Question 1

If the government imposes a binding price floor in a market, then the consumer surplus in that market will increase.

Accepted Answer

A) True 
 B)False

Question 2

Consumer surplus equals the

Accepted Answer

A)   value to buyers minus the amount paid by buyers.
B)   value to buyers minus the cost to sellers.
C)   amount received by sellers minus the cost to sellers.
D)   amount received by sellers minus the amount paid by buyers.E) A) and C)
F) B) and C)

Question 3

Figure 7-3 
-Refer to Figure 7-3. When the price is P1, consumer surplus is

Accepted Answer

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

Question 4

Figure 7-22 
-Refer to Figure 7-22. If the price decreases from $80 to $70 due to a shift in the supply curve, consumer surplus increases by

Accepted Answer

A)   $250.
B)   $750.
C)   $1000.
D)   $500.E) C) and D)
F) B) and D)

Question 5

Table 7-18
The following table shows the willingness to pay for a good for the only four consumers in a market. 
-Refer to Table 7-18. If the price of the good is $20, how many units will be demanded?

Accepted Answer

Three unit...

Question 6

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $90.

Accepted Answer

A) True 
 B)False

Question 7

Table 7-17 
-Refer to Table 7-17. At a price of $2.00, total surplus is

Accepted Answer

A)   larger than it would be at the equilibrium price.
B)   smaller than it would be at the equilibrium price.
C)   the same as it would be at the equilibrium price.
D)   There is insufficient information to make this determination.E) A) and B)
F) A) and C)

Question 8

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

Question 9

Producer surplus is

Accepted Answer

A)   measured using the demand curve for a good.
B)   always a negative number for sellers in a competitive market.
C)   the amount a seller is paid minus the cost of production.
D)   the opportunity cost of production minus the cost of producing goods that go unsold.E) A) and C)
F) None of the above

Question 10

Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $425. Billie Jo's willingness to pay for the dishwasher is

Accepted Answer

A)   $150.
B)   $425.
C)   $500.
D)   $850.E) None of the above
F) B) and D)

Question 11

Figure 7-33 
-Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price.
How much is total surplus in this market at the new equilibrium price?

Accepted Answer

Total surplus at the...

Question 12

Table 7-20 
-Refer to Table 7-20. How much is total surplus at the equilibrium price in this market?

Accepted Answer

Total surp...

Question 13

Figure 7-30 
-Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the increase in consumer surplus to the consumers who were initially in the market at the $120 price?

Accepted Answer

Consumer surplus inc...

Question 14

Figure 7-19 
-Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be

Accepted Answer

A)   $137.50.
B)   $125.00.
C)   $187.50.
D)   $275.00.E) B) and C)
F) A) and C)

Question 15

Producer surplus directly measures

Accepted Answer

A)   the well-being of society as a whole.
B)   the well-being of buyers and sellers.
C)   the well-being of sellers.
D)   sellers' willingness to sell.E) A) and B)
F) All of the above

Question 16

On a graph, consumer surplus is represented by the area

Accepted Answer

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

Question 17

Which of the following equations is valid?

Accepted Answer

A)   Consumer surplus = Total surplus - Cost to sellers
B)   Producer surplus = Total surplus - Consumer surplus
C)   Total surplus = Value to buyers - Amount paid by buyers
D)   Total surplus = Amount received by sellers - Cost to sellersE) A) and C)
F) A) and B)

Question 18

Figure 7-18 
-Refer to Figure 7-18. Suppose the willingness to pay of the marginal buyer of the 3rd unit is $125. Then total surplus is maximized if

Accepted Answer

A)   1 unit of the good is produced and sold.
B)   2 units of the good are produced and sold.
C)   3 units of the good are produced and sold.
D)   4 units of the good are produced and sold.E) C) and D)
F) A) and B)

Question 19

Figure 7-33 
-Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price.
How much is total producer surplus in this market at the new equilibrium price?

Accepted Answer

Total producer surpl...

Question 20

Figure 7-33 
-Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price.
How much is total consumer surplus in this market at the new equilibrium price?

Accepted Answer

Total consumer surpl...

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

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total consumer surplus in this market at the new equilibrium price?

Correct AnswerverifiedTotal consumer surpl...View AnswerShow Answer

Producer surplus is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $425. Billie Jo's willingness to pay for the dishwasher is

Correct AnswerverifiedShow Answer

Table 7-18 The following table shows the willingness to pay for a good for the only four consumers in a market. -Refer to Table 7-18. If the price of the good is $20, how many units will be demanded?

Correct AnswerverifiedThree unit...View AnswerShow Answer

Figure 7-18 -Refer to Figure 7-18. Suppose the willingness to pay of the marginal buyer of the 3rd unit is $125. Then total surplus is maximized if

Correct AnswerverifiedShow Answer

Figure 7-3 -Refer to Figure 7-3. When the price is P1, consumer surplus is

Correct AnswerverifiedShow Answer

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total producer surplus in this market at the new equilibrium price?

Correct AnswerverifiedTotal producer surpl...View AnswerShow Answer

Consumer surplus equals the

Correct AnswerverifiedShow Answer

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the increase in consumer surplus to the consumers who were initially in the market at the $120 price?

Correct AnswerverifiedConsumer surplus inc...View AnswerShow Answer

Producer surplus directly measures

Correct AnswerverifiedShow Answer

Figure 7-19 -Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be

Correct AnswerverifiedShow Answer

Figure 7-22 -Refer to Figure 7-22. If the price decreases from $80 to $70 due to a shift in the supply curve, consumer surplus increases by

Correct AnswerverifiedShow Answer

Which of the following equations is valid?

Correct AnswerverifiedShow Answer

If the government imposes a binding price floor in a market, then the consumer surplus in that market will increase.

Correct AnswerverifiedShow Answer

On a graph, consumer surplus is represented by the area

Correct AnswerverifiedShow Answer

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $90.

Correct AnswerverifiedShow Answer

Table 7-20 -Refer to Table 7-20. How much is total surplus at the equilibrium price in this market?

Correct AnswerverifiedTotal surp...View AnswerShow Answer

Table 7-17 -Refer to Table 7-17. At a price of $2.00, total surplus is

Correct AnswerverifiedShow Answer

Figure 7-33 -Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total surplus in this market at the new equilibrium price?

Correct AnswerverifiedTotal surplus at the...View AnswerShow Answer

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Total consumer surpl...
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Three unit...
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Total producer surpl...
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Consumer surplus inc...
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Total surp...
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Total surplus at the...
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