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Surplus is:


A) a measure of the value that buyers and sellers get from participating in a market
B) maximized for individuals whose willingness to pay equals the market price.
C) negative for all individuals who do not participate in a market.
D) All of these are correct.

E) B) 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 decreased from $17 to $12:


A) producer participation in the market would increase.
B) producer participation in the market would decrease.
C) producer participation in the market would not be affected.
D) total producer surplus would remain unchanged.

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

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According to the graph shown, if the market goes from equilibrium to having its price set at $18: A) producer surplus will be $8,100. B) consumer surplus will be $12,150. C) deadweight loss will be $2,250. D) deadweight loss will be $1,500. According to the graph shown, if the market goes from equilibrium to having its price set at $18:


A) producer surplus will be $8,100.
B) consumer surplus will be $12,150.
C) deadweight loss will be $2,250.
D) deadweight loss will be $1,500.

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

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A market has four individuals, each considering buying a grill. Assume that grills come in only one size and model. Martina considers herself a grill-master, and finds a grill a necessity, so she is willing to pay $400 for a grill. Javier is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Kamal wants to impress his friends with his vegetable grilling skills and is willing to pay $320 for a grill. Lina loves grilled shrimp and thinks it might be cheaper in the long run if she grills her own shrimp instead of eating out at a restaurant, so she is willing to pay $200 for a grill.If the market price of grills is $300, who will participate in the market?


A) Only Martina, Javier, and Kamal will participate
B) Only Kamal and Lina will participate
C) Only Martina and Javier will participate
D) Only Lina will participate

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

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Suppose the market for kidneys is depicted in the graph shown. Suppose the market for kidneys is depicted in the graph shown. Initially, kidneys are exchanged by donations only (price = $0) . If the government decides to legalize kidneys sales and the market reaches equilibrium, then: A) total surplus will increase. B) consumer surplus will remain the same. C) producer surplus will remain the same. D) a shortage of kidneys will arise. Initially, kidneys are exchanged by donations only (price = $0) . If the government decides to legalize kidneys sales and the market reaches equilibrium, then:


A) total surplus will increase.
B) consumer surplus will remain the same.
C) producer surplus will remain the same.
D) a shortage of kidneys will arise.

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

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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 $11, total producer surplus would increase by:


A) $3.
B) $6.
C) $9.
D) $4.

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

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Assume the market depicted in the graph is in equilibrium. If the market price is set to $7, which of the following statements is true? A) Some producers will gain surplus, but total surplus will fall. B) Some producers will lose surplus, but total surplus will rise. C) Some consumers will gain surplus, but total surplus will fall. D) Some consumers will lose surplus, but total surplus will rise. Assume the market depicted in the graph is in equilibrium. If the market price is set to $7, which of the following statements is true?


A) Some producers will gain surplus, but total surplus will fall.
B) Some producers will lose surplus, but total surplus will rise.
C) Some consumers will gain surplus, but total surplus will fall.
D) Some consumers will lose surplus, but total surplus will rise.

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

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What consumer surplus is received by someone whose willingness to pay is $35 below the market price of a good?


A) $35
B) $0
C) ($35 × P*)
D) None of these are correct.

E) A) and B)
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 decreased from $13 to $11, total producer surplus would:


A) decrease from $9 to $5.
B) increase from $5 to $9.
C) decrease from $30 to $17.
D) remain unchanged.

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

Correct Answer

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According to the graph shown, if the market goes from equilibrium to having its price set at $4: A) deadweight loss will be $90. B) consumer surplus will be $160. C) deadweight loss will be $60. D) consumer surplus will rise by $30. According to the graph shown, if the market goes from equilibrium to having its price set at $4:


A) deadweight loss will be $90.
B) consumer surplus will be $160.
C) deadweight loss will be $60.
D) consumer surplus will rise by $30.

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

Correct Answer

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Assume the market depicted in the graph is in equilibrium. If the market price is set to $6, 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 $6, 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 C)

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The maximum price that a buyer would be willing to pay for a good or service is also called:


A) willingness to pay.
B) the buyer-max price.
C) the reserved max price.
D) opportunity cost.

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

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Assume the market depicted in the graph is in equilibrium. What is consumer surplus? A) $40. B) $80. C) $160. D) $240. Assume the market depicted in the graph is in equilibrium. What is consumer surplus?


A) $40.
B) $80.
C) $160.
D) $240.

E) C) and D)
F) None 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 increased from $6 to $7, what would happen to total producer surplus?


A) It would increase.
B) It would remain unchanged.
C) It would decrease.
D) We cannot determine this with the information given.

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

Correct Answer

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Efficient markets:


A) maximize total surplus.
B) can occur without a central planner.
C) occur when a perfectly competitive, well-functioning market is in equilibrium.
D) All of these are correct.

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

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

Correct Answer

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Assume the market depicted in the graph is in equilibrium. Producer surplus consists of area(s) : A) A. B) A + B + C. C) A + B + C + D + E. D) D + E. Assume the market depicted in the graph is in equilibrium. Producer surplus consists of area(s) :


A) A.
B) A + B + C.
C) A + B + C + D + E.
D) D + E.

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

Correct Answer

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According to the graph shown, if the market goes from equilibrium to having its price set at $10, how will surplus transfer? A) $12 transfers from consumer surplus to producer surplus. B) $12 transfers from producer surplus to consumer surplus. C) All consumer surplus lost is gained by producers. D) All producer surplus lost is gained by consumers. According to the graph shown, if the market goes from equilibrium to having its price set at $10, how will surplus transfer?


A) $12 transfers from consumer surplus to producer surplus.
B) $12 transfers from producer surplus to consumer surplus.
C) All consumer surplus lost is gained by producers.
D) All producer surplus lost is gained by consumers.

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

Correct Answer

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