7-2 to 7-4

Refer to Table 7-15. If each producer has one unit available for sale, and if the market equilibrium price is $70, how much is the combined total cost of all participating sellers in the market? A)$100 B)$150 C)$250 D)$350

A)$100

Refer to Figure 7-11. If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus? A)$625 B)$1,250 C)$2,500 D)$5,000

A)$625

Efficiency is attained when A)total surplus is maximized B)producer surplus is maximized. C)all resources are being used. D)consumer surplus is maximized and producer surplus is minimized.

A)total surplus is maximized

Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus would be A)$2,500 B)$900. C)$800 D)$1,600.

D)$1,600.

Refer to Figure 7-10. Which area represents producer surplus when the price is P2? A)BCG B)ACH C)ABGD D)AHGB

B)ACH

Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be A)$137.50. B)$125.00 C)$187.50 D)$275.00

C)$187.50

Refer to Figure 7-23. 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 Figure 7-22. If 40 units of the good are bought and sold, then A)the marginal cost to sellers is equal to the marginal value to buyers. B)the marginal value to buyers is greater than the marginal cost to sellers C)the marginal cost to sellers is greater than the marginal value to buyers D)the marginal cost to sellers is greater than the marginal value to buyers

B)the marginal value to buyers is greater than the marginal cost to sellers

Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2? A)BCG B)ACH C)ABGD D)AHGB

D)AHGB

Laissez-faire is a French expression which literally means A)to make do B)to get involved C)whatever works D)allow them to do

D)allow them to do

Which of the following will cause a decrease in producer surplus? A)the imposition of a nonbinding price ceiling in the market B)buyers expect the price of a good to be higher next month C)the price of a substitute increases D)income increases and buyers consider the good to be inferior

D)income increases and buyers consider the good to be inferior

According to many economists, government restrictions on ticket scalping do all of the following except A)inconvenience the public. B)reduce the audience for cultural and sports events C)waste police officers' time. D)keep the cost of tickets to all consumers low

D)keep the cost of tickets to all consumers low

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. If Firm A produces a monitor that Cassie buys but David does not, then the market outcome illustrates which of the following principles? (i)Free markets allocate the supply of goods to the buyers who value them most highly, as measured by their willingness to pay.(ii)Free markets allocate the demand for goods to the sellers who can produce them at the least cost. A)(i) only B)(ii) only C)both (i) and (ii) D)neither (i) nor (ii)

B)(ii) only

Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is A)$44. B)$56. C)$72 D)$96

C)$72

Inefficiency exists in a market when a good is A)not produced because buyers do not value it very highly 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

C)not being produced by the lowest-cost producers