Question 1

The equilibrium of supply and demand in a market maximizes the total benefits received by buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 2

On a graph,which area is consumer surplus

Accepted Answer

A)  the area below the demand curve to the left of the equilibrium price
B)  the area below the demand curve to the right of the equilibrium price
C)  the area below the price and above the supply curve
D)  the area below the demand curve and above the priceE) All of the above
F) A) and C)

Question 3

Market demand is given as QD = 80 - P.Market supply is given as QS = 3P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Accepted Answer

A)  $168.75
B)  $600.00
C)  $875.00
D)  $1800.00E) A) and B)
F) A) and C)

Question 4

Figure 7-4
 
-Refer to Figure 7-4.When the price is at P 2,what is producer surplus

Accepted Answer

A)  A
B)  A + C
C)  A + B + C
D)  C + DE) All of the above
F) None of the above

Question 5

Figure 7-6
​
 
-Refer to Figure 7-6.If this market were currently at a quantity of 110,what would we know

Accepted Answer

A)  The producers' willingness to sell is greater than the consumers' willingness to pay
B)  The value to buyers is greater than the cost to sellers.
C)  The cost to sellers is greater than the value to buyers.
D)  Consumer surplus would be greater than producer surplus.E) C) and D)
F) B) and D)

Question 6

Total surplus = Value to buyers - Cost to sellers.

Accepted Answer

A) True 
 B)False

Question 7

Welfare economics is the study of the welfare system.

Accepted Answer

A) True 
 B)False

Question 8

What would a simultaneous increase in both the demand for and the supply of electric bicycles imply

Accepted Answer

A)  Both the value of electric bicycles to consumers and the cost of producing electric bicycles have increased.
B)  Both the value of electric bicycles to consumers and the cost of producing electric bicycles have decreased.
C)  The value of electric bicycles to consumers has decreased and the cost of producing electric bicycles has increased.
D)  The value of electric bicycles to consumers has increased and the cost of producing electric bicycles has decreased.E) A) and D)
F) A) and C)

Question 9

Figure 7-7
 
-Refer to Figure 7-7.Which segment represents sellers whose costs are less than price

Accepted Answer

A)  AC
B)  BC
C)  CD
D)  CEE) A) and B)
F) B) and C)

Question 10

Figure 7-2
 
-Refer to Figure 7-2.Which area represents the increase in consumer surplus when the price falls from P₁ to P₂

Accepted Answer

A)  ABD
B)  ACF
C)  BCED
D)  BCFDE) A) and C)
F) None of the above

Question 11

What does producer surplus measure

Accepted Answer

A)  the well-being of sellers
B)  production costs
C)  the well-being of buyers and sellers
D)  unsold inventoriesE) All of the above
F) C) and D)

Question 12

Figure 7-3
 
-Refer to Figure 7-3.Which area represents producer surplus at a price of P₂

Accepted Answer

A)  ACF
B)  BCE
C)  ABED
D)  DEFE) None of the above
F) All of the above

Question 13

Market demand is given as QD = 100 - 2P.Market supply is given as QS = P + 10.In a perfectly competitive equilibrium,what will be the value of consumer surplus

Accepted Answer

A)  $120
B)  $200
C)  $400
D)  $800E) A) and B)
F) B) and C)

Question 14

Suppose that the equilibrium price in the market for widgets is $8.If a law reduced the maximum legal price for widgets to $7,what would be the result

Accepted Answer

A)  Any possible increase in consumer surplus would be larger than the loss of producer surplus.
B)  Any possible increase in consumer surplus would be smaller than the loss of producer surplus.
C)  The resulting increase in producer surplus would be larger than any possible loss of consumer surplus.
D)  The resulting increase in producer surplus would be smaller than any possible loss of consumer surplus.E) All of the above
F) A) and B)

Question 15

Table 7-3
 
-Refer to Table 7-3.If the price is $1100,who would be willing to supply the product

Accepted Answer

A)  Dale and Jill
B)  Dale, Jill, and Denise
C)  Denise, Catherine, and Jackson
D)  Catherine and JacksonE) A) and B)
F) B) and C)

Question 16

The Ministry of Health announces that eating chocolate increases tooth decay.As a result,what happens to the equilibrium market price of chocolate and producer surplus

Accepted Answer

A)  They both increase.
B)  The equilibrium market price increases, and producer surplus decreases.
C)  They both decrease.
D)  The equilibrium market price decreases, and producer surplus increases.E) A) and B)
F) A) and C)

Question 17

Market demand is given as QD = 75 - P.Market supply is given as QS = 3P + 15.In a perfectly competitive equilibrium,what will be the value of consumer surplus

Accepted Answer

A)  $900
B)  $1125
C)  $1800
D)  $2400E) None of the above
F) A) and B)

Question 18

Economists generally believe that although there may be advantages to society from ticket scalping,the costs to society of this activity outweigh the benefits.

Accepted Answer

A) True 
 B)False

Question 19

What is consumer surplus

Accepted Answer

A)  a buyer's willingness to pay minus the price
B)  a buyer's willingness to pay plus the price
C)  the price of the product minus the buyer's willingness to pay
D)  the price of the product plus the buyer's willingness to payE) A) and B)
F) A) and C)

Question 20

In a competitive market,sales go to those producers who are willing to supply the product at the lowest price.

Accepted Answer

A) True 
 B)False

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

What is consumer surplus

Correct AnswerverifiedShow Answer

Suppose that the equilibrium price in the market for widgets is $8.If a law reduced the maximum legal price for widgets to $7,what would be the result

Correct AnswerverifiedShow Answer

What would a simultaneous increase in both the demand for and the supply of electric bicycles imply

Correct AnswerverifiedShow Answer

Economists generally believe that although there may be advantages to society from ticket scalping,the costs to society of this activity outweigh the benefits.

Correct AnswerverifiedShow Answer

Total surplus = Value to buyers - Cost to sellers.

Correct AnswerverifiedShow Answer

The equilibrium of supply and demand in a market maximizes the total benefits received by buyers and sellers.

Correct AnswerverifiedShow Answer

Welfare economics is the study of the welfare system.

Correct AnswerverifiedShow Answer

Figure 7-6 ​ -Refer to Figure 7-6.If this market were currently at a quantity of 110,what would we know

Correct AnswerverifiedShow Answer

On a graph,which area is consumer surplus

Correct AnswerverifiedShow Answer

In a competitive market,sales go to those producers who are willing to supply the product at the lowest price.

Correct AnswerverifiedShow Answer

Market demand is given as QD = 80 - P.Market supply is given as QS = 3P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Correct AnswerverifiedShow Answer

What does producer surplus measure

Correct AnswerverifiedShow Answer

The Ministry of Health announces that eating chocolate increases tooth decay.As a result,what happens to the equilibrium market price of chocolate and producer surplus

Correct AnswerverifiedShow Answer

Figure 7-3 -Refer to Figure 7-3.Which area represents producer surplus at a price of P₂

Correct AnswerverifiedShow Answer

Figure 7-4 -Refer to Figure 7-4.When the price is at P 2,what is producer surplus

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Table 7-3 -Refer to Table 7-3.If the price is $1100,who would be willing to supply the product

Correct AnswerverifiedShow Answer

Market demand is given as QD = 100 - 2P.Market supply is given as QS = P + 10.In a perfectly competitive equilibrium,what will be the value of consumer surplus

Correct AnswerverifiedShow Answer

Figure 7-2 -Refer to Figure 7-2.Which area represents the increase in consumer surplus when the price falls from P₁ to P₂

Correct AnswerverifiedShow Answer

Market demand is given as QD = 75 - P.Market supply is given as QS = 3P + 15.In a perfectly competitive equilibrium,what will be the value of consumer surplus

Correct AnswerverifiedShow Answer

Figure 7-7 -Refer to Figure 7-7.Which segment represents sellers whose costs are less than price

Correct AnswerverifiedShow Answer

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Figure 7-6 -Refer to Figure 7-6.If this market were currently at a quantity of 110,what would we know

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Market demand is given as Q_D= 80 - P.Market supply is given as Q_S= 3P.In a perfectly competitive equilibrium,what will be the value of producer surplus

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Market demand is given as Q_D= 100 - 2P.Market supply is given as Q_S= P + 10.In a perfectly competitive equilibrium,what will be the value of consumer surplus

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Market demand is given as Q_D= 75 - P.Market supply is given as Q_S= 3P + 15.In a perfectly competitive equilibrium,what will be the value of consumer surplus

Correct Answer
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