Question 1

When Bob's willingness to pay for a cup of coffee is $1,and the price of a cup of coffee is $1:

Accepted Answer

A)   Bob is indifferent about purchasing the coffee.
B)   Bob will get no surplus by purchasing the coffee.
C)   Bob will get the same surplus whether he purchases the coffee or not.
D)   All of these are true.E) C) and D)
F) B) and C)

Question 2

When someone's willingness to pay is the same as the actual price paid for an item:

Accepted Answer

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

Question 3

Assume there are three hardware stores,each willing to sell one standard model hammer in a given time period.House Depot can offer their hammer for a minimum of $7.Lace Hardware can offer the hammer for a minimum of $10.Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described,if the market price of hammers increased from $7 to $11:

Accepted Answer

A)   more producers would participate in the market.
B)   only Bob's Hardware would lose surplus.
C)   both Bob's Hardware and Lace Hardware would lose surplus.
D)   House Depot is the only producer that will gain surplus.E) All of the above
F) B) and C)

Question 4

At prices below a consumer's willingness to pay:

Accepted Answer

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

Question 5

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

Accepted Answer

A)   $30.
B)   $20.
C)   $50.
D)   $60.E) B) and D)
F) A) and B) A

Question 6

A market has four individuals,each considering buying a grill for his backyard.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:

Accepted Answer

A)   $750.
B)   $400.
C)   $50.
D)   $870.E) None of the above
F) A) and D) C

Question 7

Assume there are three hardware stores,each willing to sell one standard model hammer in a given time period.House Depot can offer their hammer for a minimum of $7.Lace Hardware can offer the hammer for a minimum of $10.Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described,if the market price of hammers was $12,then total producer surplus would be:

Accepted Answer

A)   $7.
B)   $9.
C)   $17.
D)   $30.E) C) and D)
F) B) and C)

Question 8

At prices above a consumer's reservation price:

Accepted Answer

A)   the opportunity cost is less than the benefit from having the good.
B)   the opportunity cost is greater than the benefit from having the good.
C)   the buyer will purchase the good.
D)   the willingness to pay is greater than the price.E) A) and D)
F) None of the above

Question 9

If Billy's reservation price on a snowboard is $250,how many snowboards would he buy if the market price of snowboards is $500?

Accepted Answer

A)   0
B)   1
C)   2
D)   The amount of snowboards purchased would depend on Billy's income.E) A) and B)
F) A) and C)

Question 10

The market to buy and sell organs:

Accepted Answer

A)   is missing.
B)   has been banned by public policy.
C)   would create surplus for those who would interact in it.
D)   All of these are true.E) A) and B)
F) A) and C)

Question 11

According to the graph shown,producer surplus is:

Accepted Answer

A)   $10.
B)   $6.
C)   $2.
D)   $20.E) A) and B)
F) None of the above

Question 12

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

Accepted Answer

A)  A.
B)  A + B + C.
C)  A + B + C + D + E.
D)  D + E.E) None of the above
F) A) and B) D

Question 13

1 is in equilibrium at a quantity of 5 units.Consumer surplus is: A)  $5. B)  $10. C)  $45. D)  $9." class="answers-bank-image d-inline" rel="preload" > Assume the market in the graph shown with demand D and supply S1 is in equilibrium at a quantity of 5 units.Consumer surplus is:

Accepted Answer

A)   $5.
B)   $10.
C)   $45.
D)   $9.E) B) and C)
F) A) and B)

Question 14

Deadweight loss:

Accepted Answer

A)   creates efficiency in markets.
B)   is the difference between the total surplus occurring in a market and the maximum total surplus achievable.
C)   is the loss in producer surplus from a price increase
D)   always occurs in markets.E) B) and C)
F) C) and D)

Question 15

2 at a quantity of 8,producer surplus is: A)  28 B)  less than the consumer surplus. C)  16 D)  $32." class="answers-bank-image d-inline" rel="preload" > Assuming the market is in equilibrium in the graph shown with demand D and supply S2 at a quantity of 8,producer surplus is:

Accepted Answer

A)   28
B)   less than the consumer surplus.
C)   16
D)   $32.E) B) and D)
F) None of the above

Question 16

Assume there are three hardware stores,each willing to sell one standard model hammer in a given time period.House Depot can offer their hammer for a minimum of $7.Lace Hardware can offer the hammer for a minimum of $10.Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described,if the market price of hammers was $10,then:

Accepted Answer

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.E) A) and D)
F) C) and D)

Question 17

Well-being can be increased by:

Accepted Answer

A)   policies that help people do business more efficiently.
B)   technologies that help people share more and better information.
C)   increasing the availability of accurate information.
D)   All of these are true.E) All of the above
F) A) and D)

Question 18

Efficient markets:

Accepted Answer

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

Question 19

Total surplus:

Accepted Answer

A)   can never be zero.
B)   can never fall below zero.
C)   is always above zero.
D)   is less than the consumer surplus.E) C) and D)
F) A) and B)

Question 20

Consider the hypothetical supply and demand of Kidneys.  Suppose Kidneys cannot be sold,only donated (price is zero) .How many kidneys are donated in this hypothetical situation?

Accepted Answer

A)   0
B)   900
C)   2000
D)   1200E) All of the above
F) A) and B)

Exam 5: Efficiency

When Bob's willingness to pay for a cup of coffee is $1,and the price of a cup of coffee is $1:

Correct Answer
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When someone's willingness to pay is the same as the actual price paid for an item:

Correct Answer
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Correct Answer
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At prices below a consumer's willingness to pay:

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

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A

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C

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At prices above a consumer's reservation price:

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If Billy's reservation price on a snowboard is $250,how many snowboards would he buy if the market price of snowboards is $500?

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The market to buy and sell organs:

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According to the graph shown,producer surplus is:

Correct Answer
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According to the graph shown,if the market is in equilibrium,producer surplus is area:

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D

Assume the market in the graph shown with demand D and supply S₁ is in equilibrium at a quantity of 5 units.Consumer surplus is:

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Deadweight loss:

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Assuming the market is in equilibrium in the graph shown with demand D and supply S₂at a quantity of 8,producer surplus is:

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Well-being can be increased by:

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Efficient markets:

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Total surplus:

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Consider the hypothetical supply and demand of Kidneys. Suppose Kidneys cannot be sold,only donated (price is zero) .How many kidneys are donated in this hypothetical situation?

Correct Answer
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Exam 5: Efficiency

When Bob's willingness to pay for a cup of coffee is $1,and the price of a cup of coffee is $1:

Correct AnswerverifiedShow Answer

When someone's willingness to pay is the same as the actual price paid for an item:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

At prices below a consumer's willingness to pay:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

Correct AnswerverifiedC

Correct AnswerverifiedShow Answer

At prices above a consumer's reservation price:

Correct AnswerverifiedShow Answer

If Billy's reservation price on a snowboard is $250,how many snowboards would he buy if the market price of snowboards is $500?

Correct AnswerverifiedShow Answer

The market to buy and sell organs:

Correct AnswerverifiedShow Answer

According to the graph shown,producer surplus is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedD

Assume the market in the graph shown with demand D and supply S1 is in equilibrium at a quantity of 5 units.Consumer surplus is:

Correct AnswerverifiedShow Answer

Deadweight loss:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Well-being can be increased by:

Correct AnswerverifiedShow Answer

Efficient markets:

Correct AnswerverifiedShow Answer

Total surplus:

Correct AnswerverifiedShow Answer

Consider the hypothetical supply and demand of Kidneys. Suppose Kidneys cannot be sold,only donated (price is zero) .How many kidneys are donated in this hypothetical situation?

Correct AnswerverifiedShow Answer

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A

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C

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D

Assume the market in the graph shown with demand D and supply S₁ is in equilibrium at a quantity of 5 units.Consumer surplus is:

Correct Answer
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Assuming the market is in equilibrium in the graph shown with demand D and supply S₂at a quantity of 8,producer surplus is:

Correct Answer
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