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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 Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. 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 Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. Which of the following statements is correct? A) Neither Bob's consumer surplus nor Charisse's consumer surplus can exceed Allison's consumer surplus, for any price of an orange. B) All three individuals will buy at least one orange only if the price of an orange is less than $0.25. C) If the price of an orange is $0.60, then consumer surplus is $4.90. D) All of the above are correct. -Refer to Table 7-5. Which of the following statements is correct?


A) Neither Bob's consumer surplus nor Charisse's consumer surplus can exceed Allison's consumer surplus, for any price of an orange.
B) All three individuals will buy at least one orange only if the price of an orange is less than $0.25.
C) If the price of an orange is $0.60, then consumer surplus is $4.90.
D) All of the above are correct.

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

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Table 7-16 Table 7-16 -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, total surplus will be A) $42. B) $48. C) $54. D) $60. -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, total surplus will be


A) $42.
B) $48.
C) $54.
D) $60.

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

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Table 7-16 Table 7-16 -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, consumer surplus is A) $24. B) $36. C) $42. D) $48. -Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, consumer surplus is


A) $24.
B) $36.
C) $42.
D) $48.

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

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Figure 7-31 Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price is $25, how much is total producer surplus in this market? -Refer to Figure 7-31. If the market equilibrium price is $25, how much is total producer surplus in this market?

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Total prod...

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Wendy is willing to pay $50 for a concert ticket and Bruce would like to receive $25. If the market price is $40 for this transaction, then the total surplus would be $15.

A) True
B) False

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Figure 7-15 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 A) lower than P1. B) P1. C) between P1 and P2. D) higher than P2. -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


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

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

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On a graph, consumer surplus is represented by the area


A) between the demand and supply curves.
B) below the demand curve and above price.
C) below the price and above the supply curve.
D) below the demand curve and to the right of equilibrium price.

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

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Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is


A) $150.
B) $350.
C) $500.
D) $850.

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

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

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.Total surplus will ...

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Figure 7-22 Figure 7-22 -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus would be A) $2,500. B) $900. C) $800. D) $1,600. -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus would be


A) $2,500.
B) $900.
C) $800.
D) $1,600.

E) B) and C)
F) All of the above

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Consumer surplus


A) is the amount a buyer pays for a good minus the amount the buyer is willing to pay for it.
B) is represented on a supply-demand graph by the area below the price and above the demand curve.
C) measures the benefit sellers receive from participating in a market.
D) measures the benefit buyers receive from participating in a market.

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

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The 2005 Boston Globe article discussing ticket scalping points out that the price people will pay for tickets will rise when


A) supply and demand are both limited.
B) supply is limited and demand is not limited.
C) supply is not limited and demand is limited.
D) supply and demand are both not limited.

E) None of the above
F) All of the above

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Table 7-8 During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase. Table 7-8 During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase. -Refer to Table 7-8. The price that Chad paid for a latte on the second day is A) $0.25 less than the amount he paid on the first day. B) $1.00 less than the amount he paid on the first day. C) $1.50 less than the amount he paid on the first day. D) $0.50 less than the amount he paid on the first day. -Refer to Table 7-8. The price that Chad paid for a latte on the second day is


A) $0.25 less than the amount he paid on the first day.
B) $1.00 less than the amount he paid on the first day.
C) $1.50 less than the amount he paid on the first day.
D) $0.50 less than the amount he paid on the first day.

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

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Which of the following statements is not correct about a market in equilibrium?


A) The price determines which buyers and which sellers participate in the market.
B) Those buyers who value the good more than the price choose to buy the good.
C) Those sellers whose costs are less than the price choose to produce and sell the good.
D) Consumer surplus will be equal to producer surplus.

E) A) and B)
F) All of the above

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Economists normally assume people's preferences should be


A) respected.
B) adjusted.
C) overruled.
D) ignored.

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

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Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called


A) deadweight loss.
B) willingness to pay.
C) consumer surplus.
D) producer surplus.

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

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Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?


A) profits and costs to firms
B) consumer and producer surplus
C) the equilibrium price and quantity
D) incomes of and prices paid by buyers

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

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Figure 7-32 Figure 7-32 -Refer to Figure 7-32. If the government imposed a price ceiling at $20 in this market, how much are consumer surplus, producer surplus, and total surplus? -Refer to Figure 7-32. If the government imposed a price ceiling at $20 in this market, how much are consumer surplus, producer surplus, and total surplus?

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Consumer surplus is ...

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What do economists call the highest amount a consumer will pay to purchase a good?

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The (maxim...

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Table 7-3 The only four consumers in a market have the following willingness to pay for a good: Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If the price is $20, then consumer surplus in the market is A) $20, and Wilbur and Ming-la purchase the good. B) $45, and Carlos and Quilana purchase the good. C) $45, and Quilana, Wilbur, and Ming-la purchase the good. D) $55, and Carlos, Wilbur, and Ming-la purchase the good. -Refer to Table 7-3. If the price is $20, then consumer surplus in the market is


A) $20, and Wilbur and Ming-la purchase the good.
B) $45, and Carlos and Quilana purchase the good.
C) $45, and Quilana, Wilbur, and Ming-la purchase the good.
D) $55, and Carlos, Wilbur, and Ming-la purchase the good.

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

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