40
7) Refer to Figure 4.6. If price is P1, consumer surplus is area
A) A.
B) A + B + E.
C) G.
D) B + C + E + F + G.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
8) Refer to Figure 4.6. If price is P1, producer surplus is area
A) A.
B) A + B + E.
C) G.
D) B + E + G.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
9) Refer to Figure 4.6. If price is P1, the deadweight loss due to under production is area
A) A + C.
B) C + F.
C) E + G.
D) F + G.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
10) Refer to Figure 4.6. If price goes from equilibrium to P1, producer surplus changes by the area
A) E – C.
B) C + E.
C) E + F.
D) B – F.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
41
11) Refer to Figure 4.6. If price goes from equilibrium to P1, consumer surplus changes by the area
A) E – C.
B) C + E.
C) E + F.
D) B – F.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
12) Refer to Figure 4.6. The area of [A + B + C] represents
A) producer surplus.
B) consumer surplus.
C) consumer surplus plus producer surplus.
D) consumer surplus minus producer surplus.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
13) Refer to Figure 4.6. The area of [E + F + G] represents
A) producer surplus.
B) consumer surplus.
C) consumer surplus plus producer surplus.
D) consumer surplus minus producer surplus.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
14) Refer to Figure 4.6. Consumer surplus is area [A + B + E] if price is
A) P1.
B) P2.
C) P3.
D) above P3.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
42
15) Refer to Figure 4.6. Producer surplus is area G if price is
A) below P1.
B) P1.
C) P2.
D) P3.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
16) Refer to Figure 4.6. The deadweight loss due to underproduction is area [C + F] if price is
A) P1.
B) P2.
C) P3.
D) > P3.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
17) Refer to Figure 4.6. Producer surplus changes by the area [E + F] if price goes from equilibrium to
A) P1.
B) P3.
C) < P1.
D) > P3.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
18) Refer to Figure 4.6. Consumer surplus changes by the area [E – C] if price goes from equilibrium to
A) P1.
B) P3.
C) < P1.
D) > P3.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
43
19) The total of consumer plus producer surplus is greatest
A) when consumer surplus is maximized.
B) when producer surplus is maximized.
C) at the market equilibrium.
D) all of the above
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-7
20) When there is overproduction in a market,
A) market price is too low.
B) there is excess quantity demanded.
C) the total of consumer and producer surplus is maximized.
D) there is a deadweight loss.
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-7
21) When there is underproduction in a market,
A) market price is too high.
B) there is excess quantity supplied.
C) the total of consumer and producer surplus is maximized.
D) there is a deadweight loss.
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-7
22) The difference between current market price and full costs of production for the firm is known as
A) consumer surplus.
B) producer surplus.
C) market surplus.
D) nonprice surplus.
Topic: Supply and Demand and Market Efficiency
Skill: Definition
Learning Outcome: Micro-7
44
23) The difference between the maximum a person is willing to pay and current market price is known as
A) consumer surplus.
B) producer surplus.
C) market surplus.
D) nonprice surplus.
Topic: Supply and Demand and Market Efficiency
Skill: Definition
Learning Outcome: Micro-7
24) If the most someone is willing to pay for an airline ticket to Las Vegas is $300 and the market price of
the ticket is $200, then this buyer will get consumer surplus of
A) $100.
B) $200.
C) $300.
D) $500.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
25) If the market price of a bowling ball is $125 and the full cost of producing it is $35, then a bowling ball
producing firm gets producer surplus of
A) $35.
B) $90.
C) $125.
D) $160.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
26) The total of consumer plus producer surplus is ________ at the market equilibrium.
A) greatest
B) smallest
C) zero
D) negative
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-7
45
27) A deadweight loss occurs ________ in a market.
A) only when there is overproduction
B) only when there is underproduction
C) when there is efficient production
D) when there is underproduction or overproduction
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-7
28) Consumer surplus is the difference between the most a person is willing to pay and market price.
Topic: Supply and Demand and Market Efficiency
Skill: Definition
Learning Outcome: Micro-7
29) Consumer surplus describes a situation in which there is excess quantity supplied.
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-4
30) If someone is willing to pay $500 to go to the Super Bowl but can buy a ticket for $300, they will get
$200 in consumer surplus.
Topic: Supply and Demand and Market Efficiency
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-7
31) A firm that sells a car for $30,000 gets producer surplus of $30,000.
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-7
32) The total of consumer plus producer surplus is largest at the market equilibrium.
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-7
46
33) The total of producer and consumer surplus is maximized when there is underproduction.
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-7
34) Producer surplus is the difference between the most a person is willing to pay and market price.
Topic: Supply and Demand and Market Efficiency
Skill: Definition
Learning Outcome: Micro-7
35) Producer surplus describes a situation in which there is excess quantity demanded.
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-4
36) Deadweight loss is the difference between consumer surplus and producer surplus.
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Analytical Thinking
Learning Outcome: Micro-7
37) At equilibrium, deadweight loss is zero.
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-7
38) On a graph, consumer surplus is the area above the equilibrium price and below the demand curve.
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-7
47
39) The total of producer and consumer surplus is maximized when there is overproduction.
Topic: Supply and Demand and Market Efficiency
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-7