Econ Chapter 7 practice questions

An example of positive analysis is studying a. how market forces produce equilibrium. b. whether equilibrium outcomes are fair. c. whether equilibrium outcomes are socially desirable. d. if income distributions are fair

a. how market forces produce equilibrium.

Refer to Table 7-6 If the market price is $900, the producer surplus in the market is a. $350. b. $550. c. $750. d. $1,000

b. $550.

Total surplus is equal to a. value to buyers- profit to sellers. b. value to buyers-cost to sellers. c. consumer surplus x producer surplus. d. (consumer surplus + producer surplus) x equilibrium quantity

b. value to buyers-cost to sellers.

Refer to Figure 7-6 If the price of the good is $8.50, then producer surplus is a. $2.50. b. $6.50. c. $8.00. d. $11.00

c. $8.00.

Welfare economics is the study of a. taxes and subsidies. b. how technology is best put to use in the production of goods and services. c. government welfare programs for needy people. d. how the allocation of resources affects economic well-being.

d. how the allocation of resources affects economic well-being.

Refer to Table 7-1 If the price of the product is $51, then who would be willing to purchase the product? a. Mike b. Mike and Sandy c. Mike, Sandy, and Jonathan d. no one

d. no one

Refer to Figure 7 - 1 When the price is P2, consumer surplus is a. A. b. B. c. A+B. d. A+B+C

a. A.

Refer to Table 7-1 If price of the product is $30, then the total consumer surplus is a. $-10. b. $ - 6. c. $20. d. $30

c. $20.

Refer to Figure 7-6 If the price of the good is $14, then producer surplus is a. $17. b. $22. c. $25. d. $28

c. $25.

Refer to Table 7-1 If the price of the product is $18, then the total consumer surplus is a. $38. b. $42. c. $46. d. $72

c. $46.

Refer to Table 7 - 4. If tickets sell for $20 each, then what is the total consumer surplus in the market? a. $5 b. $30 c. $40 d. $75

d. $75

When a buyer's willingness to pay for a good is equal to the price of the good, the a. buyer's consumer surplus for that good is maximized. b. buyer will buy as much of the good as the buyer's budget allows. c. price of the good exceeds the value that the buyer places on the good. d. buyer is indifferent between buying the good and not buying

d. buyer is indifferent between buying the good and not buying

Refer to Figure 7-16 If the price were P3, consumer surplus would be represented by the area a. A. b. A+B+C. c. D+H+F. d. A+B+C+D+H+F

a. A.

Refer to Figure 7-16 If the price were P1, producer surplus would be represented by the area a. F. b. F+G. c. D+H+F. d. D+H+F+G+I

a. F.

Total surplus in a market is equal to a. consumer surplus + producer surplus. b. value to buyers-amount paid by buyers. c. amount received by sellers-costs of sellers. d. producer surplus-consumer surplus

a. consumer surplus + producer surplus.

Externalities are a. side effects passed on to a party other than the buyers and sellers in the market. b. side effects of government intervention in markets. c. external forces that cause the price of a good to be higher than it otherwise would be. d. external forces that help establish equilibrium price

a. side effects passed on to a party other than the buyers and sellers in the market.

Consumer surplus is a. the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. b. the amount a buyer is willing to pay for a good minus the cost of producing the good. c. the amount by which the quantity supplied of a good exceeds the quantity demanded of the good. d. a buyer's willingness to pay for a good plus t he price of the good

a. the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

Refer to Figure 7-14. When the price is P1, area B+C represents a. total surplus. b. producer surplus. c. consumer surplus. d. None of the above is correct

a. total surplus.

Refer to Table 7-6 If the market price is $1,000, the producer surplus in the market is a. $700. b. $750. c. $2,250. d. $3,700

b. $750.

Refer to Figure 7-16 At equilibrium, consumer surplus is represented by the area a. A. b. A+B+C. c. D+H+F. d. A+B+C+D+H+F

b. A+B+C.

Refer to Figure 7-14 Which area represents consumer surplus when the price is P1? a. A b. B c. C d. D

b. B

Refer to Figure 7-11 When the price is P1, producer surplus is a. A. b. C. c. A+B. d. C+D

b. C.

Refer to Table 7-6 If the price is $1,000, a. Bobby is an eager supplier. b. Dianne is an eager supplier. c. Abby's producer surplus is $500. d. All of the above are correct

b. Dianne is an eager supplier.

Refer to Figure 7-16 The equilibrium price is a. P1. b. P2. c. P3. d. P4

b. P2.

Producer surplus is the 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 mark

b. amount a seller is paid minus the cost of production.

On a graph, the area below a demand curve and above the price measures a. producer surplus. b. consumer surplus. c. deadweight loss. d. willingness to pay

b. consumer surplus.

Refer to Figure 7-1 When the price rises from P1 to P2, consumer surplus a. increases by an amount equal to A. b. decreases by an amount equal to B+C. c. increases by an amount equal to B+C. d. decreases by an amount equal to

b. decreases by an amount equal to B+C.

Total surplus is a. the total cost to sellers of providing the good minus the total value of the good to buyers. b. the total value of the good to buyers minus the cost to sellers of providing the good. c. the difference between consumer surplus and sellers' cost. d. always smaller than producer surplus

b. the total value of the good to buyers minus the cost to sellers of providing the good.

The maximum price that a buyer will pay for a good is called the a. cost. b. willingness to pay. c. equity. d. efficiency

b. willingness to pay.

Refer to Table 7-8. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market? a. $0 b. $300 c. $400 d. $700

c. $400

Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be a. $15. b. $30. c. $45. d. $90

c. $45.

Refer to Figure 7- 11 When the price is P2, producer surplus is a. A. b. A+C. c. A+B+C. d. D+G.

c. A+B+C.

Refer to Figure 7-1 When the price is P1, consumer surplus is a. A. b. A+B. c. A+B+C. d. A+B+D

c. A+B+C.

Refer to Figure 7-14. Which area represents producer surplus when the price is P1? a. A b. B c. C d. D

c. C

Refer to Figure 7-16 At equilibrium, producer surplus is represented by the area a. F. b. F+G. c. D+H+F. d. D+H+F+G+I

c. D+H+F.

Refer to Table 7 -1 If the price of the product is $15, then who would be willing to purchase the product? a. Mike b. Mike and Sandy c. Mike, Sandy, and Jonathan d. Mike, Sandy, Jonathan, and Hale

c. Mike, Sandy, and Jonathan

Ally mows lawns for a living. Ally's out-of-pocket expenses (for equipment, gasoline, and so on) plus the value that she places on her own time amount to her a. producer surplus. b. producer deficit. c. cost of mowing lawns. d. profit.

c. cost of mowing lawns.

A consumer's willingness to pay directly measures 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

c. how much a buyer values a good.

An example of normative analysis is studying a. how market forces produce equilibrium. b. surpluses and shortages. c. whether equilibrium outcomes are socially desirable. d. income distribution

c. whether equilibrium outcomes are socially desirable.

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes a. increases, and the consumer surplus in the market for red wine increases. b. increases, and the consumer surplus in the mar ket for red wine decreases. c. decreases, and the consumer surplus in the market for red wine increases. d. decreases, and the consumer surplus in the market for red wine decreases

d. decreases, and the consumer surplus in the market for red wine decreases

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that 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 decrease

d. the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decrease

In a market, the marginal buyer is the buyer 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

d. who would be the first to leave the market if the price were any higher