Question 1

Corn chips and potato chips are substitutes. Good weather that sharply increases the corn harvest would

Accepted Answer

A)   increase consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips.
B)   increase consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips.
C)   decrease consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips.
D)   decrease consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips.E) A) and D)
F) A) and B)

Question 2

Scenario 7-1
Suppose market demand is given by the equation 
-Refer to Scenario 7-1. If the market equilibrium price is $10, how much is total consumer surplus in this market?

Accepted Answer

Consumer s...

Question 3

Figure 7-4 
-Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

Accepted Answer

A)   BDF
B)   AFG
C)   BCGD
D)   ABCE) B) and C)
F) A) and D)

Question 4

Table 7-11
The following table represents the costs of five possible sellers. 
-Refer to Table 7-11. If the market price is $1,000, the producer surplus in the market is

Accepted Answer

A)   $1000.
B)   $300.
C)   $1,700.
D)   $700.E) A) and B)
F) B) and D)

Question 5

Hot dogs and hot dog buns are complements. An increase in the price of flour used to make hot dogs buns will

Accepted Answer

A)   increase consumer surplus in the market for hot dog buns and decrease producer surplus in the market for hot dogs.
B)   increase consumer surplus in the market for hot dogs and increase producer surplus in the market for hot dog buns.
C)   decrease consumer surplus in the market for hot dog buns and increase producer surplus in the market for hot dogs.
D)   decrease consumer surplus in the market for hot dog buns and decrease producer surplus in the market for hot dogs.E) None of the above
F) A) and B)

Question 6

Figure 7-3 
-Refer to Figure 7-3. When the price is P2, consumer surplus is

Accepted Answer

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

Question 7

Table 7-15 
-Refer to Table 7-15. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. You take bids from the sellers. Who offers the winning bid, and what does he offer to charge for the photography session?

Accepted Answer

A)   Steve; more than $400 but less than $450
B)   Steve; $399
C)   LeBron; more than $700
D)   LeBron; more than $600 but less than $700E) A) and D)
F) B) and C)

Question 8

Figure 7-1 
-Refer to Figure 7-1. If the price of the good is $200, then

Accepted Answer

A)   consumer surplus is $150.
B)   consumer surplus is $650.
C)   producer surplus is $650.
D)   producer surplus is $750.E) A) and D)
F) B) and C)

Question 9

Total surplus in a market is consumer surplus minus producer surplus.

Accepted Answer

A) True 
 B)False

Question 10

Figure 7-21 
-Refer to Figure 7-21. When the price is P1, area B+C represents

Accepted Answer

A)   total surplus.
B)   producer surplus.
C)   consumer surplus.
D)   None of the above is correct.E) A) and D)
F) All of the above

Question 11

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 consumer surplus do consumers entering the market after the price drop receive?

Accepted Answer

The consumers enteri...

Question 12

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 B)

Question 13

Welfare economics explains which of the following in the market for televisions?

Accepted Answer

A)   The government sets the price of televisions; firms respond to the price by producing a specific level of output.
B)   The government sets the quantity of televisions; firms respond to the quantity by charging a specific price.
C)   The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers.
D)   The market equilibrium price for televisions maximizes consumer welfare and minimizes producer profit.E) A) and B)
F) A) and C)

Question 14

Figure 7-33 
-Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?

Accepted Answer

Total surp...

Question 15

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

Accepted Answer

A)   40.
B)   200.
C)   8.
D)   50.E) A) and D)
F) B) and D)

Question 16

Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is

Accepted Answer

A)   $15.
B)   $90
C)   $105.
D)   $75.E) A) and B)
F) C) and D)

Question 17

Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to

Accepted Answer

A)   only existing sellers who now receive higher prices on the pizzas they were already selling.
B)   only new sellers who enter the market because of the higher prices.
C)   both existing sellers who now receive higher prices on the pizzas they were already selling and new sellers who enter the market because of the higher prices.
D)   Producer surplus does not increase; it decreases.E) B) and C)
F) A) and B)

Question 18

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

Question 19

Producer surplus is the

Accepted Answer

A)   area under the supply curve to the left of the amount sold.
B)   amount a seller is paid minus the cost of production.
C)   area between the supply and demand curves, above the equilibrium price.
D)   cost to sellers of participating in a market.E) C) and D)
F) None of the above

Question 20

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Accepted Answer

A)   Consumer surplus decreases.
B)   Consumer surplus remains unchanged.
C)   Consumer surplus increases.
D)   Consumer surplus may increase, decrease, or remain unchanged.E) A) and B)
F) A) and D)

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

Hot dogs and hot dog buns are complements. An increase in the price of flour used to make hot dogs buns will

Correct Answer
verified

Figure 7-33 -Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?

Correct Answer
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Total surp...
View Answer

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

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
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Total surplus in a market is consumer surplus minus producer surplus.

Correct Answer
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Figure 7-3 -Refer to Figure 7-3. When the price is P2, consumer surplus is

Correct Answer
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Correct Answer
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Producer surplus is the

Correct Answer
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Figure 7-21 -Refer to Figure 7-21. When the price is P1, area B+C represents

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
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Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to

Correct Answer
verified

Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

Correct Answer
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Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,000, the producer surplus in the market is

Correct Answer
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Figure 7-1 -Refer to Figure 7-1. If the price of the good is $200, then

Correct Answer
verified

Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is

Correct Answer
verified

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Correct Answer
verified

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price is $10, how much is total consumer surplus in this market?

Correct Answer
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Consumer s...
View Answer

Welfare economics explains which of the following in the market for televisions?

Correct Answer
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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 consumer surplus do consumers entering the market after the price drop receive?

Correct Answer
verified
The consumers enteri...
View Answer

Corn chips and potato chips are substitutes. Good weather that sharply increases the corn harvest would

Correct Answer
verified

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

Hot dogs and hot dog buns are complements. An increase in the price of flour used to make hot dogs buns will

Correct AnswerverifiedShow Answer

Figure 7-33 -Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?

Correct AnswerverifiedTotal surp...View AnswerShow Answer

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

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

Total surplus in a market is consumer surplus minus producer surplus.

Correct AnswerverifiedShow Answer

Figure 7-3 -Refer to Figure 7-3. When the price is P2, consumer surplus is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Producer surplus is the

Correct AnswerverifiedShow Answer

Figure 7-21 -Refer to Figure 7-21. When the price is P1, area B+C represents

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to

Correct AnswerverifiedShow Answer

Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?

Correct AnswerverifiedShow Answer

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,000, the producer surplus in the market is

Correct AnswerverifiedShow Answer

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $200, then

Correct AnswerverifiedShow Answer

Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is

Correct AnswerverifiedShow Answer

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?

Correct AnswerverifiedShow Answer

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price is $10, how much is total consumer surplus in this market?

Correct AnswerverifiedConsumer s...View AnswerShow Answer

Welfare economics explains which of the following in the market for televisions?

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 consumer surplus do consumers entering the market after the price drop receive?

Correct AnswerverifiedThe consumers enteri...View AnswerShow Answer

Corn chips and potato chips are substitutes. Good weather that sharply increases the corn harvest would

Correct AnswerverifiedShow Answer

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Total surp...
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Consumer s...
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The consumers enteri...
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