilibrium price falls from $10 to $5,how much additional consumer surplus do consumers initially in the market at the $10 price receive?

Correct Answer
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The consumers initially in the...
View Answer

Welfare economics is the study of

Correct Answer
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Ray buys a new tractor for $118,000.He receives consumer surplus of $13,000 on his purchase.Ray's willingness to pay is

Correct Answer
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Which of the following is not equal to total surplus?

Correct Answer
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Figure 7-18 -Refer to Figure 7-18.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.The increase in producer surplus would be

Correct Answer
verified

Figure 7-20 -Refer to Figure 7-20.At equilibrium,consumer surplus is

Correct Answer
verified

Suppose consumer income increases.If grass seed is a normal good,the equilibrium price of grass seed will

Correct Answer
verified

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

Correct Answer
verified

All else equal,an increase in supply will cause an increase in consumer surplus.

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

Total surplus is represented by the area below the

Correct AnswerverifiedShow Answer

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Producer surplus directly measures

Correct AnswerverifiedShow Answer

Figure 7-4 -Suppose John's cost for performing some carpentry work is $120.If John is paid $200 for the carpentry work,what is his producer surplus?

Correct AnswerverifiedHis produc...View AnswerShow Answer

The "invisible hand" refers to

Correct AnswerverifiedShow Answer

Figure 7-13 -Refer to Figure 7-13.Producer surplus amounts to $300 if the price of the good is

Correct AnswerverifiedShow Answer

A seller's opportunity cost measures the

Correct AnswerverifiedShow Answer

Figure 7-6 -Refer to Figure 7-6.What is the consumer surplus if the price is $100?

Correct AnswerverifiedShow Answer

The Surgeon General announces that eating chocolate increases tooth decay.As a result,the equilibrium price of chocolate

Correct AnswerverifiedShow Answer

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1.If the market equilibrium price falls from $10 to $5,how much additional consumer surplus do consumers initially in the market at the $10 price receive?

Correct AnswerverifiedThe consumers initially in the...View AnswerShow Answer

Welfare economics is the study of

Correct AnswerverifiedShow Answer

Ray buys a new tractor for $118,000.He receives consumer surplus of $13,000 on his purchase.Ray's willingness to pay is

Correct AnswerverifiedShow Answer

Which of the following is not equal to total surplus?

Correct AnswerverifiedShow Answer

Figure 7-18 -Refer to Figure 7-18.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.The increase in producer surplus would be

Correct AnswerverifiedShow Answer

Figure 7-20 -Refer to Figure 7-20.At equilibrium,consumer surplus is

Correct AnswerverifiedShow Answer

Suppose consumer income increases.If grass seed is a normal good,the equilibrium price of grass seed will

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

All else equal,an increase in supply will cause an increase in consumer surplus.

Correct AnswerverifiedShow Answer

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His produc...
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The consumers initially in the...
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