Question 1

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers increased from $6 to $8:

Accepted Answer

A)  producer participation in the market would increase.
B)  producer participation in the market would decrease.
C)  producer participation in the market would remain unchanged.
D)  total producer surplus would increase by $2.E) B) and C)
F) None of the above

Question 2

A market has four individuals, each considering buying a grill. Assume that grills come in only one size and model. Martina considers herself a grill-master, and finds a grill a necessity, so she is willing to pay $400 for a grill. Javier is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Kamal wants to impress his friends with his vegetable grilling skills and is willing to pay $320 for a grill. Lina loves grilled shrimp and thinks it might be cheaper in the long run if she grills her own shrimp instead of eating out at a restaurant, so she is willing to pay $200 for a grill.If the market price of grills is $350, what is total consumer surplus?

Accepted Answer

A)  $750
B)  $400
C)  $50
D)  $870E) B) and C)
F) All of the above

Question 3

If Thelma's willingness to sell her homemade fudge is $4, at which of the following prices would Thelma sell?

Accepted Answer

A)  $2
B)  $3.99
C)  $4.01
D)  Thelma would not sell her fudge at any of these prices.E) C) and D)
F) A) and C)

Question 4

Assume the market depicted in the graph is in equilibrium. If the market price is set to $12, which of the following statements is true?

Accepted Answer

A)  For those still interacting in the market, some surplus will be transferred from buyer to seller.
B)  For those still interacting in the market, some surplus will be transferred from seller to buyer.
C)  Producers will gain the surplus of those buyers who drop out of the market.
D)  Consumers will gain the surplus of those sellers who drop out of the market.E) C) and D)
F) B) and D)

Question 5

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers increased from $9 to $12, total producer surplus would increase by:

Accepted Answer

A)  $1.
B)  $3.
C)  $5.
D)  $7.E) A) and B)
F) B) and C)

Question 6

At prices above a consumer's willingness to pay:

Accepted Answer

A)  the opportunity cost of buying the good is less than the benefit received from having the good.
B)  the opportunity cost of buying the good is greater than the benefit received from having the good.
C)  the buyer will purchase the good and attempt to resell after receiving due benefit.
D)  the buyer needs more income in order to buy the good.E) B) and C)
F) All of the above

Question 7

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers decreased from $15 to $11:

Accepted Answer

A)  total producer surplus would fall by $4.
B)  producer surplus would fall by $4 for each producer.
C)  House Depot's producer surplus would fall by $4.
D)  total producer surplus would fall by $8.E) B) and C)
F) A) and C)

Question 8

According to the graph shown, if the market goes from equilibrium to having its price set at $10 producer surplus will:

Accepted Answer

A)  rise by area B, but fall by area G.
B)  rise by area B + C + D + E.
C)  rise by area B + C, but fall by area C + G.
D)  rise by area B, but fall by area C + G.E) A) and B)
F) A) and C)

Question 9

Creating a market that was previously missing:

Accepted Answer

A)  redistributes surplus from buyer to seller.
B)  creates more total surplus.
C)  redistributes surplus from seller to buyer.
D)  redistributes surplus from a pre-existing market to the one that was previously missing.E) A) and B)
F) B) and D)

Question 10

Assume the market depicted in the graph is in equilibrium. If the price is subsequently set at $22, which of the following statements is true?
I. Some producers will gain surplus.
II. Some surplus will be transferred from producers to consumers.
III. Total surplus will fall.

Accepted Answer

A)  III only
B)  II and III only
C)  I and II only
D)  I, II, and IIIE) None of the above
F) A) and C)

Question 11

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers decreased from $15 to $10:

Accepted Answer

A)  Bob's Hardware would lose $5 of producer surplus.
B)  producer surplus would fall by $5 for each producer.
C)  Bob's Hardware would no longer sell hammers.
D)  total producer surplus would fall by $15.E) A) and B)
F) None of the above

Question 12

Assume the market depicted in the graph is in equilibrium. What is total surplus?

Accepted Answer

A)  $30
B)  $20
C)  $50
D)  $60E) All of the above
F) A) and B)

Question 13

Which of the following is an example of a missing market?

Accepted Answer

A)  The market to buy and sell children for adoption
B)  The market for typewriters
C)  The market for student loans
D)  None of these exemplify a missing market.E) B) and D)
F) B) and C)

Question 14

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Accepted Answer

A)  $10
B)  $15
C)  $20
D)  $30E) A) and C)
F) A) and D)

Question 15

Assume the market depicted in the graph is in equilibrium. Consumer surplus is the area:

Accepted Answer

A)  under the supply curve and above the market price.
B)  above the supply curve and below the market price.
C)  under the demand curve and above the market price.
D)  above the demand curve and below the market price.E) A) and D)
F) A) and C)

Question 16

If price is set at $11 in the market shown in the graph, total surplus will consist of areas:

Accepted Answer

A)  A + B + G + C + G + H + I + J + L.
B)  A + B + G + L.
C)  A + B + C + G + H + L.
D)  A + B + C + G + H + I + J + L + M + N + O.E) A) and B)
F) A) and C)

Question 17

In a well-functioning competitive market, total surplus equals:

Accepted Answer

A)  producer surplus plus consumer surplus.
B)  producer surplus minus consumer surplus.
C)  consumer surplus minus producer surplus.
D)  the total amount spent on a good in a market.E) B) and D)
F) C) and D)

Question 18

A consumer's willingness to pay:

Accepted Answer

A)  is the maximum price that the consumer would be willing to pay for a good or service.
B)  is the minimum price that the consumer would be willing to pay for a good or service.
C)  is known as the consumer's reserved minimum bid-price.
D)  must always equal a seller's willingness to sell.E) B) and C)
F) A) and D)

Question 19

When the market price is set above the equilibrium price:

Accepted Answer

A)  total surplus increases.
B)  consumer surplus increases for some consumers but falls for others.
C)  there are no exchanges that can make some better off without others becoming worse off.
D)  the market is not efficient.E) A) and C)
F) B) and D)

Question 20

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Accepted Answer

A)  $36
B)  $72
C)  $120
D)  $60E) B) and D)
F) B) and C)

Exam 5: Efficiency

Assume the market depicted in the graph is in equilibrium. If the price is subsequently set at $22, which of the following statements is true? I. Some producers will gain surplus. II. Some surplus will be transferred from producers to consumers. III. Total surplus will fall.

Correct Answer
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Correct Answer
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Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Correct Answer
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Assume the market depicted in the graph is in equilibrium. Consumer surplus is the area:

Correct Answer
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Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Correct Answer
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Which of the following is an example of a missing market?

Correct Answer
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According to the graph shown, if the market goes from equilibrium to having its price set at $10 producer surplus will:

Correct Answer
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Correct Answer
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A consumer's willingness to pay:

Correct Answer
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When the market price is set above the equilibrium price:

Correct Answer
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If Thelma's willingness to sell her homemade fudge is $4, at which of the following prices would Thelma sell?

Correct Answer
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Correct Answer
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In a well-functioning competitive market, total surplus equals:

Correct Answer
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Assume the market depicted in the graph is in equilibrium. If the market price is set to $12, which of the following statements is true?

Correct Answer
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If price is set at $11 in the market shown in the graph, total surplus will consist of areas:

Correct Answer
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Creating a market that was previously missing:

Correct Answer
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At prices above a consumer's willingness to pay:

Correct Answer
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Assume the market depicted in the graph is in equilibrium. What is total surplus?

Correct Answer
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Correct Answer
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Correct Answer
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Exam 5: Efficiency

Assume the market depicted in the graph is in equilibrium. If the price is subsequently set at $22, which of the following statements is true? I. Some producers will gain surplus. II. Some surplus will be transferred from producers to consumers. III. Total surplus will fall.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. Consumer surplus is the area:

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. What is consumer surplus?

Correct AnswerverifiedShow Answer

Which of the following is an example of a missing market?

Correct AnswerverifiedShow Answer

According to the graph shown, if the market goes from equilibrium to having its price set at $10 producer surplus will:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A consumer's willingness to pay:

Correct AnswerverifiedShow Answer

When the market price is set above the equilibrium price:

Correct AnswerverifiedShow Answer

If Thelma's willingness to sell her homemade fudge is $4, at which of the following prices would Thelma sell?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a well-functioning competitive market, total surplus equals:

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. If the market price is set to $12, which of the following statements is true?

Correct AnswerverifiedShow Answer

If price is set at $11 in the market shown in the graph, total surplus will consist of areas:

Correct AnswerverifiedShow Answer

Creating a market that was previously missing:

Correct AnswerverifiedShow Answer

At prices above a consumer's willingness to pay:

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. What is total surplus?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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