Microeconomics Ist Canadian edition By Ottawa Karlan - Test Bank

Microeconomics Ist Canadian edition By Ottawa Karlan – Test Bank

 

Instant Download – Complete Test Bank With Answers

 

 

Sample Questions Are Posted Below

 

Chapter 05

Efficiency

 

 

Multiple Choice Questions

1. In economics, the concept of surplus:
   A.measures the benefit that people receive when they buy something for less than they would have been willing to pay.
   B. measures the benefit that people receive when they sell something for less than they would have been willing to accept.
   C. is the worst way to look at the benefits people receive from successful transactions.
   D. measures the benefit that people receive when they buy something for more than they would have been willing to pay.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-01 A Broken Laser Pointer Starts an Internet Revolution

2. The concept of surplus can:
   A.show who loses from international trade.
   B. show who benefits from a tax.
   C. show who loses from minimum wage.
   D. show any of these.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-01 A Broken Laser Pointer Starts an Internet Revolution

 

3. The maximum price that a buyer would be willing to pay for a good or service is also called:
   A.the reservation price.
   B. the buyer-max price.
   C. the reserved max price.
   D. None of these terms is used.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-02 Willingness to Pay and Sell

4. A consumer’s willingness to pay:
   A.is the maximum price that a buyer would be willing to pay for a good or service.
   B. is the minimum price that a buyer would be willing to pay for a good or service.
   C. is his or her reserved minimum bid-price.
   D. must always equal the seller’s willingness to sell.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-02 Willingness to Pay and Sell

5. Which of the following prices could represent Sally’s willingness to pay for a pair of shoes if she bought them for $45?
   A.$15.00
   B. $25.00
   C. $44.99
   D. $55.00

 

Blooms: Apply
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-02 Willingness to Pay and Sell

 

6. If Billy’s reservation price on a snowboard is $250, how many snowboards would he buy if the market price of snowboards is $500?
   A.0
   B. 1
   C. 2
   D. The amount of snowboards purchased would depend on Billy’s income.

 

Blooms: Apply
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-02 Willingness to Pay and Sell

7. If Claire’s reservation price on a sweater is $37, which of the following prices would she have to observe in the market in order to buy a sweater?
   A.$37.00
   B. $37.01
   C. $38.00
   D. Claire would not buy a sweater at any of these prices.

 

Blooms: Apply
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-02 Willingness to Pay and Sell

8. Which of the following prices could represent Eli’s willingness to pay for a baseball glove if he observed the market price of $43 and decided not to buy one?
   A.$37
   B. $45
   C. $50
   D. None of these could represent Eli’s willingness to pay.

 

Blooms: Apply
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-02 Willingness to Pay and Sell

 

9. A seller’s willingness to sell:
   A.is the maximum price that a seller is willing to accept in exchange for a good or service.
   B. is the minimum price that a seller is willing to accept in exchange for a good or service.
   C. is his or her reserved minimum bid-price.
   D. must always equal the buyer’s willingness to buy.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-02 Willingness to Pay and Sell

10. A buyer always wants to:
    A.buy for a price that is as low as possible, but never higher than his maximum.
    B. buy for a price that is as high as possible, but never higher than his maximum.
    C. buy for a price that is as low as possible, but never lower than his minimum.
    D. buy for a price that is as high as possible, but never lower than his minimum.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-02 Willingness to Pay and Sell

11. Willingness to pay represents:
    A.the point at which the benefit that a person will get from a good is equal to the benefit of spending the money on another alternative.
    B. The lowest price a buyer would take it for.
    C. the buyer’s desire for a product.
    D. The lowest price a seller is willing to sell for.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-02 Willingness to Pay and Sell

 

12. The willingness to pay of buyers’ in a market:
    A.is represented by the demand curve.
    B. is represented by the supply curve.
    C. explains why the demand curve is bowed-out.
    D. explains why the demand curve is bowed-in.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-02 Willingness to Pay and Sell

13. At prices above a consumers’ reservation price:
    A.the opportunity cost is greater than the benefit from having the good.
    B. the opportunity cost is less than the benefit from having the good.
    C. the buyer will purchase the good.
    D. None of these is true.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-02 Willingness to Pay and Sell

14. At prices below a consumer’s maximum willingness to pay:
    A.the buyer will participate in the market because the opportunity cost is less than the benefit from consuming the good.
    B. the buyer will participate in the market because the opportunity cost is more than the benefit from consuming the good.
    C. the buyer will not participate in the market because the opportunity cost is less than the benefit from consuming the good.
    D. the buyer will not participate in the market because the opportunity cost is more than the benefit from consuming the good.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-02 Willingness to Pay and Sell

 

15. Each seller’s opportunity costs are:
    A.determined monetarily, which is why they can never be zero.
    B. determined by a number of factors, none of which is monetary.
    C. determined by a number of factors, including monetary considerations.
    D. None of these is true.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-04 Willingness to Sell and the Supply Curve

16. If Thelma’s willingness to sell her homemade fudge is $4, then at which of the following prices would Thelma sell her fudge?
    A.$2
    B. $3.99
    C. $4.01
    D. Thelma would not sell her fudge at any of these prices.

 

Blooms: Apply
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-04 Willingness to Sell and the Supply Curve

17. If Sam’s opportunity cost of a sweater is $37, which of the following prices would he have to observe in the market in order to sell a sweater?
    A.$37
    B. $37.01
    C. $50
    D. Sam would sell a sweater at any of these prices.

 

Blooms: Apply
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-04 Willingness to Sell and the Supply Curve

 

18. Surplus is:
    A.a way of measuring who gains from transactions and by how much.
    B. how much extra quantity is produced.
    C. how much money the supplier made.
    D. How much extra product was created.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-05 Measuring Surplus

19. Surplus is:
    A.how much extra quantity is produced.
    B. the difference between the willingness to pay and the actual price paid.
    C. how much the supplier made
    D. how much extra product was created.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-05 Measuring Surplus

20. When someone’s willingness to pay is the same as the actual price paid for an item:
    A.the individual will not purchase the item.
    B. the individual’s surplus is zero.
    C. surplus cannot be maximized.
    D. All of these are true.

 

Blooms: Understand
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-03 Willingness to Pay and the Demand Curve

 

21. When Bob’s willingness to pay for a cup of coffee is $1, and the price of a cup of coffee is $1:
    A.Bob is indifferent about purchasing the coffee.
    B. Bob will get extra surplus by purchasing the coffee.
    C. Bob will get less surplus by purchasing the coffee.
    D. Bob will get have negative surplus by purchasing the coffee.

 

Blooms: Apply
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-03 Willingness to Pay and the Demand Curve

22. Surplus is:
    A.a better measure of the value that buyers and sellers get from participating in a market than price itself.
    B. maximized for individuals whose reservation price equals the market price.
    C. negative for those who do not participate in a market.
    D. All of these are true.

 

Blooms: Remember
Learning Objective: 05-01 Use willingness to pay and willingness to sell to determine supply and demand at a given price.
Topic: 05-03 Willingness to Pay and the Demand Curve

23. A market has four individuals, each considering buying a grill for his backyard. Further assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills is $300, given the scenario described, the total consumer surplus would be:
    A.$170.
    B. $1,070.
    C. $200.
    D. None of these is true.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

 

24. A market has four individuals, each considering buying a grill for his backyard. Further assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. Given the scenario described, if the market price of grills is $320, who participates in the market?
    A.Only Abe, Butch, and Collin participate.
    B. Only Collin and Daniel participate.
    C. Only Abe and Butch participate.
    D. Only Daniel participates.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

25. A market has four individuals, each considering buying a grill for his backyard. Further assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills increases from $300 to $320, given the scenario described:
    A.Daniel drops out of the market.
    B. Collin drops out of the market
    C. Collin is the only consumer who would be affected in terms of surplus.
    D. Collin loses any surplus he had.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

 

26. A market has four individuals, each considering buying a grill for his backyard. Further assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills increases from $310 to $350, given the scenario described:
    A.total consumer surplus would rise.
    B. total consumer surplus would fall.
    C. Collin and Butch would experience a decrease in consumer surplus, but Abe’s consumer surplus would rise.
    D. Collin would experience a decrease in consumer surplus, but Abe and Butch would experience a rise in consumer surplus.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

27. A market has four individuals, each considering buying a grill for his backyard. Further assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills is $350, given the scenario described, total consumer surplus would be:
    A.$50.
    B. $750.
    C. $400.
    D. $870.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

 

28. A market has four individuals, each considering buying a grill for his backyard. Further assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills is $320, given the scenario described, Abe’s consumer surplus would be:
    A.$400.
    B. $350.
    C. $320.
    D. $80.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

29. A market has four individuals, each considering buying a grill for his backyard. Further assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills falls from $375 to $330, given the scenario described, which of the following can be said?
    A.Butch will join the market, but receive no consumer surplus.
    B. Butch and Collin will join the market, and together will receive $30 in consumer surplus.
    C. Abe will experience a decrease in consumer surplus of $45.
    D. Abe will experience an increase in consumer surplus of $45.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

 

30. A market has four individuals, each considering buying a grill for his backyard. Further assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. Given the scenario described, if the market price of grills falls from $395 to $340, then we can say:
    A.Abe’s consumer surplus increases from $5 to $60, and total consumer surplus increases from $5 to $70.
    B. Abe’s consumer surplus decreases from $60 to $5, and total consumer surplus decreases from $70 to $5.
    C. Collin’s consumer surplus increases from $0 to $20, and total consumer surplus increases from $5 to $70.
    D. Butch’s consumer surplus decreases from $10 to $0, and total consumer surplus increases from $10 to $80.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

31. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers was $13, then total producer surplus would be:
    A.$9.
    B. $30.
    C. $17.
    D. $7.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

32. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers was $12, then total producer surplus would be:
    A.$7.
    B. $9.
    C. $17.
    D. $30.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

33. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers was $10, then:
    A.only House Depot would gain surplus by supplying hammers to the market.
    B. only House Depot and Lace Hardware would gain surplus by supplying hammers to the market.
    C. House Depot, Lace Hardware, and Bob’s Hardware would all supply hammers to the market, but Bob’s would lose surplus.
    D. only House Depot and Bob’s Hardware would supply hammers to the market.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

34. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $7 to $11:
    A.producer participation in the market would increase.
    B. only Bob’s Hardware would still lose surplus.
    C. both Bob’s Hardware and Lace Hardware would lose surplus.
    D. House Depot is the only producer that will gain surplus.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

35. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers decreased from $15 to $13, which of the following can be said with certainty?
    A.Producer participation in the market would decrease.
    B. Total producer surplus would decrease.
    C. Only Bob’s Hardware will experience a drop in producer surplus.
    D. Producer participation in the market will not be affected.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

36. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers decreased from $17 to $12:
    A.producer participation in the market would increase.
    B. producer participation in the market would decrease.
    C. producer participation in the market would not be affected.
    D. total producer surplus would remain unchanged.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

37. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers decreased from $13 to $11:
    A.total producer surplus would decrease from $9 to $5.
    B. total producer surplus would increase from $5 to $9.
    C. total producer surplus would decrease from $30 to $17.
    D. total producer surplus would remain unchanged.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

38. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers decreased from $15 to $11:
    A.total producer surplus would fall by $4.
    B. producer surplus for each producer falls by $4.
    C. House Depot’s producer surplus falls by $4.
    D. total producer surplus falls by $8.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

39. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers decreased from $15 to $10:
    A.total producer surplus falls by $5.
    B. producer surplus for each producer falls by $5.
    C. Bob’s Hardware no longer sells hammers.
    D. total producer surplus falls by $15.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

40. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $6 to $7:
    A.total producer surplus would increase.
    B. total producer surplus would remain unchanged.
    C. total producer surplus would decrease.
    D. Total producer surplus cannot be determined with the information given.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

41. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $6 to $8:
    A.producer participation in the market would increase.
    B. producer participation in the market would decrease.
    C. producer participation in the market would remain unchanged.
    D. total producer surplus would increase by $2.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

42. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $8 to $11:
    A.total producer surplus would increase by $3.
    B. total producer surplus would increase by $6.
    C. total producer surplus would increase by $9.
    D. total producer surplus would increase by $4.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

43. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $8 to $11:
    A.total producer surplus would increase to $5.
    B. total producer surplus would decrease to $1.
    C. total producer surplus would increase to $17.
    D. total producer surplus would decrease to $7.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

44. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $9 to $13:
    A.producer surplus would increase for each producer.
    B. producer surplus would increase only for House Depot.
    C. producer surplus would remain unchanged for Bob’s Hardware.
    D. producer surplus would increase by $4 for Lace Hardware.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

45. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $8 to $12, total producer surplus would:
    A.increase from $8 to $12.
    B. increase by $4 for each producer.
    C. increase by $4 for House Depot.
    D. All of these statements are true.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

46. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $9 to $12, total producer surplus would be:
    A.$3.
    B. $6.
    C. $7.
    D. $17.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

47. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $8 to $14, total producer surplus would:
    A.increase from $8 to $14.
    B. increase from $1 to $12.
    C. decrease from $14 to $8.
    D. increase from $7 to $30.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

48. Assume there are three hardware stores in the market for hammers and that all three markets produce a single, standard model hammer. House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7. Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10. Bob’s Hardware store is a family owned and operated, independent hardware store and can offer hammers at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $9 to $13:
    A.House Depot’s producer surplus would decrease by $4.
    B. Lace Hardware’s producer surplus would decrease by $3.
    C. Bob’s Hardware’s producer surplus would increase.
    D. House depot’s producer surplus would increase by $4

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

49. According to the graph shown, total surplus is area:

    A. A + B + C.
    B. B.
    C. A.
    D. A + B.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

50. According to the graph shown, consumer surplus is area:

    A. A + B + C.
    B. B.
    C. A.
    D. A + B.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

51. According to the graph shown, producer surplus is area:

    A. A + B + C.
    B. B.
    C. A.
    D. A + B.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

52. According to the graph shown, consumer surplus is:

    A. $30.
    B. $15.
    C. $45.
    D. $90.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

53. According to the graph shown, producer surplus is:

    A. $10.
    B. $6.
    C. $2.
    D. $20.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

54. According to the graph shown, total surplus is:

    A. $25.
    B. $90.
    C. $50.
    D. $130.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

55. According to the graph shown:

    A. consumer surplus is greater than producer surplus.
    B. producer surplus is greater than consumer surplus.
    C. total surplus is smaller than consumer surplus.
    D. total surplus is smaller than producer surplus.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

56. According to the graph shown, if the price increased (all else staying the same):

    A. consumer surplus would increase.
    B. consumer surplus would decrease.
    C. total surplus would increase.
    D. None of these statements is true.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

57. According to the graph shown, if the price decreased (all else staying the same):

    A. producer surplus would increase.
    B. producer surplus would decrease.
    C. total surplus would increase.
    D. None of these statements is true.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

58. Assume an equilibrium price of $7 and equilibrium quantity of 8 units at demand D and supply S₂ in the graph shown. Total surplus is:

    A. $32.
    B. $16.
    C. $4.
    D. $8.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

59. Assuming the market is in equilibrium in the graph shown with demand D and supply S₂ at a quantity of 8, consumer surplus is:

    A. $32.
    B. $11.
    C. $7.
    D. equal to producer surplus.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

60. Assuming the market is in equilibrium in the graph shown with demand D and supply S₂ at a quantity of 8, producer surplus is:

    A. greater than consumer surplus.
    B. less than consumer surplus.
    C. equal to consumer surplus.
    D. $32.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

61. Assuming the market is in equilibrium in the graph shown with demand D and supply S₁, total surplus is:

    A. greater than total surplus when market is in equilibrium at D and S₂.
    B. less than total surplus when market is in equilibrium at D and S₂.
    C. the same as total surplus when market is in equilibrium at D and S₂.
    D. $32.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

62. Assuming the market is in equilibrium in the graph shown with demand D and supply S₁, consumer surplus is:

    A. greater than consumer surplus when market is in equilibrium at D and S₂.
    B. less than consumer surplus when market is in equilibrium at D and S₂.
    C. the same as consumer surplus when market is in equilibrium at D and S₂.
    D. $32.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

63. Assuming the market is in equilibrium in the graph shown with demand D, supply S₁ and equilibrium quantity of 5 units. Consumer surplus is:

    A. $5.
    B. $10.
    C. $45.
    D. $9.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

 

64. Assuming the market is in equilibrium in the graph shown with demand is D and supply S₁ with an equilibrium quantity of 5 units. Producer surplus is:

    A. $5.
    B. $10.
    C. $15.
    D. $7.50.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

65. Assuming the market is in equilibrium in the graph shown with demand D, supply S₁ and equilibrium quantity of 5 units. Total surplus is:

    A. $5.
    B. $15.
    C. $12.50.
    D. $60.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

66. Assume the market is in equilibrium in the graph shown at demand D and supply S₁. If the supply curve shifts to S₂, and a new equilibrium is reached, which of the following is true?

    A. Consumer surplus increases, but producer surplus decreases.
    B. Consumer surplus decreases, but producer surplus increases.
    C. Both consumer and producer surplus increases.
    D. Both consumer and producer surplus decreases.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

67. Assume the market is in equilibrium in the graph shown at demand D and supply S1 (and a quantity of 5). If the supply curve shifts to S2, and a new equilibrium is reached (at a quantity of 7), which of the following is true?

    A. Consumer surplus increases by $5.
    B. Consumer surplus decreases by $5.
    C. Consumer surplus increases by $9.
    D. Consumer surplus decreases by $9.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

 

68. Assume the market is in equilibrium in the graph shown at demand D and supply S1. If the supply curve shifts to S2, and a new equilibrium is reached, equilibrium quantity will increase from 5 to 7 units. Which of the following is true?

    A. Producer surplus increases by $3.00.
    B. Producer surplus decreases by $8.50.
    C. Producer surplus increases by $7.50.
    D. Producer surplus decreases by $16.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

69. Assume the market is in equilibrium in the graph shown at demand D and supply S1 (at a quantity of 5). If the supply curve shifts to S2, and a new equilibrium is reached (at a quantity of 7), which of the following is true?

    A. Total surplus increases by $12.50.
    B. Total surplus decreases by $12.50.
    C. Total surplus increases by $15.50.
    D. Total surplus decreases by $15.50.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

70. Assume the market is in equilibrium in the graph shown at demand D and supply S₁. If the supply curve shifts to S₂, and a new equilibrium is reached, which of the following is true?

    A. Consumer surplus increases, and total surplus increases.
    B. Consumer surplus decreases, and total surplus increases.
    C. Consumer surplus increases, and total surplus decreases.
    D. Consumer surplus decreases, and total surplus decreases.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

71. Assume the market is in equilibrium in the graph shown at demand D and supply S₂. If the supply curve shifts to S₁, and a new equilibrium is reached, which of the following is true?

    A. Producer surplus would increase, and total surplus would increase.
    B. Producer surplus would decrease, and total surplus would increase.
    C. Producer surplus would increase, and total surplus would decrease.
    D. Producer surplus would decrease, and total surplus would decrease.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

72. Assume the market is in equilibrium in the graph shown at demand D and supply S₂ (at a quantity of 6). If the supply curve shifts to S₁, and a new equilibrium is reached (at a quantity of 4), which of the following is true?

    A. Total surplus would increase by $7.50.
    B. Total surplus would decrease by $16.50.
    C. Total surplus would increase by $32.
    D. Total surplus would decrease by $14.00.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

73. What consumer surplus is received by someone whose willingness to pay is $35 below the market price of a good?
    A.$0
    B. $35
    C. ($35 x P*)
    D. None of these is correct.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

 

74. What is the producer surplus earned by a seller whose willingness to sell is $10 below the market price of a good?
    A.$0
    B. $10
    C. (P* – $10)
    D. None of these is correct.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

75. Total surplus:
    A.can never be zero.
    B. can never fall below zero.
    C. is always above zero.
    D. None of these is true.

 

Blooms: Understand
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

76. Total surplus:
    A.can never be negative.
    B. is always zero in an efficient market.
    C. can be negative when the market is not in equilibrium.
    D. None of these is true.

 

Blooms: Understand
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

77. Total surplus:
    A.is producer and consumer surplus combined.
    B. is producer surplus minus consumer surplus.
    C. is consumer surplus minus producer surplus.
    D. None of these is true.

 

Blooms: Understand
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

78. When a market is in equilibrium,
    A.consumer surplus is minimized.
    B. producer surplus is minimized.
    C. total surplus is maximized.
    D. All of these are true.

 

Blooms: Remember
Learning Objective: 05-05 Define efficiency in terms of surplus, and identify efficient and inefficient situations.
Topic: 05-10 Market Equilibrium and Efficiency

79. When a market is in equilibrium,
    A.total surplus is maximized.
    B. the market is inefficient.
    C. total well being of all participants in the market is as low as possible.
    D. total surplus is minimized.

 

Blooms: Remember
Learning Objective: 05-05 Define efficiency in terms of surplus, and identify efficient and inefficient situations.
Topic: 05-10 Market Equilibrium and Efficiency

 

80. When a market is efficient,
    A.there is no exchange that can make anyone better off without someone becoming worse off.
    B. a central planner must be involved.
    C. only increased prices can benefit those involved.
    D. None of these is true.

 

Blooms: Remember
Learning Objective: 05-05 Define efficiency in terms of surplus, and identify efficient and inefficient situations.
Topic: 05-10 Market Equilibrium and Efficiency

81. Efficient markets:
    A.maximize total surplus.
    B. can occur with a central planner.
    C. occur when a market is in disequilibrium.
    D. minimize total surplus

 

Blooms: Remember
Learning Objective: 05-05 Define efficiency in terms of surplus, and identify efficient and inefficient situations.
Topic: 05-10 Market Equilibrium and Efficiency

82. When the market price is set above the equilibrium price:
    A.efficiency occurs.
    B. total surplus is maximized.
    C. consumer surplus is increased.
    D. producer surplus is increased

 

Blooms: Understand
Learning Objective: 05-05 Define efficiency in terms of surplus, and identify efficient and inefficient situations.
Topic: 05-08 Total Surplus

 

83. When the market price is set below the equilibrium price:
    A.efficiency occurs.
    B. total surplus is not maximized.
    C. producer surplus is increased.
    D. consumer surplus is increased.

 

Blooms: Understand
Learning Objective: 05-05 Define efficiency in terms of surplus, and identify efficient and inefficient situations.
Topic: 05-08 Total Surplus

84. When a market is not in equilibrium:
    A.total surplus can be increased by a change in market price.
    B. the market is efficient.
    C. there are exchanges that can make some worse off without someone becoming better off.
    D. total surplus can be decreased by a change in market price.

 

Blooms: Understand
Learning Objective: 05-05 Define efficiency in terms of surplus, and identify efficient and inefficient situations.
Topic: 05-08 Total Surplus

85. When a market is not in equilibrium:
    A.total surplus is not maximized.
    B. there are no exchanges that can make some better off without someone becoming worse off.
    C. the market is efficient.
    D. All of these are true.

 

Blooms: Understand
Learning Objective: 05-05 Define efficiency in terms of surplus, and identify efficient and inefficient situations.
Topic: 05-08 Total Surplus

 

86. According to the graph shown, consumer surplus is:

    A. $36.
    B. $72.
    C. $120
    D. None of these.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

 

87. According to the graph shown, producer surplus is:

    A. $36.
    B. $72.
    C. $120.
    D. None of these.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

88. According to the graph shown, consumer surplus is:

    A. the area under the demand curve and above the market price.
    B. the area under the supply curve and above the price.
    C. the area above the supply curve and below the price.
    D. the area above the demand curve and below the price.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

 

89. According to the graph shown, producer surplus is:

    A. the area under the demand curve and above the market price.
    B. the area under the supply curve and above the price.
    C. the area above the supply curve and below the price.
    D. the area above the demand curve and below the price.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

90. Assume the market was in equilibrium in the graph shown.
    If the market price were set to $12, which of the following is true?

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

 

Blooms: Apply
Learning Objective: 05-06 Describe the distribution of benefits that results from a policy decision.
Topic: 05-11 Changing the Distribution of Total Surplus

 

91. Assume the market was in equilibrium in the graph shown.
    If the market price were set to $6, which of the following is true?

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

 

Blooms: Apply
Learning Objective: 05-06 Describe the distribution of benefits that results from a policy decision.
Topic: 05-11 Changing the Distribution of Total Surplus

 

92. Assume the market was in equilibrium in the graph shown.
    If the market price gets set to $7, which of the following is true?

    A. Some consumers gain surplus, but total surplus falls.
    B. Some producers gain surplus, but total surplus falls.
    C. Some producers lose surplus, but total surplus rises.
    D. Some consumers lose surplus, but total surplus rises.

 

Blooms: Apply
Learning Objective: 05-06 Describe the distribution of benefits that results from a policy decision.
Topic: 05-11 Changing the Distribution of Total Surplus

 

93. Assume the market was in equilibrium in the graph shown.
    If the market price gets set to $14, which of the following is true?

    A. Some consumers gain surplus, but total surplus falls.
    B. Some producers gain surplus, but total surplus falls.
    C. Some producers lose surplus, but total surplus rises.
    D. Some consumers lose surplus, but total surplus rises.

 

Blooms: Apply
Learning Objective: 05-06 Describe the distribution of benefits that results from a policy decision.
Topic: 05-11 Changing the Distribution of Total Surplus

 

94. Assume a market price gets set artificially high—that is, it gets set above the equilibrium price. This change means:
    A.Every consumer loses surplus, and it all gets transferred to producers.
    B. Some consumers drop out of the market, and those left lose some surplus.
    C. Every producer gains surplus, due to the higher price now being charged.
    D. None of these is true.

 

Blooms: Understand
Learning Objective: 05-06 Describe the distribution of benefits that results from a policy decision.
Topic: 05-11 Changing the Distribution of Total Surplus

95. Assume a market price gets set artificially low—that is, it gets set below the equilibrium price. This change means:
    A.Every producer loses surplus, and it all gets transferred to consumers.
    B. Some producers drop out of the market, and those left lose some surplus.
    C. Every consumer gains surplus, due to the lower price now being charged.
    D. None of these is true.

 

Blooms: Understand
Learning Objective: 05-06 Describe the distribution of benefits that results from a policy decision.
Topic: 05-11 Changing the Distribution of Total Surplus

96. Assume a market that has an equilibrium price of $4. If the market price is set at $8, which of the following is true?
    A.Some surplus is transferred from consumers to producers, but total surplus falls.
    B. All surplus is transferred from consumers to producers, and total surplus stays the same.
    C. Some surplus is transferred from producers to consumers, but total surplus falls.
    D. Some surplus is transferred from consumers to producers, causing total surplus to increase.

 

Blooms: Apply
Learning Objective: 05-06 Describe the distribution of benefits that results from a policy decision.
Topic: 05-11 Changing the Distribution of Total Surplus

 

97. Assume a market that has an equilibrium price of $7. If the market price is set at $3, which of the following is true?
    A.Some surplus is transferred from consumers to producers, but total surplus falls.
    B. All surplus is transferred from consumers to producers, and total surplus stays the same.
    C. Some surplus is transferred from producers to consumers, but total surplus falls.
    D. Some surplus is transferred from consumers to producers, causing total surplus to increase.

 

Blooms: Apply
Learning Objective: 05-06 Describe the distribution of benefits that results from a policy decision.
Topic: 05-11 Changing the Distribution of Total Surplus

98. Assume a market that has an equilibrium price of $5. If the market price is set at $9, producer surplus:
    A.rises for some because of the increased price.
    B. decreases for some because of fewer transactions taking place.
    C. Both of these statements are true.
    D. Neither of these statements is true.

 

Blooms: Apply
Learning Objective: 05-06 Describe the distribution of benefits that results from a policy decision.
Topic: 05-11 Changing the Distribution of Total Surplus

99. Assume a market that has an equilibrium price of $8. If the market price is set at $7, consumer surplus:
    A.rises for some because of the decreased price.
    B. decreases for some because of fewer transactions taking place.
    C. Both of these statements are true.
    D. Neither of these statements is true.

 

Blooms: Apply
Learning Objective: 05-06 Describe the distribution of benefits that results from a policy decision.
Topic: 05-11 Changing the Distribution of Total Surplus

 

100. According to the graph shown, if the market is in equilibrium, total surplus is:

     A. $30.
     B. $20.
     C. $50.
     D. $60.

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

101. According to the graph shown, if the market goes from equilibrium to having its price set at $10:

     A. deadweight loss will not occur.
     B. eight fewer market transactions will occur.
     C. consumer surplus will increase.
     D. produce surplus will increase

 

Blooms: Apply
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-12 Deadweight Loss

 

102. According to the graph shown, if the market goes from equilibrium to having its price set at $10:

     A. market transactions will decrease by 7.
     B. market transactions will decrease by 3.
     C. market transactions will decrease by 10.
     D. market transactions will not change, only price has changed.

 

Blooms: Apply
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-12 Deadweight Loss

 

103. According to the graph shown, if the market is in equilibrium, consumer surplus is:

     A. $30.
     B. $20.
     C. $50.
     D. $60.

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

 

104. According to the graph shown, if the market is in equilibrium, producer surplus is:

     A. $30.
     B. $20.
     C. $50.
     D. $60.

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

105. According to the graph shown, if the market is in equilibrium, total surplus is area(s):

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

 

Blooms: Apply
Learning Objective: 05-04 Calculate total surplus based on a graph or table.
Topic: 05-08 Total Surplus

 

106. According to the graph shown, if the market is in equilibrium, consumer surplus is area:

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

 

Blooms: Apply
Learning Objective: 05-02 Calculate consumer surplus based on a graph or table.
Topic: 05-06 Consumer Surplus

 

107. According to the graph shown, if the market is in equilibrium, producer surplus is area:

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

 

Blooms: Apply
Learning Objective: 05-03 Calculate producer surplus based on a graph or table.
Topic: 05-07 Producer Surplus

 

108. According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

     A. consumer surplus will decrease from (A + B + C) to (A) only.
     B. consumer surplus will increase from (A + B + C) to (A) only.
     C. consumer surplus (B + C) will transfer to producers.
     D. None of these is true.

 

Blooms: Apply
Learning Objective: 05-06 Describe the distribution of benefits that results from a policy decision.
Topic: 05-10 Market Equilibrium and Efficiency

 

109. According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

     A. producer surplus will change from (D + E) to (D + E + B + C).
     B. producer surplus will change from (B + C + D + E) to D only.
     C. producer surplus will change from (D + E) to (D + B).
     D. producer surplus will change from (D + B) to (D + E).

 

Blooms: Apply
Learning Objective: 05-06 Describe the distribution of benefits that results from a policy decision.
Topic: 05-10 Market Equilibrium and Efficiency

 

110. According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

     A. producer surplus rises by area B, but falls by area E.
     B. producer surplus rises by area B, but falls by area D + E.
     C. producer surplus rises by area B + C, but falls by area D + E.
     D. producer surplus rises by area B + C, but falls by area E.

 

Blooms: Apply
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-11 Changing the Distribution of Total Surplus

 

111. According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

     A. area (B + C) gets transferred from consumer to producer.
     B. area (B + C) gets transferred from producer to consumer.
     C. area B gets transferred from consumer to producer.
     D. area B gets transferred from producer to consumer.

 

Blooms: Apply
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-11 Changing the Distribution of Total Surplus

 

112. According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

     A. $12 gets transferred from consumer to producer in surplus.
     B. $12 gets transferred from producer to consumer in surplus.
     C. all consumer surplus lost is gained by producers.
     D. all producer surplus lost is gained by consumers.

 

Blooms: Apply
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-11 Changing the Distribution of Total Surplus

 

113. According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

     A. area B gets transferred from consumer surplus to producer surplus.
     B. area D is lost surplus due to fewer transactions taking place.
     C. area A is lost surplus due to fewer transactions taking place.
     D. area C is lost surplus due to fewer transactions taking place.

 

Blooms: Apply
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-11 Changing the Distribution of Total Surplus

 

114. According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

     A. area (C + E) is deadweight loss.
     B. area B is transferred surplus from producer to consumer.
     C. $12 of surplus gets transferred from producer to consumers.
     D. area (A+B) is consumer surplus.

 

Blooms: Apply
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-11 Changing the Distribution of Total Surplus

 

115. According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:

     A. the market ceases to be efficient.
     B. total surplus will increase.
     C. deadweight loss will not occur.
     D. area (B+D) represent the deadweight loss.

 

Blooms: Apply
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-11 Changing the Distribution of Total Surplus

116. Deadweight loss:
     A.occurs in markets that are inefficient.
     B. occurs when markets are in equilibrium.
     C. is lost surplus due to increased market transactions.
     D. is increased due to increased market transactions.

 

Blooms: Remember
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-12 Deadweight Loss

 

117. Deadweight loss:
     A.creates efficiency in markets.
     B. is the loss of total surplus that results when the quantity of a good that is bought and sold is below the market equilibrium quantity.
     C. is the loss of total surplus that results when the quantity of a good that is bought and sold is above the market equilibrium quantity.
     D. always occurs in markets.

 

Blooms: Remember
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-12 Deadweight Loss

118. Deadweight loss:
     A.occurs when the market price is set above the equilibrium price.
     B. occurs when the market price is set at the equilibrium price.
     C. is the loss of total surplus that results when the quantity of a good that is bought and sold is at the market equilibrium quantity.
     D. All of these are true.

 

Blooms: Remember
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-12 Deadweight Loss

119. The loss of total surplus that results when the quantity of a good that is bought and sold is below the market equilibrium quantity:
     A.is deadweight loss.
     B. occurs in efficient markets.
     C. occurs when the market price is set at the equilibrium price.
     D. All of these are true.

 

Blooms: Remember
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-12 Deadweight Loss

 

120. The loss of total surplus that results when the quantity of a good that is bought and sold is below the market equilibrium quantity is called:
     A.deadweight loss.
     B. producer surplus.
     C. consumer surplus.
     D. total surplus.

 

Blooms: Remember
Learning Objective: 05-07 Define and calculate deadweight loss
Topic: 05-12 Deadweight Loss

121. We say a market is “missing” when:
     A.there is a place for potential buyers and sellers to exchange a particular good or service.
     B. the quantity being exchanged is at or close to zero.
     C. there is an abundance of a well-functioning market, and total surplus is higher than it could be.
     D. there is an abundance of a well-functioning market, and total surplus is less than it could be.

 

Blooms: Remember
Learning Objective: 05-08 Explain why correcting a missing market can make everyone better off.
Topic: 05-13 Missing Markets

122. Markets can be missing:
     A.because public policy prevents the market from existing.
     B. when the production of a particular good is legalized.
     C. because of an abundance of accurate information between potential buyers and sellers.
     D. All of these are true.

 

Blooms: Remember
Learning Objective: 05-08 Explain why correcting a missing market can make everyone better off.
Topic: 05-13 Missing Markets

 

123. Markets can be missing:
     A.because public policy taxes a market.
     B. when the sale of a particular service is banned.
     C. when miscommunication of information between buyers and sellers leads to the wrong equilibrium price.
     D. All of these are true.

 

Blooms: Remember
Learning Objective: 05-08 Explain why correcting a missing market can make everyone better off.
Topic: 05-13 Missing Markets

124. Markets can be missing if:
     A.there is a lack of technology that would make the exchanges possible.
     B. when the production of a particular good is legalized.
     C. when miscommunication of information between buyers and sellers leads to the wrong equilibrium price.
     D. because public policy taxes a market.

 

Blooms: Remember
Learning Objective: 05-08 Explain why correcting a missing market can make everyone better off.
Topic: 05-13 Missing Markets

125. Total surplus can be increased if:
     A.new markets are prohibited.
     B. existing markets are improved.
     C. markets get further from equilibrium.
     D. All of these can increase total surplus.

 

Blooms: Understand
Learning Objective: 05-08 Explain why correcting a missing market can make everyone better off.
Topic: 05-13 Missing Markets

 

126. Well-being can be increased by:
     A.policies that help people do business more effectively.
     B. technologies that help people share more and worse information.
     C. increasing the availability of inaccurate information.
     D. All of these are true.

 

Blooms: Understand
Learning Objective: 05-08 Explain why correcting a missing market can make everyone better off.
Topic: 05-13 Missing Markets

127. Creating a market that was previously “missing”:
     A.redistributes surplus from buyer to seller.
     B. redistributes surplus from seller to buyer.
     C. redistributes surplus from one market to the one that was previously missing.
     D. creates more total surplus.

 

Blooms: Understand
Learning Objective: 05-08 Explain why correcting a missing market can make everyone better off.
Topic: 05-13 Missing Markets

128. The creation of markets that were previously “missing”:
     A.decreases economic wellbeing.
     B. decreases total surplus.
     C. benefits those who interact in the new markets.
     D. All of these are true.

 

Blooms: Understand
Learning Objective: 05-08 Explain why correcting a missing market can make everyone better off.
Topic: 05-13 Missing Markets

129. The market to buy and sell organs:
     A.is missing.
     B. has been legalized by public policy.
     C. would create less surplus for those who would interact in it.
     D. All of these are true.

 

Blooms: Understand
Learning Objective: 05-08 Explain why correcting a missing market can make everyone better off.
Topic: 05-13 Missing Markets

 

130. An example of a “missing” market would be:
     A.the market to buy and sell children for adoption.
     B. the market to buy and sell a alcohol.
     C. the market to buy and sell chicken.
     D. All of these markets are missing.

 

Blooms: Understand
Learning Objective: 05-08 Explain why correcting a missing market can make everyone better off.
Topic: 05-13 Missing Markets

131. The market to buy and sell organs:
     A.would increase the wellbeing of those who interacted in it.
     B. would not be considered “missing,” since surplus could be gained from it.
     C. would create negative surplus in those who could not afford an organ, but needed one.
     D. would never exist because it is unfair.

 

Blooms: Understand
Learning Objective: 05-08 Explain why correcting a missing market can make everyone better off.
Topic: 05-13 Missing Markets