Question 1

Graph 7-4 
-In Graph 7-4, at the market-clearing equilibrium, total producer surplus is represented by the area:

Accepted Answer

A)  F
B)  F + G
C)  D + E + F
D)  D + E + F + G + HE) None of the above
F) C) and D) C

Question 2

Pollution and other externalities, while bothersome, do not interfere with efficiency.

Accepted Answer

A) True 
 B)False

Question 3

Nick's willingness to sell his homemade chocolate chip biscuits is $9 per dozen.He sells them and realises a producer surplus of $5 per dozen.Nick sells his biscuits for:

Accepted Answer

A)  $14 a dozen
B)  $9 a dozen
C)  $5 a dozen
D)  $4 a dozenE) All of the above
F) C) and D)

Question 4

Graph 7-2 
-Refer to Graph 7-2.When the price is P₁, consumer surplus is:

Accepted Answer

A)  A
B)  A + B
C)  A + B + C
D)  A + B + DE) A) and B)
F) All of the above

Question 5

For any given quantity, the price on a supply curve represents the marginal buyer's willingness to pay.

Accepted Answer

A) True 
 B)False

Question 6

Many economists believe that a market for human organs would lead to an:

Accepted Answer

A)  inefficient allocation of organs but a fair distribution of organs
B)  inefficient allocation of organs and an unfair distribution of organs
C)  efficient allocation of organs but an unfair distribution of organs
D)  efficient allocation of organs and a fair distribution of organsE) B) and D)
F) C) and D)

Question 7

Total surplus in a market is consumer surplus plus firm profit.

Accepted Answer

A) True 
 B)False

Question 8

Jean wants to sell her camera.Greg offers her $250.Lee offers her $300.We can say for sure that she will sell it to Lee, as he has offered the highest price.

Accepted Answer

A) True 
 B)False

Question 9

Use the information in Table A to graph a demand curve for this product.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> This question could...

Question 10

Information regarding the consumer's willingness to pay can be derived from the demand curve.

Accepted Answer

A) True 
 B)False

Question 11

Caitlin would be willing to pay $120 to see The Lion King musical but buys a ticket for only $40.Caitlin values the performance at:

Accepted Answer

A)  $40
B)  $0
C)  $120
D)  $80E) A) and C)
F) A) and D) D

Question 12

Legalising ticket scalping would make everyone worse off.

Accepted Answer

A) True 
 B)False

Question 13

What is the relationship between the willingness to sell and the supply curve?

Accepted Answer

Because the supply curve shows...

Question 14

Graph 7-2 
-According to Graph 7-2, area C represents:

Accepted Answer

A)  the decrease in consumer surplus that results from a downward-sloping demand curve
B)  consumer surplus to new consumers who enter the market when the price falls from P₂ to P₁
C)  an increase in producer surplus when the quantity sold increases from Q₂ to Q₁
D)  a decrease in consumer surplus to each consumer in the marketE) All of the above
F) None of the above

Question 15

Donald produces nails at a cost of $700 per ton.If he sells the nails for $900 per ton, his producer surplus is:

Accepted Answer

A)  $200 per ton
B)  $1600 per ton
C)  $700 per ton
D)  $900 per tonE) B) and D)
F) A) and C) A

Question 16

The total surplus in a market equals:

Accepted Answer

A)  the value to buyers plus the amount paid by buyers
B)  the amount received by sellers less the costs of sellers
C)  the value to buyers less the costs of sellers
D)  zero, because producer and consumer surplus cancel each other outE) A) and B)
F) A) and C)

Question 17

Lee can sell coffee at $3 per cup.The market equilibrium price of coffee is $3.50.Suppose Lee sells 100 cups of coffee.The producer surplus captured by Lee is $100.

Accepted Answer

A) True 
 B)False

Question 18

Each seller of a product is willing to sell as long as the price he or she can receive is less than the opportunity cost of producing the product.

Accepted Answer

A) True 
 B)False

Question 19

If a seller is able to control the market price, the seller has market power and the market outcome will be inefficient.

Accepted Answer

A) True 
 B)False

Question 20

Pollution is a classic example of:

Accepted Answer

A)  cost minimisation by firms
B)  corporate greed
C)  market failure
D)  an efficient market outcomeE) A) and C)
F) A) and B)

Exam 7: Consumers, Producers and the Efficiency of Markets

Graph 7-4 -In Graph 7-4, at the market-clearing equilibrium, total producer surplus is represented by the area:

Correct AnswerverifiedC

Pollution and other externalities, while bothersome, do not interfere with efficiency.

Correct AnswerverifiedShow Answer

Nick's willingness to sell his homemade chocolate chip biscuits is $9 per dozen.He sells them and realises a producer surplus of $5 per dozen.Nick sells his biscuits for:

Correct AnswerverifiedShow Answer

Graph 7-2 -Refer to Graph 7-2.When the price is P₁, consumer surplus is:

Correct AnswerverifiedShow Answer

For any given quantity, the price on a supply curve represents the marginal buyer's willingness to pay.

Correct AnswerverifiedShow Answer

Many economists believe that a market for human organs would lead to an:

Correct AnswerverifiedShow Answer

Total surplus in a market is consumer surplus plus firm profit.

Correct AnswerverifiedShow Answer

Jean wants to sell her camera.Greg offers her $250.Lee offers her $300.We can say for sure that she will sell it to Lee, as he has offered the highest price.

Correct AnswerverifiedShow Answer

Use the information in Table A to graph a demand curve for this product.

Correct Answerverified This question could...View AnswerShow Answer

Information regarding the consumer's willingness to pay can be derived from the demand curve.

Correct AnswerverifiedShow Answer

Caitlin would be willing to pay $120 to see The Lion King musical but buys a ticket for only $40.Caitlin values the performance at:

Correct AnswerverifiedD

Legalising ticket scalping would make everyone worse off.

Correct AnswerverifiedShow Answer

What is the relationship between the willingness to sell and the supply curve?

Correct AnswerverifiedBecause the supply curve shows...View AnswerShow Answer

Graph 7-2 -According to Graph 7-2, area C represents:

Correct AnswerverifiedShow Answer

Donald produces nails at a cost of $700 per ton.If he sells the nails for $900 per ton, his producer surplus is:

Correct AnswerverifiedA

The total surplus in a market equals:

Correct AnswerverifiedShow Answer

Lee can sell coffee at $3 per cup.The market equilibrium price of coffee is $3.50.Suppose Lee sells 100 cups of coffee.The producer surplus captured by Lee is $100.

Correct AnswerverifiedShow Answer

Each seller of a product is willing to sell as long as the price he or she can receive is less than the opportunity cost of producing the product.

Correct AnswerverifiedShow Answer

If a seller is able to control the market price, the seller has market power and the market outcome will be inefficient.

Correct AnswerverifiedShow Answer

Pollution is a classic example of:

Correct AnswerverifiedShow Answer

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C

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D

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Because the supply curve shows...
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A

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