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

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Question 181

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If the United States changed its laws to allow for the legal sale of a kidney, which of the following is likely to occur?

A) The price of kidneys would rise to balance supply and demand.
B) The gains from trade would make both buyers and sellers better off.
C) Thousands of lives would be saved.
D) All of the above are correct.

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

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Question 182

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If the government removes a binding price ceiling in a market, then the producer surplus in that market will increase.

A) True
B) False

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Question 183

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Figure 7-20 -Refer to Figure 7-20. If 10 units of the good are produced and sold, then

Figure 7-19 -Refer to Figure 7-19. The equilibrium price is

Figure 7-22 -Refer to Figure 7-22. At the quantity Q3,

Economists say that a market where goods are not consumed by those valuing the goods most highly is

Figure 7-9 -Refer to Figure 7-9. 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?

Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is pleased since she paid $8,000 for the car but would have been willing to pay $11,000 for the car. Susie's consumer surplus is $2,000.

Another way to think of the marginal seller is the seller who

Figure 7-2 -Refer to Figure 7-2. When the price is P2, consumer surplus is

On a graph, the area below a demand curve and above the price measures

All else equal, an increase in supply will cause an increase in consumer surplus.

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to

Sarah buys a new MP3 player for $135. She receives consumer surplus of $25 on her purchase if her willingness to pay is

Table 7-8 The only four producers in a market have the following costs: $\begin{array} { | c | c | } \hline \text { Sallar } & \text { Cast } \\\hline \text { Evar } & \$ 50 \\\hline \text { Selana } & \$ 100 \\\hline \text { Angie } & \$ 150 \\\hline \text { Kris } & \$ 200 \\\hline\end{array}$ -Refer to Table 7-8. If Evan, Selena, Angie, and Kris sell the good, and the resulting producer surplus is $700, then the price must have been

Let P represent price; let Q^S represent quantity supplied; and assume the equation of the supply curve is $P = 10 + ( 1 / 4 ) Q ^ { S }$ . If 80 units of the good are produced and sold, then producer surplus amounts to $1,200.

Total surplus in a market is equal to

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?

Consumer surplus is

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: $\begin{array} { | c | c | } \hline \text { Buyer } & \text { Willingritis to Pay } \\\hline \text { Carlos } & \$ 15 \\\hline \text { Quilena } & \$ 25 \\\hline \text { Wilbur } & \$ 35 \\\hline \text { Ming-la } & \$ 45 \\\hline\end{array}$ -Refer to Table 7-3. If the market price for the good is $20, who will purchase the good?