Ch.7 Quiz

As a result of a decrease in price... a. new buyers enter the market, increasing consumer surplus. b. new buyers enter the market, decreasing consumer surplus. c. existing buyers exit the market, increasing consumer surplus. d. existing buyers exit the market, decreasing consumer surplus.

a. new buyers enter the market, increasing consumer surplus.

Cost is a measure of the... a. seller's willingness to sell. b. seller's producer surplus. c. producer shortage. d. seller's willingness to buy.

a. seller's willingness to sell

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game? a. $0 b. $10 c. $40 d. $50

b. $10

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it... a. maximizes both the total revenue for firms and the quantity supplied of the product. b. maximizes the combined welfare of buyers and sellers. c. minimizes costs and maximizes output. d. minimizes the level of welfare payments.

b. maximizes the combined welfare of buyers and sellers.

Evan purchases a wall calendar for $9, and his consumer surplus is $1. How much is Evan willing to pay for the wall calendar? a. $9 b. $5 c. $10 d. $8

c. $10

Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $425. Billie Jo's willingness to pay for the dishwasher is... a. $150. b. $425. c. $500. d. $850.

c. $500.

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market... a. decreases. b. is unchanged. c. increases. d. may increase, decrease, or remain unchanged.

d. may increase, decrease, or remain unchanged.

A simultaneous increase in both the demand for tablets and the supply of tablets would imply that... a. both the value of tablets to consumers and the cost of producing tablets has increased. b. both the value of tablets to consumers and the cost of producing tablets has decreased. c. the value of tablets to consumers has decreased, and the cost of producing tablets has increased. d. the value of tablets to consumers has increased, and the cost of producing tablets has decreased.

d. the value of tablets to consumers has increased, and the cost of producing tablets has decreased.

The maximum price that a buyer will pay for a good is called... a. consumer surplus. b. producer surplus. c. efficiency. d. willingness to pay.

d. willingness to pay.