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1. The maximum price that a buyer will pay for a good is called
a.
consumer surplus.
b.
willingness to pay.
c.
equilibrium.
d.
efficiency.
2. Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.
Each has in mind a maximum amount that he will bid. This maximum is called
a.
a resistance price.
b.
willingness to pay.
c.
consumer surplus.
d.
producer surplus.
3. Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction. Each has in mind a
maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called
a.
deadweight loss.
b.
willingness to pay.
c.
consumer surplus.
d.
producer surplus.
4. Willingness to pay
a.
measures the value that a buyer places on a good.
b.
is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept.
c.
is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept.
d.
is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
5. A consumer's willingness to pay directly measures
a.
the extent to which advertising and other external forces have influenced the consumer’s preferences.
b.
the cost of a good to the buyer.
c.
how much a buyer values a good.
d.
consumer surplus.
6. When a buyer’s willingness to pay for a good is equal to the price of the good, the
a.
buyer’s consumer surplus for that good is maximized.
b.
buyer will buy as much of the good as the buyer’s budget allows.
c.
price of the good exceeds the value that the buyer places on the good.
d.
buyer is indifferent between buying the good and not buying it.
7. In which of the following circumstances would a buyer be indifferent about buying a good?
a.
The amount of consumer surplus the buyer would experience as a result of buying the good is zero.
b.
The price of the good is equal to the buyer’s willingness to pay for the good.
c.
The price of the good is equal to the value the buyer places on the good.
d.
All of the above are correct.
8. A demand curve reflects each of the following except the
a.
willingness to pay of all buyers in the market.
b.
value each buyer in the market places on the good.
c.
highest price buyers are willing to pay for each quantity.
d.
ability of buyers to obtain the quantity they desire.
9. Consumer surplus
a.
is closely related to the supply curve for a product.
b.
is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward-
sloping line.
c.
is measured using the demand curve for a product.
d.
does not reflect economic well-being in most markets.
10. Consumer surplus is
a.
the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
b.
the amount a buyer is willing to pay for a good minus the cost of producing the good.
c.
the amount by which the quantity supplied of a good exceeds the quantity demanded of the good.
d.
a buyer's willingness to pay for a good plus the price of the good.
11. Consumer surplus
a.
is the amount a buyer pays for a good minus the amount the buyer is willing to pay for it.
b.
is represented on a supply-demand graph by the area below the price and above the demand curve.
c.
measures the benefit sellers receive from participating in a market.
d.
measures the benefit buyers receive from participating in a market.
12. Consumer surplus
a.
is the amount of a good that a consumer can buy at a price below equilibrium price.
b.
is the amount a consumer is willing to pay minus the amount the consumer actually pays.
c.
is the number of consumers who are excluded from a market because of scarcity.
d.
measures how much a seller values a good.
13. Consumer surplus is the
a.
amount of a good consumers get without paying anything.
b.
amount a consumer pays minus the amount the consumer is willing to pay.
c.
amount a consumer is willing to pay minus the amount the consumer actually pays.
d.
value of a good to a consumer.
14. Consumer surplus is equal to the
a.
Value to buyers - Amount paid by buyers.
b.
Amount paid by buyers - Costs of sellers.
c.
Value to buyers - Costs of sellers.
d.
Value to buyers - Willingness to pay of buyers.
15. On a graph, the area below a demand curve and above the price measures
a.
producer surplus.
b.
consumer surplus.
c.
deadweight loss.
d.
willingness to pay.
16. On a graph, consumer surplus is represented by the area
a.
between the demand and supply curves.
b.
below the demand curve and above price.
c.
below the price and above the supply curve.
d.
below the demand curve and to the right of equilibrium price.
17. Consumer surplus in a market can be represented by the
a.
area below the demand curve and above the price.
b.
distance from the demand curve to the horizontal axis.
c.
distance from the demand curve to the vertical axis.
d.
area below the demand curve and above the horizontal axis.
18. Consumer surplus is
a.
a concept that helps us make normative statements about the desirability of market outcomes.
b.
represented on a graph by the area below the demand curve and above the price.
c.
a good measure of economic welfare if buyers' preferences are the primary concern.
d.
All of the above are correct.
19. In a market, the marginal buyer is the buyer
a.
whose willingness to pay is higher than that of all other buyers and potential buyers.
b.
whose willingness to pay is lower than that of all other buyers and potential buyers.
c.
who is willing to buy exactly one unit of the good.
d.
who would be the first to leave the market if the price were any higher.
Table 7-1
Buyer
Willingness To Pay
Calvin
$150.00
Sam
$135.00
Andrew
$120.00
Lori
$100.00
20. Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product?
a.
Calvin
b.
Calvin and Sam
c.
Calvin, Sam, and Andrew
d.
Calvin, Sam, Andrew, and Lori
21. Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?
a.
Calvin
b.
Calvin and Sam
c.
Calvin, Sam, and Andrew
d.
Calvin, Sam, Andrew, and Lori
22. Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product?
a.
Calvin
b.
Calvin and Sam
c.
Calvin, Sam, and Andrew
d.
Calvin, Sam, Andrew, and Lori
23. Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is
a.
$28.
b.
$41.
c.
$43.
d.
$405.
24. Refer to Table 7-1. If price of the product is $135, then the total consumer surplus is
a.
$-50.
b.
$-35.
c.
$15.
d.
$150.
25. Refer to Table 7-1. If the market price is $105,
a.
Calvin’s consumer surplus is $45 and total consumer surplus is $85.
b.
Sam’s consumer surplus is $30 and total consumer surplus is $90.
c.
Andrew’s consumer surplus is $15 and total consumer surplus is $67.50.
d.
Lori’s consumer surplus is -$2 and total consumer surplus is $100.
CUSTOM ID:
025.07.1 - MC - MANK08
Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
Buyer
Willingness To Pay
David
$8.50
Laura
$7.00
Megan
$5.50
Mallory
$4.00
Audrey
$3.50
26. Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good?
a.
all five individuals
b.
Megan, Mallory and Audrey
c.
David, Laura and Megan
d.
David and Laura
27. Refer to Table 7-2. Which of the following is not true?
a.
At a price of $9.00, no buyer is willing to purchase Vanilla Coke.
b.
At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not buying one.
c.
At a price of $4.00, total consumer surplus in the market will be $9.00.
d.
All of the above are correct.
28. Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be
a.
$3.00.
b.
$4.50.
c.
$15.50.
d.
$21.00.
29. Refer to Table 7-2. If the market price is $3.80,
a.
David’s consumer surplus is $4.70 and total consumer surplus for the five individuals is $9.50.
b.
Megan’s consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80.
c.
David, Laura, and Megan will be the only buyers of Vanilla Coke.
d.
the demand curve for Vanilla Coke, taking the five individuals into account, is horizontal.
Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
Buyer
Willingness to Pay
Carlos
$15
Quilana
$25
Wilbur
$35
Ming-la
$45
30. Refer to Table 7-3. If the market price for the good is $20, who will purchase the good?
a.
Ming-la only
b.
Carlos and Quilana only
c.
Quilana and Wilbur only
d.
Quilana, Wilbur, and Ming-la only
31. Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to
purchase it, then the good will sell for
a.
$15 or slightly less.
b.
$25 or slightly more.
c.
$35 or slightly more.
d.
$45 or slightly less.
32. Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right to
purchase it, then the consumer surplus will be
a.
$0 or slightly more.
b.
$10 or slightly less.
c.
$30 or slightly more.
d.
$45 or slightly less.
33. Refer to Table 7-3. If the price is $20, then consumer surplus in the market is
a.
$20, and Wilbur and Ming-la purchase the good.
b.
$45, and Carlos and Quilana purchase the good.
c.
$45, and Quilana, Wilbur, and Ming-la purchase the good.
d.
$55, and Carlos, Wilbur, and Ming-la purchase the good.
34. Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from
$20 to $22?
a.
Quilana
b.
Wilbur
c.
Ming-la
d.
All three buyers experience the same loss of consumer surplus.
Table 7-4
The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal’s
baseball game at Wrigley Field.
Buyer
Willingness to Pay
Jennifer
$10
Bryce
$15
Dan
$20
David
$25
Ken
$50
Lisa
$60
35. Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, what will be the selling price?
a.
slightly more than $20.
b.
slightly more than $25.
c.
slightly more than $50.
d.
slightly more than $60.
36. Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, who will buy the ticket?
a.
Dan
b.
David
c.
Ken
d.
Lisa
37. Refer to Table 7-4. If tickets sell for $40 each, then what is the total consumer surplus in the market?
a.
$90.
b.
$30.
c.
$70.
d.
$110.
38. Refer to Table 7-4. If tickets sell for $25 each, then what is the total consumer surplus in the market?
a.
$25
b.
$35
c.
$60
d.
$110
39. Refer to Table 7-4. If you have two (essentially) identical tickets that you sell to the group in an auction, what will be
the selling price for each ticket?
a.
$21
b.
$26
c.
$51
d.
$61
Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the
day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per
day.
First Orange
Second Orange
Third Orange
Allison
$2.00
$1.50
$0.75
Bob
$1.50
$1.00
$0.60
Charisse
$0.75
$0.25
$0
40. Refer to Table 7-5. If the market price of an orange is $0.90, then the market quantity of oranges demanded per day is
a.
5.
b.
2.
c.
3.
d.
4.
41. Refer to Table 7-5. If the market price of an orange is $0.70, then the market quantity of oranges demanded per day is
a.
5.
b.
6.
c.
4.
d.
7.
42. Refer to Table 7-5. The market quantity of oranges demanded per day is exactly 7 if the price of an orange, P,
satisfies
a.
$0.60 < P < $0.75.
b.
$0.60 < P < $2.00.
c.
$0.25 < P < $0.75.
d.
$0.25 < P < $0.60.
43. Refer to Table 7-5. If the market price of an orange is $0.65, then consumer surplus amounts to
a.
$3.90.
b.
$6.75.
c.
$3.60.
d.
$7.50.
44. Refer to Table 7-5. If the market price of an orange is $0.40, then
a.
6 oranges are demanded per day, and consumer surplus amounts to $4.95.
b.
6 oranges are demanded per day, and consumer surplus amounts to $5.10.
c.
7 oranges are demanded per day, and consumer surplus amounts to $5.30.
d.
7 oranges are demanded per day, and consumer surplus amounts to $5.15.
45. Refer to Table 7-5. If the market price of an orange increases from $0.80 to $1.05, then consumer surplus
a.
increases by $0.75.
b.
decreases by $0.95.
c.
decreases by $0.75.
d.
decreases by $1.00.
46. Refer to Table 7-5. If the market price of an orange increases from $0.70 to $1.40, then consumer surplus
a.
increases by $2.60.
b.
decreases by $0.70.
c.
decreases by $2.50.
d.
decreases by $2.60.
47. Refer to Table 7-5. Who experiences the largest loss of consumer surplus when the price of an orange increases from
$0.70 to $1.40?
a.
Allison
b.
Bob
c.
Charisse
d.
All three individuals experience the same loss of consumer surplus.
48. Refer to Table 7-5. Who experiences the largest gain in consumer surplus when the price of an orange decreases from
$1.05 to $0.75?
a.
Allison
b.
Bob
c.
Charisse
d.
Allison and Bob experience the same gain in consumer surplus, and Charisse’s gain is zero.
49. Refer to Table 7-5. Which of the following statements is correct?
a.
Neither Bob’s consumer surplus nor Charisse’s consumer surplus can exceed Allison’s consumer surplus, for
any price of an orange.
b.
All three individuals will buy at least one orange only if the price of an orange is less than $0.25.
c.
If the price of an orange is $0.60, then consumer surplus is $4.90.
d.
All of the above are correct.
Table 7-6
For each of three potential buyers of apples, the table displays the willingness to pay for the first three apples of the day.
Assume Xavier, Yadier, and Zavi are the only three buyers of apples, and only three apples can be supplied per day.
First Apple
Second Apple
Third Apple
Xavier
$1.75
$1.55
$1.15
Yadier
$1.50
$1.25
$0.75
Zavi
$1.30
$1.10
$0.70
50. Refer to Table 7-6. If the market price of an apple is $1.40, then the market quantity of apples demanded per day is
a.
1.
b.
2.
c.
3.
d.
4.
51. Refer to Table 7-6. If the market price of an apple is $1.40, then consumer surplus amounts to
a.
$0.60.
b.
$1.20.
c.
$1.40.
d.
$3.40
52. Refer to Table 7-6. If the market price of an apple increases from $1.40 to $1.60, then consumer surplus
a.
decreases by $0.15.
b.
decreases by $0.30.
c.
decreases by $0.45.
d.
increases by $0.15.
Table 7-7
Buyer
Willingness to Pay
Michael
$500
Earvin
$400
Larry
$350
Charles
$300
53. Refer to Table 7-7. You have an extra ticket to the Midwest Regional Sweet 16 game in the men’s NCAA basketball
tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You
hold an auction to sell the ticket. Who makes the winning bid, and what does he offer to pay for the ticket?
a.
Michael; $501
b.
Michael; more than $400 but less than or equal to $500
c.
Earvin; $400
d.
Earvin; more than $350 but less than or equal to $400
54. Refer to Table 7-7. You have an extra ticket to the Midwest Regional Sweet 16 game in the men’s NCAA basketball
tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You
hold an auction to sell the ticket. Michael bids $410 for the ticket, and you sell him the ticket. What is his consumer
surplus?
a.
$410
b.
$90
c.
$10
d.
$0
55. Refer to Table 7-7. You have two essentially identical extra tickets to the Midwest Regional Sweet 16 game in the
men’s NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for
a ticket to the game. You hold an auction to sell the two tickets. Who makes the winning bids, and what do they offer to
pay for the tickets?
a.
Michael and Earvin; more than $350 but less than or equal to $400
b.
Michael and Earvin; more than $400 but less than or equal to $500
c.
Earvin and Larry; more than $300 but less than or equal to $350
d.
Larry and Charles; less than $300
56. Refer to Table 7-7. You have two essentially identical extra tickets to the Midwest Regional Sweet 16 game in the
men’s NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for
a ticket to the game. You hold an auction to sell the two tickets. Michael and Earvin each offer to pay $360 for a ticket,
and you sell them the two tickets. What is the total consumer surplus in the market?
a.
$720
b.
$180
c.
$140
d.
$40
57. Refer to Table 7-7. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the
men’s NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for
a ticket to the game. You offer to sell the tickets for $400. How many tickets do you sell, and what is the total consumer
surplus in the market?
a.
one ticket; $100
b.
two tickets; $100
c.
two tickets; $0
d.
three tickets; $0
58. Refer to Table 7-7. You have four essentially identical extra tickets to the Midwest Regional Sweet 16 game in the
men’s NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for
a ticket to the game. You offer to sell the tickets for $325. How many tickets do you sell, and what is the total consumer
surplus in the market?
a.
one ticket; $175
b.
two tickets; $225
c.
three tickets; $225
d.
three tickets; $275
59. Refer to Table 7-7. You are selling extra tickets to the Midwest Regional Sweet 16 game in the men’s NCAA
basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the
game. Which of the following graphs represents the market demand curve?
a.
b.
c.
d.
Table 7-8
During the last two days, Chad purchased a latte from two different stores. The table below shows Chad’s willingness to
pay on each day and his consumer surplus from each purchase.
Chad’s Willingness to Pay
Chad’s Consumer Surplus
First Day
$5.00
$1.25
Second Day
$4.00
$0.75
60. Refer to Table 7-8. The price that Chad paid for a latte on the first day is
a.
$3.75.
b.
$6.25.
c.
$5.00.
d.
$5.50.
61. Refer to Table 7-8. The price that Chad paid for a latte on the second day is
a.
$0.25 less than the amount he paid on the first day.
b.
$1.00 less than the amount he paid on the first day.
c.
$1.50 less than the amount he paid on the first day.
d.
$0.50 less than the amount he paid on the first day.
