Question 1

Market demand is given as QD = 150 - P.Market supply is given as QS = 4P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Accepted Answer

A)  $1800
B)  $2304
C)  $7200
D)  $9216E) B) and D)
F) A) and D)

Question 2

Which occurrence would NOT show an inefficient market

Accepted Answer

A)  a scalper selling Montreal Canadians hockey tickets on the sidewalk
B)  the only gas station in a location that is 100 kilometres from the next closest gas station
C)  a steel mill that also produces pollution
D)  a college student attending a private universityE) All of the above
F) A) and B)

Question 3

Consider the following two equations:
1) Total surplus = Consumer surplus + Producer surplus
2) Total surplus = Value to buyers - Cost to sellers
Show how equation (1) can be used to derive equation (2).

Accepted Answer

Start with equation (1): Total surplus =...

Question 4

What will occur when the price of a good or service falls

Accepted Answer

A)  Buyers who were already buying the good or service are worse off.
B)  Some new buyers, who are now willing to buy, enter the market.
C)  The total value of what is purchased decreases.
D)  The total value of what is purchased increases.E) B) and C)
F) A) and D)

Question 5

The area below the price and above the supply curve measures the producer surplus in a market.

Accepted Answer

A) True 
 B)False

Question 6

Suppose that the equilibrium price in the market for widgets is $8.If a law reduced the maximum legal price for widgets to $7,what would happen to consumer surplus

Accepted Answer

A)  It would necessarily increase even if the lower price resulted in a shortage of widgets.
B)  It would necessarily decrease because the lower price would create a shortage of widgets.
C)  It might increase or decrease.
D)  It would be unaffected.E) None of the above
F) A) and B)

Question 7

Suppose consumer income increases.If grass seed is a normal good,what happens to the equilibrium price of grass seed and producer surplus

Accepted Answer

A)  They both decrease.
B)  They both increase.
C)  The equilibrium price will decrease, and producer surplus in the industry will increase.
D)  The equilibrium price will increase, and producer surplus in the industry will decrease.E) B) and C)
F) A) and C)

Question 8

Figure 7-2
 
-Refer to Figure 7-2.When the price falls from P₁ to P₂,which area represents the increase in consumer surplus to existing buyers

Accepted Answer

A)  ABD
B)  ACF
C)  BCED
D)  DEFE) A) and B)
F) A) and C)

Question 9

Figure 7-6
​
 
-Refer to Figure 7-6.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.What would be the increase in total producer surplus

Accepted Answer

A)  $210
B)  $360
C)  $480
D)  $570E) None of the above
F) B) and D)

Question 10

What is the French expression used to express the free market concept that literally translates to "allow them to do"

Accepted Answer

A)  laissez-faire
B)  je ne sais pas
C)  s'il vous plait
D)  maintien de la paixE) None of the above
F) All of the above

Question 11

When markets fail,what can public policy do

Accepted Answer

A)  nothing to improve the situation
B)  potentially remedy the problem and increase economic efficiency
C)  always remedy the problem and increase economic efficiency
D)  in theory, remedy the problem, but in practice, has proven to be ineffectiveE) A) and D)
F) None of the above

Question 12

Answer each of the following questions on supply and producer surplus.
a.What is producer surplus,and how is it measured
b.What is the relationship between the cost to sellers and the supply curve
c.Other things equal,what happens to producer surplus when the price of a good rises? Illustrate your answer on a supply curve.

Accepted Answer

a. Producer surplus measures the benefit...

Question 13

Market demand is given as QD = 140 - 5P.Market supply is given as QS = 2P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Accepted Answer

A)  $400
B)  $600
C)  $800
D)  $1000E) B) and D)
F) None of the above

Question 14

Table 7-3
 
-Refer to Table 7-3.If the market price is $1000,what is the producer surplus in the market

Accepted Answer

A)  $450
B)  $950
C)  $1450
D)  $3700E) All of the above
F) A) and B)

Question 15

Total surplus in a market can be measured as the area below the supply curve and the area above the demand curve.

Accepted Answer

A) True 
 B)False

Question 16

Which comparison of efficiency and equity is most accurate

Accepted Answer

A)  Efficiency deals with the size of the economic pie and equity deals with how fairly the pie is sliced.
B)  Equity can be judged on positive grounds, whereas efficiency requires normative judgments.
C)  Efficiency is more difficult to evaluate than equity.
D)  Equity and efficiency are both maximized in a society when total surplus is maximized.E) All of the above
F) C) and D)

Exam 7: Consumers, producers, and the Efficiency of Markets

Table 7-3 -Refer to Table 7-3.If the market price is $1000,what is the producer surplus in the market

Correct Answer
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Which occurrence would NOT show an inefficient market

Correct Answer
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What will occur when the price of a good or service falls

Correct Answer
verified

Suppose that the equilibrium price in the market for widgets is $8.If a law reduced the maximum legal price for widgets to $7,what would happen to consumer surplus

Correct Answer
verified

Consider the following two equations: 1) Total surplus = Consumer surplus + Producer surplus 2) Total surplus = Value to buyers - Cost to sellers Show how equation (1) can be used to derive equation (2).

Correct Answer
verified
Start with equation (1): Total surplus =...
View Answer

Figure 7-2 -Refer to Figure 7-2.When the price falls from P₁ to P₂,which area represents the increase in consumer surplus to existing buyers

Correct Answer
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Figure 7-6 -Refer to Figure 7-6.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.What would be the increase in total producer surplus

Correct Answer
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Market demand is given as Q_D= 140 - 5P.Market supply is given as Q_S= 2P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Correct Answer
verified

The area below the price and above the supply curve measures the producer surplus in a market.

Correct Answer
verified

Which comparison of efficiency and equity is most accurate

Correct Answer
verified

What is the French expression used to express the free market concept that literally translates to "allow them to do"

Correct Answer
verified

Market demand is given as Q_D= 150 - P.Market supply is given as Q_S= 4P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Correct Answer
verified

Total surplus in a market can be measured as the area below the supply curve and the area above the demand curve.

Correct Answer
verified

When markets fail,what can public policy do

Correct Answer
verified

Correct Answer
verified
a. Producer surplus measures the benefit...
View Answer

Suppose consumer income increases.If grass seed is a normal good,what happens to the equilibrium price of grass seed and producer surplus

Correct Answer
verified

Exam 7: Consumers, producers, and the Efficiency of Markets

Table 7-3 -Refer to Table 7-3.If the market price is $1000,what is the producer surplus in the market

Correct AnswerverifiedShow Answer

Which occurrence would NOT show an inefficient market

Correct AnswerverifiedShow Answer

What will occur when the price of a good or service falls

Correct AnswerverifiedShow Answer

Suppose that the equilibrium price in the market for widgets is $8.If a law reduced the maximum legal price for widgets to $7,what would happen to consumer surplus

Correct AnswerverifiedShow Answer

Consider the following two equations: 1) Total surplus = Consumer surplus + Producer surplus 2) Total surplus = Value to buyers - Cost to sellers Show how equation (1) can be used to derive equation (2).

Correct AnswerverifiedStart with equation (1): Total surplus =...View AnswerShow Answer

Figure 7-2 -Refer to Figure 7-2.When the price falls from P₁ to P₂,which area represents the increase in consumer surplus to existing buyers

Correct AnswerverifiedShow Answer

Figure 7-6 ​ -Refer to Figure 7-6.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.What would be the increase in total producer surplus

Correct AnswerverifiedShow Answer

Market demand is given as QD = 140 - 5P.Market supply is given as QS = 2P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Correct AnswerverifiedShow Answer

The area below the price and above the supply curve measures the producer surplus in a market.

Correct AnswerverifiedShow Answer

Which comparison of efficiency and equity is most accurate

Correct AnswerverifiedShow Answer

What is the French expression used to express the free market concept that literally translates to "allow them to do"

Correct AnswerverifiedShow Answer

Market demand is given as QD = 150 - P.Market supply is given as QS = 4P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Correct AnswerverifiedShow Answer

Total surplus in a market can be measured as the area below the supply curve and the area above the demand curve.

Correct AnswerverifiedShow Answer

When markets fail,what can public policy do

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Producer surplus measures the benefit...View AnswerShow Answer

Suppose consumer income increases.If grass seed is a normal good,what happens to the equilibrium price of grass seed and producer surplus

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Start with equation (1): Total surplus =...
View Answer

Correct Answer
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Figure 7-6 -Refer to Figure 7-6.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.What would be the increase in total producer surplus

Correct Answer
verified

Market demand is given as Q_D= 140 - 5P.Market supply is given as Q_S= 2P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Market demand is given as Q_D= 150 - P.Market supply is given as Q_S= 4P.In a perfectly competitive equilibrium,what will be the value of producer surplus

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified
a. Producer surplus measures the benefit...
View Answer

Correct Answer
verified