Question 1

Scenario 7-2
Suppose market demand and market supply are given by the equations: 
-Refer to Scenario 7-2. How much is total surplus at the equilibrium price in this market?

Accepted Answer

Total surp...

Question 2

All else equal, a decrease in demand will cause an increase in producer surplus.

Accepted Answer

A) True 
 B)False

Question 3

ABC Company incurs a cost of 50 cents to produce a dozen eggs, while XYZ Company incurs a cost of 70 cents to produce a dozen eggs. Which of the following price increases would cause both companies to experience an increase in producer surplus?

Accepted Answer

A)   The price of a dozen eggs increases from 40 cents to 55 cents.
B)   The price of a dozen eggs increases from 55 cents to 70 cents.
C)   The price of a dozen eggs increases from 55 cents to 75 cents.
D)   All of these price increases would cause both companies to experience a loss in producer surplus.E) A) and B)
F) B) and C)

Question 4

Suppose there is an early freeze in California that reduces the size of the lemon crop. What happens to consumer surplus in the market for lemons?

Accepted Answer

A)   Consumer surplus increases.
B)   Consumer surplus decreases.
C)   Consumer surplus is not affected by this change in market forces.
D)   We would have to know whether the demand for lemons is elastic or inelastic to make this determination.E) A) and D)
F) B) and D)

Question 5

Figure 7-13 
-Refer to Figure 7-13. If the equilibrium price is $60, what is the producer surplus?

Accepted Answer

A)   $600
B)   $1,200
C)   $2,400
D)   $4,800E) A) and B)
F) All of the above

Question 6

Figure 7-9 
-Refer to Figure 7-9. If producer surplus is $19, then the price of the good is

Accepted Answer

A)   $11.50.
B)   $14.50.
C)   $13.50.
D)   $9.75.E) B) and D)
F) B) and C)

Question 7

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

Accepted Answer

A)   $2.00 each.
B)   $0.50 each.
C)   $3.50 each.
D)   $5.00 each.E) A) and C)
F) A) and B)

Question 8

If the cost of producing sofas decreases, then consumer surplus in the sofa market will

Accepted Answer

A)   increase.
B)   decrease.
C)   remain constant.
D)   increase for some buyers and decrease for other buyers.E) All of the above
F) B) and C)

Question 9

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

Accepted Answer

A) True 
 B)False

Question 10

Figure 7-14 
-Refer to Figure 7-14. If the market price increases to $130 due to an increase in demand, then producer surplus is

Accepted Answer

A)   $1,800.
B)   $900.
C)   $975.
D)   $1,950.E) All of the above
F) A) and C)

Question 11

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

Accepted Answer

A)   31 cents.
B)   38 cents.
C)   45 cents.
D)   55 cents.E) All of the above
F) C) and D)

Question 12

Figure 7-25 
-Refer to Figure 7-25. Suppose the government imposes a price ceiling of $16 in this market. If the buyers with the highest willingness to pay purchase the good, then total surplus will be

Accepted Answer

A)   $256.
B)   $768.
C)   $1,024.
D)   $1,280.E) B) and C)
F) A) and D)

Question 13

Figure 7-26 
-Refer to Figure 7-26. At the equilibrium price, total surplus is

Accepted Answer

A)   $600.
B)   $1,200.
C)   $1,500.
D)   $1,800.E) None of the above
F) B) and C)

Question 14

Figure 7-22 
-Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus to producers already in the market would be

Accepted Answer

A)   $1,600.
B)   $600.
C)   $800.
D)   $1,200.E) B) and D)
F) All of the above

Question 15

Figure 7-12 
-Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the producer surplus to new producers

Accepted Answer

A)   $15,000
B)   $3,750
C)   $7,500
D)  $30,000E) A) and B)
F) A) and C)

Question 16

A consumer's willingness to pay directly measures

Accepted Answer

A)   the extent to which advertising and other external forces have influenced the consumer's preferences.
B)   the cost of a good to the buyer.
C)   how much a buyer values a good.
D)   consumer surplus.E) A) and B)
F) A) and C)

Question 17

Table 7-9
During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase. 
-Refer to Table 7-9. The price that Chad paid for a latte on the second day is

Accepted Answer

A)   $0.25 less than the amount he paid on the first day.
B)   $1.00 less than the amount he paid on the first day.
C)   $1.50 less than the amount he paid on the first day.
D)   $0.50 less than the amount he paid on the first day.E) A) and B)
F) All of the above

Question 18

Figure 7-2 
-Refer to Figure 7-2. If the price of the good is $80, then consumer surplus amounts to

Accepted Answer

A)   $110.
B)   $135.
C)   $160 .
D)   $185.E) A) and D)
F) A) and C)

Question 19

Figure 7-2 
-Refer to Figure 7-2. If the price of the good is $100, then consumer surplus amounts to

Accepted Answer

A)   $50.
B)   $75.
C)   $100.
D)   $125.E) A) and D)
F) A) and C)

Question 20

Scenario 7-2
Suppose market demand and market supply are given by the equations: 
-Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to  By how much does total consumer surplus increase as a result of this supply shift?

Accepted Answer

Total consumer surplus prior t...

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

Figure 7-2 -Refer to Figure 7-2. If the price of the good is $100, then consumer surplus amounts to

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Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to By how much does total consumer surplus increase as a result of this supply shift?

Correct AnswerverifiedTotal consumer surplus prior t...View AnswerShow Answer

Suppose there is an early freeze in California that reduces the size of the lemon crop. What happens to consumer surplus in the market for lemons?

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Figure 7-2 -Refer to Figure 7-2. If the price of the good is $80, then consumer surplus amounts to

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Figure 7-22 -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus to producers already in the market would be

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A consumer's willingness to pay directly measures

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Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. How much is total surplus at the equilibrium price in this market?

Correct AnswerverifiedTotal surp...View AnswerShow Answer

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

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All else equal, a decrease in demand will cause an increase in producer surplus.

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ABC Company incurs a cost of 50 cents to produce a dozen eggs, while XYZ Company incurs a cost of 70 cents to produce a dozen eggs. Which of the following price increases would cause both companies to experience an increase in producer surplus?

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Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually has to pay for it.

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If the cost of producing sofas decreases, then consumer surplus in the sofa market will

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Figure 7-26 -Refer to Figure 7-26. At the equilibrium price, total surplus is

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Figure 7-25 -Refer to Figure 7-25. Suppose the government imposes a price ceiling of $16 in this market. If the buyers with the highest willingness to pay purchase the good, then total surplus will be

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Figure 7-14 -Refer to Figure 7-14. If the market price increases to $130 due to an increase in demand, then producer surplus is

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Figure 7-12 -Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the producer surplus to new producers

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Figure 7-9 -Refer to Figure 7-9. If producer surplus is $19, then the price of the good is

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Figure 7-13 -Refer to Figure 7-13. If the equilibrium price is $60, what is the producer surplus?

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Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

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Table 7-9 During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase. -Refer to Table 7-9. The price that Chad paid for a latte on the second day is

Correct AnswerverifiedShow Answer

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Total consumer surplus prior t...
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Total surp...
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