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According to the graph shown,if the market goes from equilibrium to having its price set at $10 then: A) area (C + E) is deadweight loss. B) area B is transferred surplus from consumers to producers. C) $12 of surplus gets transferred from consumers to producers. D) All of these are true. According to the graph shown,if the market goes from equilibrium to having its price set at $10 then:


A) area (C + E) is deadweight loss.
B) area B is transferred surplus from consumers to producers.
C) $12 of surplus gets transferred from consumers to producers.
D) All of these are true.

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

Correct Answer

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When a perfectly competitive,well-functioning market is in equilibrium:


A) total surplus is maximized.
B) the market is efficient.
C) deadweight loss is zero.
D) All of these are true.

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

Correct Answer

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According to the graph shown,consumer surplus is: A) $10. B) $15. C) $20. D) $30. According to the graph shown,consumer surplus is:


A) $10.
B) $15.
C) $20.
D) $30.

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

Correct Answer

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According to the graph shown,if the supply increases,then A) consumer surplus would increase. B) consumer surplus would decrease. C) total surplus would increase. D) quantity would increase. According to the graph shown,if the supply increases,then


A) consumer surplus would increase.
B) consumer surplus would decrease.
C) total surplus would increase.
D) quantity would increase.

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

Correct Answer

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Willingness to pay represents:


A) the point at which the benefit that a person will get from a good is equal to the benefit of spending the money on the next best alternative.
B) the opportunity cost of a good.
C) the buyer's reservation price.
D) All of these represent willingness to pay.

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

Correct Answer

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Assume there are three hardware stores,each willing to sell one standard model hammer in a given time period.House Depot can offer their hammer for a minimum of $7.Lace Hardware can offer the hammer for a minimum of $10.Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described,if the market price of hammers decreased from $17 to $12:


A) producer participation in the market would increase.
B) producer participation in the market would decrease.
C) producer participation in the market would not be affected.
D) total producer surplus would remain unchanged.

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

Correct Answer

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


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

Correct Answer

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The willingness to pay of buyers' in a market:


A) is represented by the demand curve.
B) is represented by the supply curve.
C) explains why the demand curve is bowed-out.
D) explains why the demand curve is bowed-in.

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

Correct Answer

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Assume a market that has an equilibrium price of $7.If the market price is set at $3,which of the following is true?


A) Some surplus is transferred from consumers to producers, but total surplus falls.
B) All surplus is transferred from producers to consumers, and total surplus stays the same.
C) Some surplus is transferred from producers to consumers, but total surplus falls.
D) Some surplus is transferred from consumers to producers, causing total surplus to increase.

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

Correct Answer

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Assume there are three hardware stores,each willing to sell one standard model hammer in a given time period.House Depot can offer their hammer for a minimum of $7.Lace Hardware can offer the hammer for a minimum of $10.Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described,if the market price of hammers increased from $9 to $13:


A) House Depot's producer surplus would increase by $4.
B) Lace Hardware Hardware's producer surplus would increase by $3.
C) Bob's Hardware's producer surplus would remain unchanged.
D) All of these statements are true.

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

Correct Answer

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According to the graph shown,if the market goes from equilibrium to having its price set at $10 then: A) producer surplus will change from (D + E) to (D + E + B + C) . B) producer surplus will change from (B + C + D + E) to D only. C) producer surplus will change from (D + E) to (D + B) . D) producer surplus will change from (D + B) to (D + E) . According to the graph shown,if the market goes from equilibrium to having its price set at $10 then:


A) producer surplus will change from (D + E) to (D + E + B + C) .
B) producer surplus will change from (B + C + D + E) to D only.
C) producer surplus will change from (D + E) to (D + B) .
D) producer surplus will change from (D + B) to (D + E) .

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

Correct Answer

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When the quantity of a good bought and sold is below the market equilibrium quantity,the loss of total surplus that results is called:


A) deadweight loss.
B) producer surplus.
C) consumer surplus.
D) total surplus.

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

Correct Answer

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Which of the following prices could represent Eli's willingness to pay for a baseball glove if he observed the market price of $43 and decided not to buy one?


A) $37
B) $45
C) $50
D) None of these could represent Eli's willingness to pay.

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

Correct Answer

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Assume the market was in equilibrium in the graph shown.If the market price gets set to $14,which of the following is true? A) Some consumers gain surplus, but total surplus falls. B) Some producers gain surplus, but total surplus falls. C) Some producers lose surplus, but total surplus rises. D) Some consumers lose surplus, but total surplus rises. Assume the market was in equilibrium in the graph shown.If the market price gets set to $14,which of the following is true?


A) Some consumers gain surplus, but total surplus falls.
B) Some producers gain surplus, but total surplus falls.
C) Some producers lose surplus, but total surplus rises.
D) Some consumers lose surplus, but total surplus rises.

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

Correct Answer

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Assume there are three hardware stores,each willing to sell one standard model hammer in a given time period.House Depot can offer their hammer for a minimum of $7.Lace Hardware can offer the hammer for a minimum of $10.Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described,if the market price of hammers increased from $9 to $13:


A) producer surplus would increase for each producer.
B) producer surplus would increase only for House Depot.
C) producer surplus would remain unchanged for Bob's Hardware.
D) producer surplus would increase by $4 for Lace Hardware.

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

Correct Answer

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According to the graph shown,if the market is in equilibrium,total surplus is: A) $30. B) $20. C) $50. D) $60. According to the graph shown,if the market is in equilibrium,total surplus is:


A) $30.
B) $20.
C) $50.
D) $60.

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

Correct Answer

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Total surplus can be increased if:


A) new markets are created.
B) new technology is banned.
C) deadweight loss is increased.
D) All of these can increase total surplus.

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

Correct Answer

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Assume the market was in equilibrium in the graph shown.If the market price were set to $6,which of the following is true? A) For those still interacting in the market, some surplus is transferred from buyer to seller. B) For those still interacting in the market, some surplus is transferred from seller to buyer. C) Producers gain the surplus of those buyers who dropped out of the market. D) Consumers gain the surplus of those sellers who dropped out of the market. Assume the market was in equilibrium in the graph shown.If the market price were set to $6,which of the following is true?


A) For those still interacting in the market, some surplus is transferred from buyer to seller.
B) For those still interacting in the market, some surplus is transferred from seller to buyer.
C) Producers gain the surplus of those buyers who dropped out of the market.
D) Consumers gain the surplus of those sellers who dropped out of the market.

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

Correct Answer

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Assume a market price gets set artificially high-that is,it gets set above the equilibrium price.This change means:


A) Every consumer loses surplus, and it all gets transferred to producers.
B) Every producer gains surplus, due to the higher price now being charged.
C) Some consumers drop out of the market, and those left lose some surplus.
D) None of these is true.

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

Correct Answer

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Assume the market in the graph shown with demand D and supply S<sub>1</sub> is in equilibrium at a quantity of 5 units.Total surplus is: A) $5. B) $15. C) $12.50. D) $60. Assume the market in the graph shown with demand D and supply S1 is in equilibrium at a quantity of 5 units.Total surplus is:


A) $5.
B) $15.
C) $12.50.
D) $60.

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

Correct Answer

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