Quiz 7: Consumers, Producers, and the Efficiency of Markets

Which of the following statements is correct? A) Buyers always want to pay less and sellers always want to be paid more. B) Buyers always want to pay less and sellers always want to be paid less. C) Buyers always want to pay more and sellers always want to be paid more. D) Buyers always want to pay more and sellers always want to be paid less.

Welfare economics is the study of how A) the allocation of resources affects economic well-being. B) a price ceiling compares to a price floor. C) the government helps poor people. D) a consumer's optimal choice affects her demand curve.

Welfare economics is the study of A) taxes and subsidies. B) how technology is best put to use in the production of goods and services. C) government welfare programs for needy people. D) how the allocation of resources affects economic well-being.

Welfare economics is the study of A) the well-being of less fortunate people. B) welfare programs in the United States. C) how the allocation of resources affects economic well-being. D) the effect of income redistribution on work effort.

The study of how the allocation of resources affects economic well-being is called A) consumer economics. B) macroeconomics. C) willingness-to-pay economics. D) welfare economics.

An example of positive analysis is studying A) how market forces produce equilibrium. B) whether equilibrium outcomes are fair. C) whether equilibrium outcomes are socially desirable. D) if income distributions are fair.

An example of normative analysis is studying A) how market forces produce equilibrium. B) surpluses and shortages. C) whether equilibrium outcomes are socially desirable. D) income distributions.

Which of the Ten Principles of Economics does welfare economics explain more fully? A) The cost of something is what you give up to get it. B) Markets are usually a good way to organize economic activity. C) Trade can make everyone better off. D) A country's standard of living depends on its ability to produce goods and services.

Which of the Ten Principles of Economics does welfare economics explain more fully? A) The cost of something is what you give up to get it. B) Rational people think at the margin. C) Markets are usually a good way to organize economic activity. D) People respond to incentives.

One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of A) factor markets. B) energy markets. C) welfare economics. D) labor economics.

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.

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it A) maximizes costs of the seller. B) maximizes tax revenue for the government. C) maximizes the combined welfare of buyers and sellers. D) minimizes the expenditure of buyers.

Welfare economics explains which of the following in the market for televisions? A) The government sets the price of televisions; firms respond to the price by producing a specific level of output. B) The government sets the quantity of televisions; firms respond to the quantity by charging a specific price. C) The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers. D) The market equilibrium price for televisions maximizes consumer welfare and minimizes producer profit.

The maximum price that a buyer will pay for a good is called A) consumer surplus. B) willingness to pay. C) equilibrium. D) efficiency.

Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called A) a resistance price. B) willingness to pay. C) consumer surplus. D) producer surplus.

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called A) deadweight loss. B) willingness to pay. C) consumer surplus. D) producer surplus.

Willingness to pay A) measures the value that a buyer places on a good. B) is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept. C) is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept. D) is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

A consumer's willingness to pay directly measures A) the extent to which advertising and other external forces have influenced the consumer's preferences. B) the cost of a good to the buyer. C) how much a buyer values a good. D) consumer surplus.

When a buyer's willingness to pay for a good is equal to the price of the good, the A) buyer's consumer surplus for that good is maximized. B) buyer will buy as much of the good as the buyer's budget allows. C) price of the good exceeds the value that the buyer places on the good. D) buyer is indifferent between buying the good and not buying it.

In which of the following circumstances would a buyer be indifferent about buying a good? A) The amount of consumer surplus the buyer would experience as a result of buying the good is zero. B) The price of the good is equal to the buyer's willingness to pay for the good. C) The price of the good is equal to the value the buyer places on the good. D) All of the above are correct.

A demand curve reflects each of the following except the A) willingness to pay of all buyers in the market. B) value each buyer in the market places on the good. C) highest price buyers are willing to pay for each quantity. D) ability of buyers to obtain the quantity they desire.

Consumer surplus A) is closely related to the supply curve for a product. B) is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward- sloping line. C) is measured using the demand curve for a product. D) does not reflect economic well-being in most markets.

Consumer surplus is A) the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. B) the amount a buyer is willing to pay for a good minus the cost of producing the good. C) the amount by which the quantity supplied of a good exceeds the quantity demanded of the good. D) a buyer's willingness to pay for a good plus the price of the good.

Consumer surplus A) is the amount a buyer pays for a good minus the amount the buyer is willing to pay for it. B) is represented on a supply-demand graph by the area below the price and above the demand curve. C) measures the benefit sellers receive from participating in a market. D) measures the benefit buyers receive from participating in a market.

Consumer surplus A) is the amount of a good that a consumer can buy at a price below equilibrium price. B) is the amount a consumer is willing to pay minus the amount the consumer actually pays. C) is the number of consumers who are excluded from a market because of scarcity. D) measures how much a seller values a good.

Consumer surplus is the A) amount of a good consumers get without paying anything. B) amount a consumer pays minus the amount the consumer is willing to pay. C) amount a consumer is willing to pay minus the amount the consumer actually pays. D) value of a good to a consumer.

Consumer surplus is equal to the A) Value to buyers - Amount paid by buyers. B) Amount paid by buyers - Costs of sellers. C) Value to buyers - Costs of sellers. D) Value to buyers - Willingness to pay of buyers.

On a graph, the area below a demand curve and above the price measures A) producer surplus. B) consumer surplus. C) deadweight loss. D) willingness to pay.

On a graph, consumer surplus is represented by the area A) between the demand and supply curves. B) below the demand curve and above price. C) below the price and above the supply curve. D) below the demand curve and to the right of equilibrium price.

Consumer surplus in a market can be represented by the A) area below the demand curve and above the price. B) distance from the demand curve to the horizontal axis. C) distance from the demand curve to the vertical axis. D) area below the demand curve and above the horizontal axis.

Consumer surplus is A) a concept that helps us make normative statements about the desirability of market outcomes. B) represented on a graph by the area below the demand curve and above the price. C) a good measure of economic welfare if buyers' preferences are the primary concern. D) All of the above are correct.

In a market, the marginal buyer is the buyer A) whose willingness to pay is higher than that of all other buyers and potential buyers. B) whose willingness to pay is lower than that of all other buyers and potential buyers. C) who is willing to buy exactly one unit of the good. D) who would be the first to leave the market if the price were any higher.

Table 7-1 -Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product? A) Calvin B) Calvin and Sam C) Calvin, Sam, and Andrew D) Calvin, Sam, Andrew, and Lori

Table 7-1 -Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product? A) Calvin B) Calvin and Sam C) Calvin, Sam, and Andrew D) Calvin, Sam, Andrew, and Lori

Table 7-1 -Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product? A) Calvin B) Calvin and Sam C) Calvin, Sam, and Andrew D) Calvin, Sam, Andrew, and Lori

Table 7-1 -Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is

Table 7-1 -Refer to Table 7-1. If price of the product is $135, then the total consumer surplus is A) $-50. B) $-35. C) $15. D) $150.

Table 7-1 -Refer to Table 7-1. If the market price is $105, A) Calvin's consumer surplus is $45 and total consumer surplus is $85. B) Sam's consumer surplus is $30 and total consumer surplus is $90. C) Andrew's consumer surplus is $15 and total consumer surplus is $67.50. D) Lori's consumer surplus is ­$2 and total consumer surplus is $100.

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good? A) all five individuals B) Megan, Mallory and Audrey C) David, Laura and Megan D) David and Laura

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. Which of the following is not true? A) At a price of $9.00, no buyer is willing to purchase Vanilla Coke. B) At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not buying one. C) At a price of $4.00, total consumer surplus in the market will be $9.00. D) All of the above are correct.

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be A) $3.00. B) $4.50. C) $15.50. D) $21.00.

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. If the market price is $3.80, A) David's consumer surplus is $4.70 and total consumer surplus for the five individuals is $9.50. B) Megan's consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80. C) David, Laura, and Megan will be the only buyers of Vanilla Coke. D) the demand curve for Vanilla Coke, taking the five individuals into account, is horizontal.

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If the market price for the good is $20, who will purchase the good? A) Ming-la only B) Carlos and Quilana only C) Quilana and Wilbur only D) Quilana, Wilbur, and Ming-la only

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the good will sell for A) $15 or slightly less. B) $25 or slightly more. C) $35 or slightly more. D) $45 or slightly less.

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be A) $0 or slightly more. B) $10 or slightly less. C) $30 or slightly more. D) $45 or slightly less.

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. If the price is $20, then consumer surplus in the market is A) $20, and Wilbur and Ming-la purchase the good. B) $45, and Carlos and Quilana purchase the good. C) $45, and Quilana, Wilbur, and Ming-la purchase the good. D) $55, and Carlos, Wilbur, and Ming-la purchase the good.

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22? A) Quilana B) Wilbur C) Ming-la D) All three buyers experience the same loss of consumer surplus.

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, what will be the selling price? A) slightly more than $20. B) slightly more than $25. C) slightly more than $50. D) slightly more than $60.

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, who will buy the ticket? A) Dan B) David C) Ken D) Lisa

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If tickets sell for $40 each, then what is the total consumer surplus in the market? A) $30. B) $90. C) $70. D) $110.

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If tickets sell for $25 each, then what is the total consumer surplus in the market? A) $25 B) $35 C) $60 D) $110

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If you have two (essentially) identical tickets that you sell to the group in an auction, what will be the selling price for each ticket?

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. If the market price of an orange is $0.90, then the market quantity of oranges demanded per day is A) 5. B) 2. C) 3. D) 4.

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. If the market price of an orange is $0.70, then the market quantity of oranges demanded per day is A) 5. B) 6. C) 4. D) 7.

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. The market quantity of oranges demanded per day is exactly 7 if the price of an orange, P, satisfies A) $0.60 < P < $0.75. B) $0.60 < P < $2.00. C) $0.25 < P < $0.75. D) $0.25 < P < $0.60.

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. If the market price of an orange is $0.65, then consumer surplus amounts to A) $3.90. B) $6.75. C) $3.60. D) $7.50.

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. If the market price of an orange is $0.40, then A) 6 oranges are demanded per day, and consumer surplus amounts to $4.95. B) 6 oranges are demanded per day, and consumer surplus amounts to $5.10. C) 7 oranges are demanded per day, and consumer surplus amounts to $5.30. D) 7 oranges are demanded per day, and consumer surplus amounts to $5.15.

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. If the market price of an orange increases from $0.80 to $1.05, then consumer surplus A) increases by $0.75. B) decreases by $0.95. C) decreases by $0.75. D) decreases by $1.00.

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. If the market price of an orange increases from $0.70 to $1.40, then consumer surplus A) increases by $2.60. B) decreases by $0.70. C) decreases by $2.50. D) decreases by $2.60.

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40? A) Allison B) Bob C) Charisse D) All three individuals experience the same loss of consumer surplus.

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. Who experiences the largest gain in consumer surplus when the price of an orange decreases from $1.05 to $0.75? A) Allison B) Bob C) Charisse D) Allison and Bob experience the same gain in consumer surplus, and Charisse's gain is zero.

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. Which of the following statements is correct? A) Neither Bob's consumer surplus nor Charisse's consumer surplus can exceed Allison's consumer surplus, for any price of an orange. B) All three individuals will buy at least one orange only if the price of an orange is less than $0.25. C) If the price of an orange is $0.60, then consumer surplus is $4.90. D) All of the above are correct.

Table 7-6 For each of three potential buyers of apples, the table displays the willingness to pay for the first three apples of the day. Assume Xavier, Yadier, and Zavi are the only three buyers of apples, and only three apples can be supplied per day. -Refer to Table 7-6. If the market price of an apple is $1.40, then the market quantity of apples demanded per day is A) 1. B) 2. C) 3. D) 4.

Table 7-6 For each of three potential buyers of apples, the table displays the willingness to pay for the first three apples of the day. Assume Xavier, Yadier, and Zavi are the only three buyers of apples, and only three apples can be supplied per day. -Refer to Table 7-6. If the market price of an apple is $1.40, then consumer surplus amounts to A) $0.60. B) $1.20. C)$1.40. D) $3.40

Table 7-6 For each of three potential buyers of apples, the table displays the willingness to pay for the first three apples of the day. Assume Xavier, Yadier, and Zavi are the only three buyers of apples, and only three apples can be supplied per day. -Refer to Table 7-6. If the market price of an apple increases from $1.40 to $1.60, then consumer surplus A) decreases by $0.15. B) decreases by $0.30. C) decreases by $0.45. D) increases by $0.15.

Table 7-7 -Refer to Table 7-7. You have an extra ticket to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the ticket. Who makes the winning bid, and what does he offer to pay for the ticket? A) Michael; $501 B) Michael; more than $400 but less than or equal to $500 C) Earvin; $400 D) Earvin; more than $350 but less than or equal to $400

Table 7-7 -Refer to Table 7-7. You have an extra ticket to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the ticket. Michael bids $410 for the ticket, and you sell him the ticket. What is his consumer surplus? A) $410 B) $90 C) $10 D) 0

Table 7-7 -Refer to Table 7-7. You have two essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the two tickets. Who makes the winning bids, and what do they offer to pay for the tickets? A) Michael and Earvin; more than $350 but less than or equal to $400 B) Michael and Earvin; more than $400 but less than or equal to $500 C) Earvin and Larry; more than $300 but less than or equal to $350 D) Larry and Charles; less than $300

Table 7-7 -Refer to Table 7-7. You have two essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the two tickets. Michael and Earvin each offer to pay $360 for a ticket, and you sell them the two tickets. What is the total consumer surplus in the market? A) $720 B) $180 C) $140 D) $40

Table 7-7 -Refer to Table 7-7. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You offer to sell the tickets for $400. How many tickets do you sell, and what is the total consumer surplus in the market? A) one ticket; $100 B) two tickets; $100 C) two tickets; $0 D) three tickets; $0

Table 7-7 -Refer to Table 7-7. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You offer to sell the tickets for $325. How many tickets do you sell, and what is the total consumer surplus in the market? A) one ticket; $175 B) two tickets; $225 C) three tickets; $225 D) three tickets; $275

Table 7-7 -Refer to Table 7-7. You are selling extra tickets to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. Which of the following graphs represents the market demand curve? A) B) C) D)

Table 7-9 During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase. -Refer to Table 7-9. The price that Chad paid for a latte on the first day is A) $3.75. B) $6.25. C) $5.00. D) $5.50.

Table 7-9 During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase. -Refer to Table 7-9. The price that Chad paid for a latte on the second day is A) $0.25 less than the amount he paid on the first day. B) $1.00 less than the amount he paid on the first day. C) $1.50 less than the amount he paid on the first day. D) $0.50 less than the amount he paid on the first day.

Table 7-10 The only four consumers in a market have the following willingness to pay for a good: Buyer Willingness to Pay -Refer to Table 7-10. If the market price for the good is $20, who will purchase the good? A) Danita only B) Carolyn and Danita only C) Ashleigh, Barb, and Carolyn only D) All four buyers would purchase the good.

Table 7-10 The only four consumers in a market have the following willingness to pay for a good: Buyer Willingness to Pay -Refer to Table 7-10. If there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the good will sell for A) $12 or slightly less B) $15 or slightly more C) $19 or slightly more D) $27 or slightly less

Table 7-10 The only four consumers in a market have the following willingness to pay for a good: Buyer Willingness to Pay -Refer to Table 7-10. If there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be A) $0 or slightly more. B) $3 or slightly less. C) $4 or slightly more. D) $8 or slightly less.

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

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes A) increases, and the consumer surplus in the market for red wine increases. B) increases, and the consumer surplus in the market for red wine decreases. C) decreases, and the consumer surplus in the market for red wine increases. D) decreases, and the consumer surplus in the market for red wine decreases.

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book? A) $2. B) $6. C) $8. D) $4.

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be A) $3. B) $8. C) $5. D) $11.

Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15. Chuck values the dog show at A) $5. B) $15. C) $20. D) $35.

If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the A) consumer has consumer surplus of $2 if he or she buys the good. B) consumer does not purchase the good. C) market is not a competitive market. D) price of the good will fall due to market forces.

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the A) consumer has consumer surplus of $5 if he buys the good. B) consumer does not purchase the good. C) price of the good will rise due to market forces. D) market is out of equilibrium.

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to A) $4. B) $16. C) $20. D) $36.

Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is A) $1.40. B) $14. C) $3.80. D) $52.

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is A) $650. B) $150. C) $250. D) $400.

Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His consumer surplus is A) $800. B) $300. C) $200. D) $500.

Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be A) $15. B) $30. C) $45. D) $90.

Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20. Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30. Which of the following statements is correct? A) Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been a buyer. B) Brent's consumer surplus is the smallest of the three individual consumer surpluses. C) For the three individuals together, consumer surplus amounts to $60. D) The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener.

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct? A) For the three individuals together, consumer surplus amounts to $35. B) Having bought the cell phone, Kristen is better off than she would have been had she not bought it. C) Had the price of the cell phone been $95 rather than $80, Katie and Kendra definitely would have been buyers and Kristen definitely would not have been a buyer. D) The fact that all three individuals paid $80 for the same type of cell phone indicates that each one placed the same value on that cell phone.

Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is A) $15. B) $90 C) $105. D) $75.

Abraham drinks Mountain Dew. He can buy as many cans of Mountain Dew as he wishes at a price of $0.55 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Abraham is rational in deciding how many cans to buy. His consumer surplus is A) $0.50. B) $0.60. C) $0.70. D) $1.00.

Janine would be willing to pay $50 to see Les Misérables, but she buys a ticket for only $30. Janine values the performance at A) $20. B) $30. C) $50. D) $80.

Chad is willing to pay $5.00 to get his first cup of morning latté. He buys a cup from a vendor selling latté for $3.75 per cup. Chad's consumer surplus is A) $8.75. B) $5.00. C) $3.75. D) $1.25.

Chad is willing to pay $5.00 to get his first cup of morning latté; he is willing to pay $4.50 for a second cup. He buys his first cup from a vendor selling latté for $3.75 per cup. He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup. Chad buys a second cup. Which of the following statements is correct? A) Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté. B) Chad's consumer surplus on his second cup of latté was larger than his consumer surplus on his first cup of latté. C) Chad is irrational in that he is willing to pay a different price for his second cup of latté than what he is willing to pay for his first cup of latté. D) Chad places a higher value on his second cup of latté than on his first cup of latté.

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound, A) Henry experiences an increase in consumer surplus, but Janine does not. B) Janine experiences an increase in consumer surplus, but Henry does not. C) both Janine and Henry experience an increase in consumer surplus. D) neither Janine nor Henry experiences an increase in consumer surplus.

Alex is willing to pay $10, and Bella is willing to pay $8, for 1 pound of ribeye steak. When the price of ribeye steak increases from $9 to $11, A) Alex experiences a decrease in consumer surplus, but Bella does not. B) Bella experiences a decrease in consumer surplus, but Alex does not. C) both Bella and Alex experience a decrease in consumer surplus. D) neither Bella nor Alex experiences a decrease in consumer surplus.

Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is A) $8,500. B) $15,500. C) $24,000. D) $39,500.

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to A) only existing customers who now get lower prices on the gowns they were already planning to purchase. B) only new customers who enter the market because of the lower prices. C) both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. D) Consumer surplus does not increase; it decreases.

Jeff decides that he would pay as much as $2,000 for a new laptop computer. He buys the computer and realizes a consumer surplus of $300. How much did Jeff pay for his computer? A) $300. B) $1,700. C) $2,000. D) $2,300.

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.

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is A) $150. B)$350. C) $500. D) $850.

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's willingness to pay is A) $500. B) $3,000. C) $3,500. D) $6,500.

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's consumer surplus is A) $500. B) $3,000. C) $3,500. D) $6,500.

Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise A) buys the dishwasher, and on her purchase she experiences a consumer surplus of $150. B) buys the dishwasher, and on her purchase she experiences a consumer surplus of $-150. C) does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $150. D) does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $0.

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is A) $13,000. B) $105,000. C) $118,000. D) $131,000.

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer? A) $700 B) $2,300 C) $3,000 D) $3,700

Cameron visits a sporting goods store to buy a new set of golf clubs. He is willing to pay $750 for the clubs but buys them on sale for $575. Cameron's consumer surplus from the purchase is A) $175. B) $575. C) $750. D)$1,325.

If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is A) zero. B) negative, and the consumer would not purchase the product. C) positive, and the consumer would purchase the product. D) There is not enough information given to answer this question.

Suppose there is an early freeze in California that reduces the size of the lemon crop. What happens to consumer surplus in the market for lemons? A) Consumer surplus increases. B) Consumer surplus decreases. C) Consumer surplus is not affected by this change in market forces. D) We would have to know whether the demand for lemons is elastic or inelastic to make this determination.

Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last tomato you bought this week, you paid a price exactly equal to your willingness to pay. Then A) you should buy more tomatoes before the end of the week. B) you already have bought too many tomatoes this week. C) your consumer surplus on the last tomato you bought is zero. D) your consumer surplus on all of the tomatoes you have bought this week is zero.

Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then A) the marginal buyer's willingness to pay for the 100th unit of the good is $25. B) the sum of the five buyers' willingness to pay for the 100th unit of the good is $25. C) the average of the five buyers' willingness to pay for the 100th unit of the good is $25. D) all of the five buyers are willing to pay at least $25 for the 100th unit of the good.

If the cost of producing sofas decreases, then consumer surplus in the sofa market will A) increase. B) decrease. C) remain constant. D) increase for some buyers and decrease for other buyers.

All else equal, what happens to consumer surplus if the price of a good increases? A) Consumer surplus increases. B) Consumer surplus decreases. C) Consumer surplus is unchanged. D) Consumer surplus may increase, decrease, or remain unchanged.

All else equal, what happens to consumer surplus if the price of a good decreases? A) Consumer surplus increases. B) Consumer surplus decreases. C) Consumer surplus is unchanged. D) Consumer surplus may increase, decrease, or remain unchanged.

Which of the following will cause an increase in consumer surplus? A) an increase in the production cost of the good B) a technological improvement in the production of the good C) a decrease in the number of sellers of the good D) the imposition of a binding price floor in the market

Which of the following will cause a decrease in consumer surplus? A) an increase in the number of sellers of the good B) a decrease in the production cost of the good C) sellers expect the price of the good to be lower next month D) the imposition of a binding price floor in the market

When there is a technological advance in the pork industry, consumer surplus in that market will A) increase. B) decrease. C) not change, since technology affects producers and not consumers. D) not change, since consumers' willingness to pay is unaffected by the technological advance.

If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets? A) Consumer surplus increases. B) Consumer surplus decreases. C) Consumer surplus will not change consumer surplus; only producer surplus changes. D) Consumer surplus depends on what event led to the increase in the price of oak lumber.

Which of the following is not true when the price of a good or service falls? A) Buyers who were already buying the good or service are better off. B) Some new buyers, who are now willing to buy, enter the market. C) The total consumer surplus in the market increases. D) The total value of purchases before and after the price change is the same.

When the demand for a good increases and the supply of the good remains unchanged, consumer surplus A) decreases. B) is unchanged. C) increases. D) may increase, decrease, or remain unchanged.

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.

Motor oil and gasoline are complements. If the price of motor oil increases, consumer surplus in the gasoline market A) decreases. B) is unchanged. C) increases. D) may increase, decrease, or remain unchanged.

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then A) Dallas's consumer surplus would be unaffected. B) Dallas's consumer surplus would increase. C) Dallas's consumer surplus would decrease. D) Dallas would be wise to buy fewer strawberries than before.

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to A) $50. B) $100. C) $150. D) $200.

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $150, then consumer surplus amounts to A) $150. B) $200. C) $250. D) $300.

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $50, then consumer surplus amounts to A) $400. B) $500. C) $600. D) $750.

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $200, then A) consumer surplus is $150. B) consumer surplus is $650. C) producer surplus is $650. D) producer surplus is $750.

Figure 7-1 -Refer to Figure 7-1. The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is A) $200. B) $150. C) $125 . D) $100.

Figure 7-2 -Refer to Figure 7-2. If the price of the good is $100, then consumer surplus amounts to A) $50. B) $75. C) $100. D) $125.

Figure 7-2 -Refer to Figure 7-2. If the price of the good is $80, then consumer surplus amounts to A) $110. B) $135. C) $160 . D) $185.

Figure 7-3 -Refer to Figure 7-3. When the price is P1, consumer surplus is A) A. B) A+B. C) A+B+C. D) A+B+D.

Figure 7-3 -Refer to Figure 7-3. When the price is P2, consumer surplus is A) A. B) B. C) A+c. D) A+B+d.

Figure 7-3 -Refer to Figure 7-3. When the price rises from P1 to P2, consumer surplus A) increases by an amount equal to A. B) decreases by an amount equal to B+C. C) increases by an amount equal to B+C. D) decreases by an amount equal to d.

Figure 7-3 -Refer to Figure 7-3. Area C represents the A) decrease in consumer surplus that results from a downward-sloping demand curve. B) consumer surplus to new consumers who enter the market when the price falls from P2 to P1. C) increase in producer surplus when quantity sold increases from Q2 to Q1. D) decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2.

Figure 7-3 -Refer to Figure 7-3. When the price rises from P1 to P2, which of the following statements is not true? A) The buyers who still buy the good are worse off because they now pay more. B) Some buyers leave the market because they are not willing to buy the good at the higher price. C) Buyers place a higher value on the good after the price increase. D) Consumer surplus in the market falls.

Figure 7-4 -Refer to Figure 7-4. Which area represents consumer surplus at a price of P1? A) BDF B) AFG C) ABDG D) ABC

Figure 7-4 -Refer to Figure 7-4. Which area represents consumer surplus at a price of P2? A) BDF B) AFG C) ABDG D) ABC

Figure 7-4 -Refer to Figure 7-4. Which area represents the increase in consumer surplus when the price falls from P1 to P2? A) BDF B) AFG C) ABC D) ABDG

Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers? A) BDF B) AFG C) BCGD D) ABC

Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market? A) BDF B) AFG C) BCGD D) ABC

Figure 7-5 -Refer to Figure 7-5. If the price of the good is $6, then consumer surplus is A) $16. B) $24. C) $30. D) $36.

Figure 7-5 -Refer to Figure 7-5. If the price of the good is $12, then consumer surplus is A) $11. B) $9. C) $13. D) $16.

Figure 7-6 -Refer to Figure 7-6. At the equilibrium price, consumer surplus is A) $1,600. B) $800. C) $1,400. D) $700.

Figure 7-6 -Refer to Figure 7-6. If the government imposes a price floor of $110 in this market, then consumer surplus will decrease by A) $200. B) $400. C) $600. D) $800.

Figure 7-7 -Refer to Figure 7-7. What is the consumer surplus if the price is $100? A) $2,500 B) $5,000 C) $10,000 D) $20,000

Figure 7-7 -Refer to Figure 7-7. What happens to the consumer surplus if the price rises from $100 to $150? A) The new consumer surplus is half of the original consumer surplus. B) The new consumer surplus is 25 percent of the original consumer surplus. C) The new consumer surplus is double the original consumer surplus. D) The new consumer surplus is triple the original consumer surplus.

Figure 7-8 -Refer to Figure 7-8. At the equilibrium price, consumer surplus is A) $1,050. B) $1,225. C) $1,575. D) $2,450.

Figure 7-8 -Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by A) $150. B) $325. C) $650. D) $675.

Figure 7-8 -Refer to Figure 7-8. If the government imposes a price ceiling of $80 in this market, then, assuming those with the highest willingness to pay purchase the good, consumer surplus will be A) $900. B) $1,200. C) $1,500. D) $1,600.

When the supply of a good decreases and the demand for the good remains unchanged, consumer surplus A) decreases. B) is unchanged. C) increases. D) may increase, decrease, or remain unchanged.

Which of the following is true when the price of a good or service rises? A) Buyers who were already buying the good or service are better off. B) Some buyers exit the market. C) The total consumer surplus in the market increases. D) The total value of purchases before and after the price change is the same.

Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market A) decreases. B) is unchanged. C) increases. D) may increase, decrease, or remain unchanged.

What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income? A) Consumer surplus decreases. B) Consumer surplus remains unchanged. C) Consumer surplus increases. D) Consumer surplus may increase, decrease, or remain unchanged.

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.

Economists normally assume people's preferences should be A) respected. B) adjusted. C) overruled. D) ignored.

Consumer surplus is a good measure of economic welfare if policymakers want to A) maximize total benefit. B) minimize deadweight loss. C) respect the preferences of sellers. D) respect the preferences of buyers.

When policymakers are considering a particular action, they can use consumer surplus as a(n) A) objective measure of the benefits to buyers as determined by policymakers. B) measure of the benefits to buyers as the buyers perceive them. C) potentially flawed measure of the benefits to buyers if the buyers are not rational. D) Both b) and c) are correct.

A seller's opportunity cost measures the A) value of everything she must give up to produce a good. B) amount she is paid for a good minus her cost of providing it. C) consumer surplus. D) out of pocket expenses to produce a good but not the value of her time.

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.

Justin builds fences for a living. Justin's out­of­pocket expenses (for wood, paint, etc.) plus the value that he places A) producer surplus. B) producer deficit. C) cost of building fences. D) profit.

A supply curve can be used to measure producer surplus because it reflects A) the actions of sellers. B) quantity supplied. C) sellers' costs. D) the amount that will be purchased by consumers in the market.

A seller is willing to sell a product only if the seller receives a price that is at least as great as the A) seller's producer surplus. B) seller's cost of production. C) seller's profit. D) average willingness to pay of buyers of the product.

Producer surplus is A) measured using the demand curve for a good. B) always a negative number for sellers in a competitive market. C) the amount a seller is paid minus the cost of production. D) the opportunity cost of production minus the cost of producing goods that go unsold.

Producer surplus measures the A) benefits to sellers of participating in a market. B) costs to sellers of participating in a market. C) price that buyers are willing to pay for sellers' output of a good or service. D) benefit to sellers of producing a greater quantity of a good or service than buyers demand.

A seller's willingness to sell is A) measured by the seller's cost of production. B) related to her supply curve, just as a buyer's willingness to buy is related to his demand curve. C) less than the price received if producer surplus is a positive number. D) All of the above are correct.

Caroline sharpens knives in her spare time for extra income. Buyers of her service are willing to pay $2.95 per knife for as many knives as Caroline is willing to sharpen. On a particular day, she is willing to sharpen the first knife for $2.00, the second knife for $2.25, the third knife for $2.75, and the fourth knife for $3.50. Assume Caroline is rational in deciding how many knives to sharpen. Her producer surplus is A) $0.95. B) $1.15. C) $1.30. D) $1.85.

Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor. On a particular day, he is willing to tutor the first hour for $10, the second hour for $18, the third hour for $28, and the fourth hour for $40. Assume Allen is rational in deciding how many hours to tutor. His producer surplus is A) $40. B) $64. C) $12. D) $56.

Tom tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $155 per tuning. One particular week, Tom is willing to tune the first piano for $120, the second piano for $125, the third piano for $140, and the fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. His producer surplus is A) $80. B) $95. C) $75. D) $60.

David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is A) $-15. B) $20. C) $30. D) $75.

George produces cupcakes. His production cost is $10 per dozen. He sells the cupcakes for $16 per dozen. His producer surplus per dozen cupcakes is A) $6. B) $10. C) $16. D) $26.

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is A) $150. B) $200. C) $350. D) $550.

If Martin sells a shirt for $40, and his producer surplus from the sale is $8, his cost must have been A) $32. B) $48. C) $8. D) $40.

Ronnie operates a lawn-care service. On each day, the cost of mowing the first lawn is $15, the cost of mowing the second lawn is $25, and the cost of mowing the third lawn is $40. His producer surplus on the first three lawns of the day is $100. If Ronnie charges all customers the same price for lawn mowing, that price is A) $20. B) $60. C) $80. D) $180.

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for A) $2.00 each. B) $0.50 each. C) $3.50 each. D) $5.00 each.

Kristi sells purses. Her cost is $35 per purse. On a certain day, she sells 12 purses, and her producer surplus for that day amounts to $180. Kristi sold each purse for A) $65. B) $50. C) $45. D) $53.

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for A) 31 cents. B) 38 cents. C) 45 cents. D) 55 cents.

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell? A) 40. B) 200. C) 8. D) 50.

Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software? A) $50. B) $150. C) $200. D) $350.

Bill created a new software program he is willing to sell for $300. He sells his first copy and enjoys a producer surplus of $250. What is the price paid for the software? A) $50. B) $250. C) $300. D) $550.

Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is A) $150. B) $350. C) $500. D) $850.

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for A) $6.50 each. B) $7.50 each. C) $9.50 each. D) $10.50 each.

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,000, the producer surplus in the market is A) $1000. B) $300. C) $1,700. D) $700.

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,200, the producer surplus in the market is A) $100. B) $800. C) $400. D) $500.

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,100, the combined total cost of all participating sellers is A) $2,800. B) $2,900. C) $1,700. D) $4,000.

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,400, the combined total cost of all participating sellers is A) $5,700. B) $1,500. C) $1,400. D) $4,100.

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the price is $1,000, A) Bobby is an eager supplier. B) Dianne is an eager supplier. C) Evaline's producer surplus is $100. D) All of the above are correct.

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the price is $1,l50, who would be willing to supply the product? A) Abby and Bobby B) Abby, Bobby, and Dianne C) Carlos, Dianne, and Evaline D) Dianne and Evaline only

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 2 if the price is A) $1,700. B) $1,100. C) $1,650. D) $1,050.

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 4 if the price is A) $860. B) $1,050. C) $1,650. D) $1,400.

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. Who is a marginal seller when the price is $1,100? A) Dianne B) Bobby and Abby C) Carlos, Dianne, and Evaline D) Carlos, Dianne, Evaline, and Bobby

Table 7-12 The only four producers in a market have the following costs: -Refer to Table 7-12. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for A) $50 or slightly more. B) $100 or slightly less. C) $150 or slightly less. D) $200 or slightly more.

Table 7-12 The only four producers in a market have the following costs: -Refer to Table 7-12. If the sellers bid against each other for the right to sell the good to a consumer, then the producer surplus will be A) $0 or slightly more. B) $50 or slightly less. C) $150 or slightly less. D) $200 or slightly more.

Table 7-12 The only four producers in a market have the following costs: -Refer to Table 7-12. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been A) $200. B) $300. C) $450. D) $600.

Table 7-12 The only four producers in a market have the following costs: -Refer to Table 7-12. If Evan, Selena, Angie, and Kris sell the good, and the resulting producer surplus is $700, then the price must have been A) $200. B) $300. C) $500. D) $700.

Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept? A) $351 B) $251 C) $249 D) $199

Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. You wish to purchase 10 piano lessons for yourself and for your brother, so you take bids from each of the sellers. You will take lessons at the same time, so one teacher cannot provide lessons to both of you. You must pay the same price for both sets of lessons, and you will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept? A) $351 B) $349 C) $201 D) $199

Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market? A) $0 B) $300 C) $400 D) $700

Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. The equilibrium market price for 10 piano lessons is $300. What is the total producer surplus in the market?

Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. The bids are required to be rounded to the nearest dollar. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. Your parents have given you $450 to spend on piano lessons. You believe that the sellers with higher opportunity costs offer higher quality lessons. You want the highest quality lessons that you can afford, but you can spend any remaining money on dinner with friends. From whom will you take lessons, and how much money will you spend? A) Peter; $450 B) Cindy; $450 C) Greg; $401 D) Cindy; $401

Table 7-14 The only four producers in a market have the following costs: -Refer to Table 7-14. If the sellers bid against each other for the right to sell the good to a single consumer, then the good will sell for A) $30 or slightly more. B) $40 or slightly less. C) $55 or slightly less. D) $65 or slightly less.

Table 7-14 The only four producers in a market have the following costs: -Refer to Table 7-14. If the sellers bid against each other for the right to sell the good to a single consumer, then the producer surplus will be A) $0 or slightly more. B) $5 or slightly less. C) $10 or slightly less. D) $25 or slightly less.

Table 7-14 The only four producers in a market have the following costs: -Refer to Table 7-14. If Abbey, Bev, and Carl sell the good, and the resulting producer surplus is $55 altogether, then the price must have been A) $40. B) $50. C) $60. D) $70.

Table 7-15 -Refer to Table 7-15. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. You take bids from the sellers. Who offers the winning bid, and what does he offer to charge for the photography session? A) Steve; more than $400 but less than $450 B) Steve; $399 C) LeBron; more than $700 D) LeBron; more than $600 but less than $700

Table 7-15 -Refer to Table 7-15. You and your best friend want to hire a professional photographer to take pictures of your two families. The table shows the costs of the four potential sellers in the local photography market. You and your friend take bids from the sellers. Who offers the two winning bids, and what do they offer to charge for the photography sessions? A) LeBron and Kobe; more than $450 but less than $600 B) Kevin and Steve; more than $450 but less than $600 C) LeBron and Kobe; more than $700 D) Kevin and Steve; less than $400

Table 7-15 -Refer to Table 7-15. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. You hire Kevin for a price of $500. What is his producer surplus?

Table 7-15 -Refer to Table 7-15. You and your best friend want to hire a professional photographer to take pictures of your two families. The table shows the costs of the four potential sellers in the local photography market. You and your friend agree to offer $500 for each session. Who accepts the offer, and what is the total producer surplus in the market? A) LeBron and Kobe; $500 B) Kevin and Steve; $500 C) LeBron and Kobe; $300 D) Kevin and Steve; $150

Table 7-15 -Refer to Table 7-15. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. Which of the following graphs represents the market supply curve? A) B) C) D)

Figure 7-9 -Refer to Figure 7-9. If the price of the good is $9.50, then producer surplus is A) $3.00. B) $6.50. C) $10.50. D) $8.50.

Figure 7-9 -Refer to Figure 7-9. If the price of the good is $14, then producer surplus is A) $19.50. B) $22.50. C) $20.50. D) $25.00.

Figure 7-9 -Refer to Figure 7-9. If producer surplus is $19, then the price of the good is A) $11.50. B) $14.50. C) $13.50. D) $9.75.

Figure 7-10 -Refer to Figure 7-10. Which area represents producer surplus when the price is P1? A) BCG B) ACH C) ABGD D) DGH

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

Figure 7-10 -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

Figure 7-10 -Refer to Figure 7-10. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers? A) BCG B) ACH C) DGH D) ABGD

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

Figure 7-11 -Refer to Figure 7-11. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus? A) $625 B) $1,250 C) $2,500 D) $5,000

Figure 7-11 -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

Figure 7-11 -Refer to Figure 7-11. If the demand curve is D and the supply curve shifts from S' to S, what is the change in producer surplus? A) Producer surplus increases by $625. B) Producer surplus increases by $1,875. C) Producer surplus decreases by $625. D) Producer surplus decreases by $1,875.

Figure 7-11 -Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus? A) Producer surplus increases by $3,125. B) Producer surplus increases by $5,625. C) Producer surplus decreases by $3,125. D) Producer surplus decreases by $5,625.

Figure 7-11 -Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers? A) $625 B) $2,500 C) $3,125 D) $5,625

Figure 7-11 -Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus due to new producers A) $625 B) $2,500 C) $3,125 D) $5,625

Table 7-16 The following table represents the costs of five possible sellers. Seller Cost ($) -Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market? A) $90 B) $110 C) $130 D) $140

Table 7-16 The following table represents the costs of five possible sellers. Seller Cost ($) -Refer to Table 7-16. 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

Table 7-16 The following table represents the costs of five possible sellers. Seller Cost ($) -Refer to Table 7-16. Suppose each of the five sellers can supply at most one unit of the good. At which of the following prices would the market quantity supplied be exactly three units? A) $20 B) $50 C) $90 D) $120

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price is $200, what is the producer surplus? A) $7,500 B) $3,750 C) $10,000 D) $15,000

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price is $350, what is the producer surplus? A) $60,000 B) $15,000 C) $30,000 D) $70,000

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the additional producer surplus to initial producers? A) $15,000 B) $3,750 C) $7,500 D) $30,000

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the producer surplus to new producers A) $15,000 B) $3,750 C) $7,500 D)$30,000

Figure 7-13 -Refer to Figure 7-13. If the equilibrium price is $60, what is the producer surplus? A) $600 B) $1,200 C) $2,400 D) $4,800

Figure 7-13 -Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the additional producer surplus to initial producers in the market? A) $1,200 B) $2,400 C) $3,600 D) $4,800

Figure 7-13 -Refer to Figure 7-13. If the equilibrium price rises from $60 to $120, what is the producer surplus to new producer s in the market? A) $1,200 B) $2,400 C) $3,600 D) $4,800

Figure 7-14 -Refer to Figure 7-14. At the equilibrium price, producer surplus is A) $800. B) $400. C) $450. D) $900.

Figure 7-14 -Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then the new producer surplus will be A) $200. B) $100. C) $125. D) $250.

Figure 7-14 -Refer to Figure 7-14. If the government imposes a price ceiling of $50 in this market, then producer surplus will A) $325. B) $100. C) $300. D) $200.

Figure 7-14 -Refer to Figure 7-14. If the market price increases to $130 due to an increase in demand, then producer surplus is A) $1,800. B) $900. C) $975. D) $1,950.

Figure 7-15 -Refer to Figure 7-15. When the price is P2, producer surplus is A) A. B) A+C. C) A+B+C. D) D+G.

Figure 7-15 -Refer to Figure 7-15. Suppose producer surplus is larger than C but smaller than A+B+C. The price of the good must be A) lower than P1. B) P1. C) between P1 and P2. D) higher than P2.

Figure 7-15 -Refer to Figure 7-15. When the price is P1, producer surplus is A) A. B) C. C) A+c. D) C+D.

Figure 7-15 -Refer to Figure 7-15. When the price falls from P2 to P1, producer surplus A) decreases by an amount equal to C. B) decreases by an amount equal to A+B. C) decreases by an amount equal to A+C. D) increases by an amount equal to A+B.

Figure 7-15 -Refer to Figure 7-15. When the price rises from P1 to P2, what area represents the increase in producer surplus? A) A B) A+B C) A+B+C D) G

Figure 7-15 -Refer to Figure 7-15. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers? A) A B) A+B C) A+B+C D) G

Figure 7-15 -Refer to Figure 7-15. When the price rises from P1 to P2, which area represents the increase in producer surplus due to new producers entering the market? A) A B) B C) A+B D) G

Figure 7-15 -Refer to Figure 7-15. Area A represents A) producer surplus to new producers entering the market as the result of an increase in price from P1 to P2. B) the increase in consumer surplus that results from an upward-sloping supply curve. C) the increase in total surplus when sellers are willing and able to increase supply from Q1 to Q2. D) the increase in producer surplus to those producers already in the market when the price increases from P1 to P2.

Figure 7-15 -Refer to Figure 7-15. Area B represents A) the combined profits of all producers when the price is P2. B) the increase in producer surplus to all producers as the result of an increase in the price from P1 to P2. C) producer surplus to new producers entering the market as the result of an increase in the price from P1 to P2. D) that portion of the increase in producer surplus that is offset by a loss in consumer surplus when the price increases from P1 to P2.

Figure 7-15 -Refer to Figure 7-15. When the price falls from P2 to P1, which of the following would not be true? A) The sellers who still sell the good are worse off because they now receive less. B) Some sellers leave the market because they are not willing to sell the good at the lower price. C) The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price. D) Producer surplus would fall by area A + B.

Figure 7-16 -Refer to Figure 7-16. If the price of the good is $300, then producer surplus amounts to A) $100. B) $200. C) $300. D) $400.

Figure 7-16 -Refer to Figure 7-16. If the price of the good is $500, then producer surplus amounts to A) $450. B) $575. C) $700. D) $800.

Figure 7-16 -Refer to Figure 7-16. If the price of the good is $600, then producer surplus amounts to A) $650. B) $800. C) $900. D) $1,000.

Figure 7-16 -Refer to Figure 7-16. If the price of the good is $600, then A) consumer surplus is $800. B) consumer surplus is $900. C) producer surplus is $900. D) producer surplus is $1,000.

Figure 7-16 -Refer to Figure 7-16. Suppose the price of the good is $400. Then, on the first unit of the good that is sold, producer surplus amounts to A) $200. B) $300. C) $400. D) $450.

Figure 7-16 -Refer to Figure 7-16. Suppose the price of the good is $450. Then, on the first unit of the good that is sold, producer surplus is A) $250, and on the second unit of the good that is sold, producer surplus is $100. B) $250, and on the second unit of the good that is sold, producer surplus is $150. C) $350, and on the second unit of the good that is sold, producer surplus is $100. D) $350, and on the second unit of the good that is sold, producer surplus is $150.

Figure 7-16 -Refer to Figure 7-16. Producer surplus amounts to $300 if the price of the good is A) $300. B) $350. C) $400. D) $450.

Figure 7-16 -Refer to Figure 7-16. Sellers will be unwilling to sell more than A) 1 unit of the good if its price is below $200. B) 2 units of the good if its price is below $450. C) 3 units of the good if its price is below $700. D) All of the above are correct.

Figure 7-17 -Refer to Figure 7-17. If the supply curve is S and the demand curve is D, what is total producer surplus at the equilibrium price? A) $202.50 B) $405 C) $810 D) $1,215

Figure 7-17 -Refer to Figure 7-17. If the demand curve is D and the supply curve shifts left from S to S', what is the change in producer surplus when comparing the new equilibrium with the original equilibrium? A) Producer surplus increases by $225. B) Producer surplus increases by $675. C) Producer surplus decreases by $225. D) Producer surplus decreases by $675.

Figure 7-17 -Refer to Figure 7-17. Suppose the market starts out in equilibrium with demand curve D and supply curve S. Next, suppose demand shifts left so as to decrease the quantity demanded by 20 units at every price. What is the change in producer surplus as a result of this demand shift? A) $80 B) $160 C) $240 D) $320

Producer surplus equals A) Value to buyers - Amount paid by buyers. B) Amount received by sellers - Costs of sellers. C) Value to buyers - Costs of sellers. D) Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers.

Producer surplus is the A) area under the supply curve to the left of the amount sold. B) amount a seller is paid minus the cost of production. C) area between the supply and demand curves, above the equilibrium price. D) cost to sellers of participating in a market.

Producer surplus is the area A) under the supply curve. B) between the supply and demand curves. C) below the price and above the supply curve. D) under the demand curve and above the price.

Producer surplus is A) represented on a graph by the area below the demand curve and above the supply curve. B) the amount a seller is paid minus the cost of production. C) also referred to as excess supply. D) All of the above are correct.

Producer surplus directly measures A) the well-being of society as a whole. B) the well-being of buyers and sellers. C) the well-being of sellers. D) sellers' willingness to sell.

Producer surplus directly measures A) the well-being of sellers. B) production costs. C) excess demand. D) unsold inventories.

The marginal seller is the seller who A) cannot compete with the other sellers in the market. B) would leave the market first if the price were any lower. C) can produce at the lowest cost. D) has the largest producer surplus.

The marginal seller is the seller A) for whom the marginal cost of producing one more unit of output is the lowest among all sellers, and the marginal buyer is the buyer for whom the marginal benefit of one more unit of the good is the highest among all buyers. B) who supplies the smallest quantity of the good among all sellers, and the marginal buyer is the buyer who demands the smallest quantity of the good among all buyers. C) who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher. D) who has the largest producer surplus, and the marginal buyer is the buyer who has the largest consumer surplus.

Another way to think of the marginal seller is the seller who A) will accept the lowest price of any seller in the market. B) requires the highest price of any potential seller in the market. C) would leave the market first if the price were any lower. D) would leave the market last if the price falls.

Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts? A) It increases. B) It decreases. C) It remains unchanged. D) It may increase, decrease, or remain unchanged.

Suppose the demand for peaches decreases. What will happen to producer surplus in the market for peaches? A) It increases. B) It decreases. C) It remains unchanged. D) It may increase, decrease, or remain unchanged.

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

If the demand for leather decreases, producer surplus in the leather market A) increases. B) decreases. C) remains the same. D) may increase, decrease, or remain the same.

If the demand for light bulbs increases, producer surplus in the market for light bulbs A) increases. B) decreases. C) remains the same. D) may increase, decrease, or remain the same.

The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate A) increases, and producer surplus increases. B) increases, and producer surplus decreases. C) decreases, and producer surplus increases. D) decreases, and producer surplus decreases.

Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will A) decrease, and producer surplus in the industry will decrease. B) increase, and producer surplus in the industry will increase. C) decrease, and producer surplus in the industry will increase. D) increase, and producer surplus in the industry will decrease.

Which of the following statements is not correct? A) A seller would be eager to sell her product at a price higher than her cost. B) A seller would refuse to sell her product at a price lower than her cost. C) A seller would be indifferent about selling her product at a price equal to her cost. D) Since sellers cannot set the price for their product, they must be willing to sell their product at any price.

Which of the following events would increase producer surplus? A) Sellers' costs stay the same and the price of the good increases. B) Sellers' costs increase and the price of the good stays the same. C) Sellers' costs increase and the price of the good decreases. D) All of the above are correct.

Which of the following will cause a decrease in producer surplus? A) the imposition of a binding price ceiling in the market B) an increase in the number of buyers of the good C) income increases and buyers consider the good to be normal D) the price of a complement decreases

ABC Company incurs a cost of 50 cents to produce a dozen eggs, while XYZ Company incurs a cost of 70 cents to produce a dozen eggs. Which of the following price increases would cause both companies to experience an increase in producer surplus? A) The price of a dozen eggs increases from 40 cents to 55 cents. B) The price of a dozen eggs increases from 55 cents to 70 cents. C) The price of a dozen eggs increases from 55 cents to 75 cents. D) All of these price increases would cause both companies to experience a loss in producer surplus.

The welfare of sellers is measured by A) consumer surplus. B) producer surplus. C) total surplus. D) price.

The Surgeon General announces that eating apples promotes healthy teeth. As a result, the equilibrium price of apples A) increases, and producer surplus increases. B) increases, and producer surplus decreases. C) decreases, and producer surplus increases. D) decreases, and producer surplus decreases.

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

Which of the following will cause no change 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

Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to A) only existing sellers who now receive higher prices on the pizzas they were already selling. B) only new sellers who enter the market because of the higher prices. C) both existing sellers who now receive higher prices on the pizzas they were already selling and new sellers who enter the market because of the higher prices. D) Producer surplus does not increase; it decreases.

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable? A) profits and costs to firms B) consumer and producer surplus C) the equilibrium price and quantity D) incomes of and prices paid by buyers

Economists typically measure efficiency using A) the price paid by buyers. B) the quantity supplied by sellers. C) total surplus. D) profits to firms.

Consumer surplus equals the A) value to buyers minus the amount paid by buyers. B) value to buyers minus the cost to sellers. C) amount received by sellers minus the cost to sellers. D) amount received by sellers minus the amount paid by buyers.

Producer surplus equals the A) value to buyers minus the amount paid by buyers. B) value to buyers minus the cost to sellers. C) amount received by sellers minus the cost to sellers. D) amount received by sellers minus the amount paid by buyers.

Total surplus A) can be used to measure a market's efficiency. B) is the sum of consumer and producer surplus. C) is the value to buyers minus the cost to sellers. D) All of the above are correct.

Total surplus is A) the total cost to sellers of providing the good minus the total value of the good to buyers. B) the total value of the good to buyers minus the cost to sellers of providing the good. C) the difference between consumer surplus and sellers' cost. D) always smaller than producer surplus.

Total surplus is A) equal to consumer surplus minus producer surplus. B) equal to the total value to buyers minus the total cost to sellers. C) equal to consumers' willingness to pay plus producers' cost. D) greater than the sum of consumer surplus plus producer surplus.

Total surplus is equal to A) value to buyers - profit to sellers. B) value to buyers - cost to sellers. C) consumer surplus x producer surplus. D) (consumer surplus + producer surplus) x equilibrium quantity.

Total surplus in a market is equal to A) value to buyers - amount paid by buyers. B) amount received by sellers - costs of sellers. C) value to buyers - costs of sellers. D) amount received by sellers - amount paid by buyers.

Total surplus in a market is equal to A) consumer surplus + producer surplus. B) value to buyers - amount paid by buyers. C) amount received by sellers - costs of sellers. D) producer surplus - consumer surplus.

Total surplus is represented by the area A) under the demand curve and above the price. B) above the supply curve and up to the price. C) under the supply curve and up to the price. D) between the demand and supply curves up to the point of equilibrium.

Which of the following equations is not valid? A) Consumer surplus = Value to buyers - Amount paid by buyers B) Producer surplus = Amount received by sellers - Cost to sellers C) Total surplus = Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers D) Total surplus = Value to sellers - Cost to sellers

Which of the following equations is valid? A) Consumer surplus = Total surplus - Cost to sellers B) Producer surplus = Total surplus - Consumer surplus C) Total surplus = Value to buyers - Amount paid by buyers D) Total surplus = Amount received by sellers - Cost to sellers

Total surplus is represented by the area below the A) demand curve and above the price. B) price and up to the point of equilibrium. C) demand curve and above the supply curve, up to the equilibrium quantity. D) demand curve and above the horizontal axis, up to the equilibrium quantity.

Which of the following is correct? A) Consumer surplus refers to a situation in which there are more buyers than sellers in a market. B) Producer surplus refers to a situation in which there are more sellers than buyers in a market. C) Total surplus is measured as the area below the demand curve and above the supply curve, up to the equilibrium quantity. D) All of the above are correct.

We can say that the allocation of resources is efficient if A) producer surplus is maximized. B) consumer surplus is maximized. C) total surplus is maximized. D) sellers' costs are minimized.

Efficiency in a market is achieved when A) a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. B) the sum of producer surplus and consumer surplus is maximized. C) all firms are producing the good at the same low cost per unit. D) no buyer is willing to pay more than the equilibrium price for any unit of the good.

At the equilibrium price of a good, the good will be purchased by those buyers who A) value the good more than price. B) value the good less than price. C) have the money to buy the good. D) consider the good a necessity.

At the equilibrium price of a good, the good will be sold by those sellers A) whose cost is more than price. B) whose cost is less than price. C) that can produce the good. D) enter the market first.

Which of the following statements is not correct about a market in equilibrium? A) The price determines which buyers and which sellers participate in the market. B) Those buyers who value the good more than the price choose to buy the good. C) Those sellers whose costs are less than the price choose to produce and sell the good. D) Consumer surplus will be equal to producer surplus.

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.

The distinction between efficiency and equality can be described as follows: A) Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains from trade among buyers and sellers. B) Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers. C) Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost. D) Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.

If an allocation of resources is efficient, then A) consumer surplus is maximized. B) producer surplus is maximized. C) all potential gains from trade among buyers are sellers are being realized. D) the allocation achieves equality as well.

Moving production from a high-cost producer to a low-cost producer will A) lower total surplus. B) raise total surplus. C) lower producer surplus. D) raise producer surplus but lower consumer surplus.