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1. A seller’s opportunity cost measures the
a.
value of everything she must give up to produce a good.
b.
amount she is paid for a good minus her cost of providing it.
c.
consumer surplus.
d.
out of pocket expenses to produce a good but not the value of her time.
2. Cost is a measure of the
a.
seller's willingness to sell.
b.
seller's producer surplus.
c.
producer shortage.
d.
seller's willingness to buy.
3. Justin builds fences for a living. Justin’s out-of-pocket expenses (for wood, paint, etc.) plus the value that he places on
his own time amount to his
a.
producer surplus.
b.
producer deficit.
c.
cost of building fences.
d.
profit.
4. A supply curve can be used to measure producer surplus because it reflects
a.
the actions of sellers.
b.
quantity supplied.
c.
sellers' costs.
d.
the amount that will be purchased by consumers in the market.
5. A seller is willing to sell a product only if the seller receives a price that is at least as great as the
a.
seller’s producer surplus.
b.
seller’s cost of production.
c.
seller’s profit.
d.
average willingness to pay of buyers of the product.
6. Producer surplus is
a.
measured using the demand curve for a good.
b.
always a negative number for sellers in a competitive market.
c.
the amount a seller is paid minus the cost of production.
d.
the opportunity cost of production minus the cost of producing goods that go unsold.
7. Producer surplus measures the
a.
benefits to sellers of participating in a market.
b.
costs to sellers of participating in a market.
c.
price that buyers are willing to pay for sellers’ output of a good or service.
d.
benefit to sellers of producing a greater quantity of a good or service than buyers demand.
8. A seller’s willingness to sell is
a.
measured by the seller’s cost of production.
b.
related to her supply curve, just as a buyer’s willingness to buy is related to his demand curve.
c.
less than the price received if producer surplus is a positive number.
d.
All of the above are correct.
9. Caroline sharpens knives in her spare time for extra income. Buyers of her service are willing to pay $2.95 per knife for
as many knives as Caroline is willing to sharpen. On a particular day, she is willing to sharpen the first knife for $2.00, the
second knife for $2.25, the third knife for $2.75, and the fourth knife for $3.50. Assume Caroline is rational in deciding
how many knives to sharpen. Her producer surplus is
a.
$0.95.
b.
$1.15.
c.
$1.30.
d.
$1.85.
10. Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hour for as many hours
Allen is willing to tutor. On a particular day, he is willing to tutor the first hour for $10, the second hour for $18, the third
hour for $28, and the fourth hour for $40. Assume Allen is rational in deciding how many hours to tutor. His producer
surplus is
a.
$40.
b.
$64.
c.
$12.
d.
$56.
11. Tom tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $155 per tuning. One
particular week, Tom is willing to tune the first piano for $120, the second piano for $125, the third piano for $140, and
the fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. His producer surplus is
a.
$95.
b.
$80.
c.
$75.
d.
$60.
12. David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One
particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and
the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is
a.
$-15.
b.
$20.
c.
$30.
d.
$75.
13. George produces cupcakes. His production cost is $10 per dozen. He sells the cupcakes for $16 per dozen. His
producer surplus per dozen cupcakes is
a.
$6.
b.
$10.
c.
$16.
d.
$26.
14. Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is
a.
$150.
b.
$200.
c.
$350.
d.
$550.
15. If Martin sells a shirt for $40, and his producer surplus from the sale is $8, his cost must have been
a.
$48.
b.
$32.
c.
$8.
d.
$40.
16. Ronnie operates a lawn-care service. On each day, the cost of mowing the first lawn is $15, the cost of mowing the
second lawn is $25, and the cost of mowing the third lawn is $40. His producer surplus on the first three lawns of the day
is $100. If Ronnie charges all customers the same price for lawn mowing, that price is
a.
$20.
b.
$60.
c.
$80.
d.
$180.
17. At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick
experiences a producer surplus in the amount of $20. Nick must be selling his danishes for
a.
$2.00 each.
b.
$0.50 each.
c.
$3.50 each.
d.
$5.00 each.
18. Kristi sells purses. Her cost is $35 per purse. On a certain day, she sells 12 purses, and her producer surplus for that
day amounts to $180. Kristi sold each purse for
a.
$65.
b.
$50.
c.
$45.
d.
$53.
19. Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40
cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for
a.
31 cents.
b.
38 cents.
c.
45 cents.
d.
55 cents.
20. Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain
day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?
a.
40.
b.
200.
c.
8.
d.
50.
21. Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus
of $150. What is the price paid for the software?
a.
$50.
b.
$150.
c.
$200.
d.
$350.
22. Bill created a new software program he is willing to sell for $300. He sells his first copy and enjoys a producer surplus
of $250. What is the price paid for the software?
a.
$50.
b.
$250.
c.
$300.
d.
$550.
23. Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is
a.
$150.
b.
$350.
c.
$500.
d.
$850.
24. At Nick’s Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick
experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for
a.
$6.50 each.
b.
$7.50 each.
c.
$9.50 each.
Table 7-10
The following table represents the costs of five possible sellers.
Seller
Cost
Abby
$1,600
Bobby
$1,300
Dianne
$1,100
Evaline
$900
Carlos
$800
25. Refer to Table 7-10. If the market price is $1,000, the producer surplus in the market is
a.
$1000.
b.
$300.
c.
$1,700.
d.
$700.
26. Refer to Table 7-10. If the market price is $1,200, the producer surplus in the market is
a.
$100.
b.
$800.
c.
$400.
d.
$500.
27. Refer to Table 7-10. If the market price is $1,100, the combined total cost of all participating sellers is
a.
$2,800.
b.
$2,900.
c.
$1,700.
d.
$4,000.
28. Refer to Table 7-10. If the market price is $1,400, the combined total cost of all participating sellers is
a.
$5,700.
b.
$1,500.
c.
$1,400.
d.
$4,100.
29. Refer to Table 7-10. If the price is $1,000,
a.
Bobby is an eager supplier.
b.
Dianne is an eager supplier.
c.
Evaline’s producer surplus is $100.
d.
All of the above are correct.
30. Refer to Table 7-10. If the price is $1,l50, who would be willing to supply the product?
a.
Abby and Bobby
b.
Abby, Bobby, and Dianne
c.
Carlos, Dianne, and Evaline
d.
Dianne and Evaline only
31. Refer to Table 7-10. Suppose each of the five sellers can supply at most one unit of the good. The market quantity
supplied is exactly 2 if the price is
a.
$1,700.
b.
$1,100.
c.
$1,650.
d.
$1,050.
32. Refer to Table 7-10. Suppose each of the five sellers can supply at most one unit of the good. The market quantity
supplied is exactly 4 if the price is
a.
$860.
b.
$1,050.
c.
$1,650.
d.
$1,400.
33. Refer to Table 7-10. Who is a marginal seller when the price is $1,100?
a.
Dianne
b.
Bobby and Abby
c.
Carlos, Dianne, and Evaline
d.
Carlos, Dianne, Evaline, and Bobby
Table 7-11
The only four producers in a market have the following costs:
Seller
Cost
Evan
$50
Selena
$100
Angie
$150
Kris
$200
34. Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the good
will sell for
a.
$50 or slightly more.
b.
$100 or slightly less.
c.
$150 or slightly less.
d.
$200 or slightly more.
35. Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the producer
surplus will be
a.
$0 or slightly more.
b.
$50 or slightly less.
c.
$150 or slightly less.
d.
$200 or slightly more.
36. Refer to Table 7-11. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the
price must have been
a.
$200.
b.
$300.
c.
$450.
d.
$600.
37. Refer to Table 7-11. If Evan, Selena, Angie, and Kris sell the good, and the resulting producer surplus is $700, then
the price must have been
a.
$200.
b.
$300.
c.
$500.
d.
$700.
Table 7-12
The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality.
Seller
Cost
Marcia
$200
Jan
$250
Cindy
$350
Greg
$400
Peter
$700
Bobby
$800
38. Refer to Table 7-12. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. You will not
accept a bid below a seller’s cost because you are concerned that the seller will not provide all 10 lessons. What bid will
you accept?
a.
$351
b.
$251
c.
$249
d.
$199
39. Refer to Table 7-12. You wish to purchase 10 piano lessons for yourself and for your brother, so you take bids from
each of the sellers. You will take lessons at the same time, so one teacher cannot provide lessons to both of you. You must
pay the same price for both sets of lessons, and you will not accept a bid below a seller’s cost because you are concerned
that the seller will not provide all 10 lessons. What bid will you accept?
a.
$351
b.
$349
c.
$201
d.
$199
40. Refer to Table 7-12. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in
the market?
a.
$0
b.
$300
c.
$400
d.
$700
41. Refer to Table 7-12. The equilibrium market price for 10 piano lessons is $300. What is the total producer surplus in
the market?
a.
$50
b.
$150
c.
$1,050
d.
$1,500
42. Refer to Table 7-12. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. The bids are
required to be rounded to the nearest dollar. You will not accept a bid below a seller’s cost because you are concerned that
the seller will not provide all 10 lessons. Your parents have given you $450 to spend on piano lessons. You believe that
the sellers with higher opportunity costs offer higher quality lessons. You want the highest quality lessons that you can
afford, but you can spend any remaining money on dinner with friends. From whom will you take lessons, and how much
money will you spend?
a.
Peter; $450
b.
Cindy; $450
c.
Greg; $401
d.
Cindy; $401
Table 7-13
The only four producers in a market have the following costs:
Seller
Cost
Abbey
$30
Bev
$40
Carl
$55
Dale
$65
43. Refer to Table 7-13. If the sellers bid against each other for the right to sell the good to a single consumer, then the
good will sell for
a.
$30 or slightly more.
b.
$40 or slightly less.
c.
$55 or slightly less.
d.
$65 or slightly less.
44. Refer to Table 7-13. If the sellers bid against each other for the right to sell the good to a single consumer, then the
producer surplus will be
a.
$0 or slightly more.
b.
$5 or slightly less.
c.
$10 or slightly less.
d.
$25 or slightly less.
45. Refer to Table 7-13. If Abbey, Bev, and Carl sell the good, and the resulting producer surplus is $55 altogether, then
the price must have been
a.
$40.
b.
$50.
c.
$60.
d.
$70.
Table 7-14
Seller
Cost
LeBron
$700
Kobe
$600
Kevin
$450
Steve
$400
46. Refer to Table 7-14. You want to hire a professional photographer to take pictures of your family. The table shows
the costs of the four potential sellers in the local photography market. You take bids from the sellers. Who offers the
winning bid, and what does he offer to charge for the photography session?
a.
Steve; more than $400 but less than $450
b.
Steve; $399
c.
LeBron; more than $700
d.
LeBron; more than $600 but less than $700
47. Refer to Table 7-14. You and your best friend want to hire a professional photographer to take pictures of your two
families. The table shows the costs of the four potential sellers in the local photography market. You and your friend take
bids from the sellers. Who offers the two winning bids, and what do they offer to charge for the photography sessions?
a.
LeBron and Kobe; more than $450 but less than $600
b.
Kevin and Steve; more than $450 but less than $600
c.
LeBron and Kobe; more than $700
d.
Kevin and Steve; less than $400
48. Refer to Table 7-14. You want to hire a professional photographer to take pictures of your family. The table shows
the costs of the four potential sellers in the local photography market. You hire Kevin for a price of $500. What is his
producer surplus?
a.
$500
b.
$150
c.
$100
d.
$50
49. Refer to Table 7-14. You and your best friend want to hire a professional photographer to take pictures of your two
families. The table shows the costs of the four potential sellers in the local photography market. You and your friend agree
to offer $500 for each session. Who accepts the offer, and what is the total producer surplus in the market?
a.
LeBron and Kobe; $500
b.
Kevin and Steve; $500
c.
LeBron and Kobe; $300
d.
Kevin and Steve; $150
50. Refer to Table 7-14. You want to hire a professional photographer to take pictures of your family. The table shows
the costs of the four potential sellers in the local photography market. Which of the following graphs represents the
market supply curve?
a.
b.
c.
d.
Figure 7-9
51. Refer to Figure 7-9. If the price of the good is $9.50, then producer surplus is
a.
$3.00.
b.
$6.50.
c.
$10.50.
d.
$8.50.
52. Refer to Figure 7-9. If the price of the good is $14, then producer surplus is
a.
$19.50.
b.
$22.50.
c.
$20.50.
d.
$25.00.
53. Refer to Figure 7-9. If producer surplus is $19, then the price of the good is
a.
$11.50.
b.
$14.50.
c.
$13.50.
Figure 7-10
54. Refer to Figure 7-10. Which area represents producer surplus when the price is P1?
a.
BCG
b.
ACH
c.
ABGD
d.
DGH
55. Refer to Figure 7-10. Which area represents producer surplus when the price is P2?
a.
BCG
b.
ACH
c.
ABGD
d.
AHGB
56. Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2?
a.
BCG
b.
ACH
c.
ABGD
d.
AHGB
57. Refer to Figure 7-10. When the price rises from P1 to P2, which area represents the increase in producer surplus to
existing producers?
a.
BCG
b.
ACH
c.
DGH
d.
ABGD
58. Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due
to new producers entering the market?
a.
BCG
b.
ACH
c.
DGH
d.
AHGB
