Question 1

Market failure is the inability of

Accepted Answer

A)   buyers to interact harmoniously with sellers in the market.
B)   a market to establish an equilibrium price.
C)   buyers to place a value on the good or service.
D)   some unregulated markets to allocate resources efficiently.E) None of the above
F) C) and D)

Question 2

Figure 7-23 
-Refer to Figure 7-23. At equilibrium, consumer surplus is represented by the area

Accepted Answer

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

Question 3

Table 7-1 
-Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is

Accepted Answer

The answer of Table 7-1 
-Refer to Table 7-1. If...

Question 4

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

Accepted Answer

A)   $13,000.
B)   $105,000.
C)   $118,000.
D)   $131,000.E) A) and C)
F) A) and B)

Question 5

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Accepted Answer

A) True 
 B)False

Question 6

Table 7-3
The only four consumers in a market have the following willingness to pay for a good: 
-Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Accepted Answer

A)   $0 or slightly more.
B)   $10 or slightly less.
C)   $30 or slightly more.
D)   $45 or slightly less.E) All of the above
F) A) and B)

Question 7

In order to calculate consumer surplus in a market, we need to know willingness to pay and price.

Accepted Answer

A) True 
 B)False

Question 8

Inefficiency exists in an economy when a good is

Accepted Answer

A)   being produced with less than all available resources.
B)   not distributed fairly among buyers.
C)   not being produced by the lowest-cost producers.
D)   being consumed by buyers who value it most highly.E) B) and C)
F) All of the above

Question 9

What do economists call the highest amount a consumer will pay to purchase a good?

Accepted Answer

The (maxim...

Question 10

Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is

Accepted Answer

A)   $8,500.
B)   $15,500.
C)   $24,000.
D)   $39,500.E) B) and C)
F) C) and D)

Question 11

George produces cupcakes. His production cost is $10 per dozen. He sells the cupcakes for $16 per dozen. His producer surplus per dozen cupcakes is

Accepted Answer

A)   $6.
B)   $10.
C)   $16.
D)   $26.E) A) and B)
F) None of the above

Question 12

In a market, the marginal buyer is the buyer

Accepted Answer

A)   whose willingness to pay is higher than that of all other buyers and potential buyers.
B)   whose willingness to pay is lower than that of all other buyers and potential buyers.
C)   who is willing to buy exactly one unit of the good.
D)   who would be the first to leave the market if the price were any higher.E) A) and B)
F) C) and D)

Question 13

Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. 
-Refer to Table 7-5. If the market price of an orange is $0.40, then

Accepted Answer

A)   6 oranges are demanded per day, and consumer surplus amounts to $4.95.
B)   6 oranges are demanded per day, and consumer surplus amounts to $5.10.
C)   7 oranges are demanded per day, and consumer surplus amounts to $5.30.
D)   7 oranges are demanded per day, and consumer surplus amounts to $5.15.E) A) and D)
F) B) and C)

Question 14

Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. 
-Refer to Table 7-5. If the market price of an orange is $0.70, then the market quantity of oranges demanded per day is

Accepted Answer

A)   5.
B)   6.
C)   4.
D)   7.E) A) and D)
F) A) and C)

Question 15

When markets fail, public policy can potentially remedy the problem and increase economic efficiency.

Accepted Answer

A) True 
 B)False

Question 16

Consumer surplus

Accepted Answer

A)   is the amount of a good that a consumer can buy at a price below equilibrium price.
B)   is the amount a consumer is willing to pay minus the amount the consumer actually pays.
C)   is the number of consumers who are excluded from a market because of scarcity.
D)   measures how much a seller values a good.E) A) and D)
F) B) and D)

Question 17

Motor oil and gasoline are complements. If the price of motor oil increases, consumer surplus in the gasoline market

Accepted Answer

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

Question 18

The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of

Accepted Answer

A)   market equilibrium.
B)   market power.
C)   externalities.
D)   laissez-faire.E) B) and C)
F) B) and D)

Question 19

Table 7-7 
-Refer to Table 7-7. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You offer to sell the tickets for $325. How many tickets do you sell, and what is the total consumer surplus in the market?

Accepted Answer

A)   one ticket; $175
B)   two tickets; $225
C)   three tickets; $225
D)   three tickets; $275E) None of the above
F) All of the above

Question 20

Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise

Accepted Answer

A)   buys the dishwasher, and on her purchase she experiences a consumer surplus of $150.
B)   buys the dishwasher, and on her purchase she experiences a consumer surplus of $-150.
C)   does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $150.
D)   does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $0.E) A) and B)
F) A) and C)

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

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Correct Answer
verified

The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of

Correct Answer
verified

When markets fail, public policy can potentially remedy the problem and increase economic efficiency.

Correct Answer
verified

What do economists call the highest amount a consumer will pay to purchase a good?

Correct Answer
verified
The (maxim...
View Answer

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

Correct Answer
verified

Inefficiency exists in an economy when a good is

Correct Answer
verified

Consumer surplus

Correct Answer
verified

Correct Answer
verified

In a market, the marginal buyer is the buyer

Correct Answer
verified

George produces cupcakes. His production cost is $10 per dozen. He sells the cupcakes for $16 per dozen. His producer surplus per dozen cupcakes is

Correct Answer
verified

Table 7-1 -Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is

Correct Answer
verified

In order to calculate consumer surplus in a market, we need to know willingness to pay and price.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Motor oil and gasoline are complements. If the price of motor oil increases, consumer surplus in the gasoline market

Correct Answer
verified

Market failure is the inability of

Correct Answer
verified

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Correct Answer
verified

Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise

Correct Answer
verified

Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is

Correct Answer
verified

Figure 7-23 -Refer to Figure 7-23. At equilibrium, consumer surplus is represented by the area

Correct Answer
verified

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

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

Correct AnswerverifiedShow Answer

The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of

Correct AnswerverifiedShow Answer

When markets fail, public policy can potentially remedy the problem and increase economic efficiency.

Correct AnswerverifiedShow Answer

What do economists call the highest amount a consumer will pay to purchase a good?

Correct AnswerverifiedThe (maxim...View AnswerShow Answer

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

Correct AnswerverifiedShow Answer

Inefficiency exists in an economy when a good is

Correct AnswerverifiedShow Answer

Consumer surplus

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a market, the marginal buyer is the buyer

Correct AnswerverifiedShow Answer

George produces cupcakes. His production cost is $10 per dozen. He sells the cupcakes for $16 per dozen. His producer surplus per dozen cupcakes is

Correct AnswerverifiedShow Answer

Table 7-1 -Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is

Correct AnswerverifiedShow Answer

In order to calculate consumer surplus in a market, we need to know willingness to pay and price.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Motor oil and gasoline are complements. If the price of motor oil increases, consumer surplus in the gasoline market

Correct AnswerverifiedShow Answer

Market failure is the inability of

Correct AnswerverifiedShow Answer

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Correct AnswerverifiedShow Answer

Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise

Correct AnswerverifiedShow Answer

Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is

Correct AnswerverifiedShow Answer

Figure 7-23 -Refer to Figure 7-23. At equilibrium, consumer surplus is represented by the area

Correct AnswerverifiedShow Answer

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The (maxim...
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