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According to the graph shown, if the market goes from equilibrium to having its price set at $10 market transactions will: A) decrease by 7. B) decrease by 3. C) decrease by 10. D) not change-only price does. According to the graph shown, if the market goes from equilibrium to having its price set at $10 market transactions will:


A) decrease by 7.
B) decrease by 3.
C) decrease by 10.
D) not change-only price does.

E) None of the above
F) A) and B)

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Assume a market has an equilibrium price of $4. If the market price is set at $8, which of the following statements is true?


A) Some surplus is transferred from consumers to producers, but total surplus falls.
B) All surplus is transferred from consumers to producers, and total surplus stays the same.
C) Some surplus is transferred from producers to consumers, but total surplus falls.
D) Some surplus is transferred from consumers to producers, causing total surplus to increase.

E) A) and B)
F) A) and C)

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When a perfectly competitive, well-functioning market is not in equilibrium:


A) total surplus is not maximized.
B) any additional changes to make someone better off will make someone else worse off.
C) the market is efficient.
D) All of these are correct.

E) A) and B)
F) None of the above

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Deadweight loss:


A) creates efficiency in markets when producers and consumers both agree to it.
B) is the difference between the total surplus occurring in a market and the maximum total surplus achievable.
C) is the loss in producer surplus from a price increase.
D) is the difference between the efficient quantity and the market quantity.

E) A) and D)
F) B) and C)

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If price is set at $11 in the market shown in the graph, total surplus will consist of areas: A) A + B + G + C + G + H + I + J + L. B) A + B + G + L. C) A + B + C + G + H + L. D) A + B + C + G + H + I + J + L + M + N + O. If price is set at $11 in the market shown in the graph, total surplus will consist of areas:


A) A + B + G + C + G + H + I + J + L.
B) A + B + G + L.
C) A + B + C + G + H + L.
D) A + B + C + G + H + I + J + L + M + N + O.

E) B) and C)
F) All of the above

Correct Answer

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Assume a market has an equilibrium price of $5. If the market price is set at $9: I. Producer surplus rises for some producers because of the increased price. II) Producer surplus decreases for some producers because fewer transactions are taking place. III) Total surplus may rise or fall depending on the change in producer surplus.


A) II only
B) I and III only
C) I and II only
D) I, II, and III

E) A) and C)
F) A) and D)

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Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers increased from $8 to $12, producer surplus would increase:


A) from $8 to $12.
B) by $4 for each producer.
C) by $4 for House Depot.
D) by $7 in total.

E) A) and B)
F) All of the above

Correct Answer

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Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers decreased from $15 to $11:


A) total producer surplus would fall by $4.
B) producer surplus would fall by $4 for each producer.
C) House Depot's producer surplus would fall by $4.
D) total producer surplus would fall by $8.

E) A) and C)
F) A) and B)

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In economics, the concept of surplus:


A) measures the benefit that people receive when they buy something for less than they would have been willing to pay.
B) measures the benefit that people receive when they sell something for more than they would have been willing to accept.
C) is the best way to look at the benefits people receive from successful transactions.
D) All of these are correct.

E) All of the above
F) B) and C)

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Assume the market in the graph is in equilibrium at demand (D) and supply (S<sub>1</sub>) . If supply shifts to S<sub>2</sub>, and a new equilibrium is reached, which of the following statements is true? A) Consumer surplus increases by $45. B) Producer surplus decreases by $45. C) Consumer surplus increases by $90. D) Total surplus increases by $45. Assume the market in the graph is in equilibrium at demand (D) and supply (S1) . If supply shifts to S2, and a new equilibrium is reached, which of the following statements is true?


A) Consumer surplus increases by $45.
B) Producer surplus decreases by $45.
C) Consumer surplus increases by $90.
D) Total surplus increases by $45.

E) C) and D)
F) All of the above

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A consumer's willingness to pay:


A) is the maximum price that the consumer would be willing to pay for a good or service.
B) is the minimum price that the consumer would be willing to pay for a good or service.
C) is known as the consumer's reserved minimum bid-price.
D) must always equal a seller's willingness to sell.

E) A) and B)
F) A) and C)

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Assume the market depicted in the graph is in equilibrium. What is producer surplus? A) $36 B) $48 C) $120 D) None of these are correct. Assume the market depicted in the graph is in equilibrium. What is producer surplus?


A) $36
B) $48
C) $120
D) None of these are correct.

E) A) and B)
F) A) and D)

Correct Answer

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Assume the market depicted in the graph is in equilibrium. If the market price is set to $12, which of the following statements is true? A) For those still interacting in the market, some surplus will be transferred from buyer to seller. B) For those still interacting in the market, some surplus will be transferred from seller to buyer. C) Producers will gain the surplus of those buyers who drop out of the market. D) Consumers will gain the surplus of those sellers who drop out of the market. Assume the market depicted in the graph is in equilibrium. If the market price is set to $12, which of the following statements is true?


A) For those still interacting in the market, some surplus will be transferred from buyer to seller.
B) For those still interacting in the market, some surplus will be transferred from seller to buyer.
C) Producers will gain the surplus of those buyers who drop out of the market.
D) Consumers will gain the surplus of those sellers who drop out of the market.

E) A) and B)
F) B) and D)

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Suppose Miguel wishes to buy a baseball glove. He observes that the market price of a glove is $43 and decides not to buy one. Which of the following prices could represent Miguel's willingness to pay for a baseball glove?


A) $37
B) $45
C) $50
D) None of these could represent Miguel's willingness to pay.

E) C) and D)
F) B) and D)

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When someone's willingness to pay is the same as the actual price paid for an item:


A) the individual will not purchase the item.
B) the individual's surplus is zero.
C) surplus cannot be maximized.
D) All of these are correct.

E) C) and D)
F) A) and B)

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Assume the market depicted in the graph is in equilibrium. What is producer surplus? A) $180 B) $80 C) $120 D) $200 Assume the market depicted in the graph is in equilibrium. What is producer surplus?


A) $180
B) $80
C) $120
D) $200

E) A) and B)
F) B) and C)

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Total surplus can be increased by:


A) policies that help people do business more efficiently.
B) technologies that help people share more and better information.
C) increasing the availability of accurate information.
D) All of these can increase total surplus.

E) All of the above
F) B) and C)

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Assume the market depicted in the graph is in equilibrium. What is total surplus? A) $160 B) $180 C) $320 D) $360 Assume the market depicted in the graph is in equilibrium. What is total surplus?


A) $160
B) $180
C) $320
D) $360

E) B) and C)
F) None of the above

Correct Answer

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We say a market is "missing" when:


A) there is no place for potential buyers and sellers to exchange a particular good or service.
B) the quantity being exchanged is at or close to zero.
C) there is an absence of a well-functioning market, and total surplus is lower than it could be.
D) All of these are correct.

E) All of the above
F) B) and C)

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Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers is $13, what would total producer surplus be?


A) $9
B) $30
C) $17
D) $7

E) None of the above
F) All of the above

Correct Answer

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