40) The figure above shows Lauren’s demand curve for Barbie dolls and the market price for
Barbie dolls. In order for Lauren to avoid paying more for dolls than they are worth to her, she
must not purchase any more than
A) 0 dolls.
B) 1 doll.
C) 3 dolls.
D) 5 dolls.
E) 4 dolls.
41) In the figure above, suppose that $20 is the market equilibrium price. Which area is the
consumer surplus?
A) A
B) B
C) A + B
D) B – A
E) B ÷ A
42) In the figure above, suppose that $20 is the market equilibrium price. What is the amount of
the consumer surplus?
A) $3,375
B) $3,000
C) $375
D) 150 units
E) $1,500
43) the figure above shows Diane’s demand curve for soda. The price of a soda is $1.00. Diane’s
consumer surplus from her 10th soda is
A) $0.00.
B) $0.50.
C) $1.00.
D) $1.50.
E) $2.50
44) The figure above shows Diane’s demand curve for soda. The price of a soda is $1.00. Diane’s
consumer surplus from her 15th soda is
A) $0.00.
B) $0.50.
C) $1.00.
D) $1.50.
E) $2.50.
45) The figure above shows Diane’s demand curve for soda. The price of a soda is $1.00. Diane’s
consumer surplus from all 15 sodas is
A) $15.00.
B) $22.50.
C) $11.25.
D) $8.00.
E) $1.50.
46) The figure above shows Diane’s demand curve for soda. The price of a soda is $1.00. Diane’s
total benefit from consuming 15 sodas is
A) $15.00.
B) $26.25.
C) $11.25.
D) $0.
E) None of the above answers is correct.
47) Value is
A) the price we pay for a good.
B) the cost of resources used to produce a good.
C) objective so that it is determined by market forces, not preferences.
D) the marginal benefit we get from consuming another unit of a good or service.
E) the difference between the price paid for a good and the marginal cost of producing that unit
of the good.
48) A marginal benefit curve
A) is the same as a demand curve.
B) is the same as a supply curve.
C) slopes upwards.
D) is a vertical line at the efficient quantity.
E) is U-shaped.
49) In general, as the consumption of a good or service increases, the marginal benefit from
consuming that good or service
A) increases.
B) decreases.
C) stays the same.
D) at first increases and then decreases.
E) at first decreases and then increases.
50) The difference between the marginal benefit from a new pair of shoes and the price of the
new pair of shoes is
A) the consumer surplus from that pair of shoes.
B) what we get.
C) what we have to pay.
D) the price when the marginal benefit is maximized.
E) the consumer’s expenditure on the shoes.
51) Suppose the price of a scooter is $200 and Cora Lee is willing to pay $250. Cora Lee’s
A) consumer surplus from that scooter is $200.
B) consumer surplus from that scooter is $50.
C) marginal benefit from that scooter is $100.
D) consumer surplus from that scooter is $150.
E) consumer surplus from that scooter is $250.
52) If the price of a pizza is $10 per pizza, the consumer surplus from the first pizza consumed
________ the consumer surplus from the second pizza consumed.
A) is greater than
B) equals
C) is less than
D) cannot be compared to
E) None of the above answers is correct because more information is needed about the marginal
cost of producing the pizzas to answer the question.
6.3 Cost, Price, and Producer Surplus
1) To a seller, the cost of a good or service is ________ and the price is ________.
A) what must be given up to produce the good or service; what is received for the good or
service
B) what is received for the good or service; what must be given up to produce the good or
service
C) the producer surplus the seller receives; the consumer surplus the buyer receives
D) the producer surplus the buyer receives; the consumer surplus the seller receives
E) None of the above answers is correct.
2) Which of the following describes the economic meanings of cost and price?
A) Cost is exchange worth, and price is dollar worth.
B) Cost is what must be given up to produce a good, and price is what a seller receives when the
good is sold.
C) They are the same, and both mean what is received when a good is sold.
D) Cost refers to what the buyers pay for the good, and price refers to what sellers receive when
the good is sold.
E) Cost refers to the price that buyers must pay to buy the good.
3) The additional cost a producer incurs from producing one more unit of a product is referred to
as the
A) marginal benefit.
B) consumer surplus.
C) marginal utility.
D) marginal cost.
E) marginal profit.
4) The opportunity cost of producing one more unit of a good or service is the
A) marginal cost.
B) marginal benefit.
C) efficient level of production.
D) market outcome.
E) price of the good or service.
5) The cost of producing one more unit of a good or service is equal to its
A) marginal benefit.
B) producer surplus.
C) expenditures .
D) consumer surplus.
E) marginal cost.
6) Ben’s cost of making an additional rocking chair is $75.
A) If he sells it for a $100, his producer surplus is $25.
B) His marginal cost is equal to $75.
C) The marginal benefit to the consumer from the chair will be $75.
D) Both answers A and B are correct.
E) Both answers B and C are correct.
7) A supply curve is the same as a
A) total cost curve.
B) marginal cost curve.
C) total benefit curve.
D) marginal benefit curve.
E) deadweight loss curve.
8) The supply curve of a good or service is the same as
A) the demand curve.
B) the marginal benefit curve.
C) the marginal cost curve.
D) the total surplus curve.
E) None of the above answers is correct.
9) A point on the supply curve can illustrate the
A) price and the corresponding quantity supplied.
B) marginal cost of that unit of the good.
C) price the consumer is willing to pay.
D) Both answers A and B are correct.
E) Both answers A and C are correct.
10) The supply curve shows the
A) marginal benefit of a firm producing another unit of a good.
B) dollars’ worth of other goods and services we are willing to give up to get another unit of the
good.
C) minimum price that firms must receive to supply a certain quantity of a good.
D) the producer surplus of producing the good.
E) maximum price that firms will accept in order to supply a certain quantity of a good.
11) A supply curve shows quantities supplied at various prices. It also shows the
A) total profit the firm earns at a given level of output.
B) marginal benefit of the good.
C) total cost of production.
D) marginal cost of production.
E) producer surplus, which is equal to the slope of the supply curve.
12) A supply curve shows the marginal
A) benefit consumers receive from consuming a good.
B) profit businesses earn from selling a good.
C) cost of producing the good.
D) price paid for a good.
E) benefit sellers receive from selling a good.
13) The supply curve is upward sloping because of
A) increasing marginal cost.
B) decreasing marginal benefit.
C) decreasing marginal cost.
D) increasing marginal benefit.
E) increasing total cost.
14) Which of the following is a correct description of the supply curve?
i. The supply curve is also the marginal cost curve.
ii. The supply curve shows the dollars’ worth of other goods that we must sacrifice to produce
another unit of a good.
iii. The supply curve shows the additional cost of producing another unit of a good.
A) i only
B) i and ii
C) ii and iii
D) i, ii, and iii
E) ii only
15) In the above figure, what is the marginal cost of the 4th pizza?
A) $0
B) $4
C) $9
D) $36
E) 4 pizzas
16) In the above figure, what is the marginal cost of the 8th pizza?
A) $1.50
B) $12
C) $6
D) $96
E) 8 pizzas
17) Producer surplus is the ________ summed over the quantity produced.
A) price of the good minus the marginal cost of producing it
B) marginal benefit of the good minus its marginal cost
C) marginal benefit of the good minus its price
D) marginal cost of the good minus the opportunity cost of producing it
E) None of the above answers is correct.
18) Producer surplus definitely exists when the
A) price exceeds marginal benefit.
B) price exceeds marginal cost.
C) marginal cost exceeds the price.
D) marginal benefit exceeds the price.
E) marginal benefit exceeds the marginal cost.
19) When the price of a product exceeds the marginal cost of producing it, producers have a
A) consumer surplus.
B) producer surplus.
C) consumer shortage.
D) producer shortage.
E) deadweight surplus.
20) If the price is greater than the marginal cost of producing a good, the seller has
A) no benefit from the sale.
B) a loss.
C) some producer surplus from the sale.
D) some negative consumer surplus from the sale.
E) None of the above answers is correct.
21) The producer surplus is found by subtracting the ________ and then adding the difference
for all units sold.
A) marginal cost from price
B) price from marginal cost
C) marginal benefit from total benefit
D) marginal cost from marginal benefit
E) deadweight loss from the price
22) When the price rises, the firms’ producer surplus ________. When the price falls, the firms’
producer surplus ________.
A) increases; decreases
B) decreases; increases
C) decreases; decreases
D) increases; increases
E) does not change; does not change
23) The producer surplus of making and selling 10 chairs is found by
A) multiplying the selling price by 10.
B) subtracting the marginal cost from the selling price for each chair and summing the
differences for all 10 chairs.
C) subtracting from the total revenue the cost of producing one chair multiplied by 10.
D) adding the marginal cost and the price of all 10 chairs.
E) None of the above answers is correct.
24) Producer surplus
A) increases if market price rises and the supply curve does not shift.
B) decreases if market price rises and the supply curve does not shift.
C) is equal to the maximum price consumers are willing to pay.
D) is the same as the marginal cost.
E) always must equal consumer surplus.
25) Hester owns an ice cream shop. It costs her $2 per cone to make 10 ice cream cones. If she
sells 10 cones for $4 each, her producer surplus on the 10 cones is equal to
A) $2.
B) $20.
C) $10.
D) $40.
E) $4.
26) If a firm produces five chairs with marginal costs of $25, $30, $40, $55, and $75,
respectively, and sells them for $80 each, what is the firm’s total producer surplus?
A) $400
B) $225
C) $175
D) $150
E) $80
27) Graphically, producer surplus is the area under the
A) demand curve and above the supply curve, up to the relevant quantity.
B) price and above the demand curve, up to the relevant quantity.
C) price and above the supply curve, up to the relevant quantity.
D) price and above the quantity axis, up to the relevant quantity.
E) demand curve and above the price, up to the relevant quantity.
28) Bill and Krista sell potted plants from a roadside stand. The figure above shows Bill and
Krista’s marginal cost curve and the market price. If Bill and Krista sell 60 plants per week, their
producer surplus from the 60th plant will equal
A) $8.
B) $480.
C) $0.
D) $20.
E) More information is needed to answer the question.
29) Bill and Krista sell potted plants from a roadside stand. The figure above shows their supply
curve and the market price. If Bill and Krista want to avoid selling plants for which the marginal
cost exceeds the price, they should sell no more than how many plants per week?
A) 0
B) 60
C) 90
D) 150
E) More information is needed to answer the question.
30) The figure above shows the supply curve for soda. The market price is $1.00 per soda. The
marginal cost of the 10,000th soda is
A) $0.00.
B) $0.50.
C) $1.00.
D) more than $0.50 and less than $1.00.
E) None of the above answers is correct.
31) The figure above shows the supply curve for soda. The market price is $1.00 per soda. The
marginal cost of the 20,000th soda is
A) $0.00.
B) $0.50.
C) $1.00.
D) more than $1.00.
E) None of the above answers is correct.
32) The figure above shows the supply curve for soda. The market price is $1.00 per soda. The
________ price that must be offered so that the 10,000th soda is produced is ________.
A) minimum; $0.50
B) minimum; $1.00
C) maximum; $0.50
D) maximum; $1.00
E) minimum; more than $0.50 but less than $1.00
33) The figure above shows the supply curve for soda. The market price is $1.00 per soda. The
producer surplus from the 10,000th soda is
A) $0.00.
B) $0.50.
C) $1.00.
D) more than $1.00.
E) None of the above answers is correct.
34) The figure above shows the supply curve for soda. The market price is $1.00 per soda. The
producer surplus from the 20,000th soda is
A) $0.00.
B) $0.50.
C) $1.00.
D) more than $1.00.
E) None of the above answers is correct.
35) In the figure above, the equilibrium market price is $20. $20 is the
A) marginal cost of 150th unit.
B) willingness to pay for the 1st unit.
C) producer surplus.
D) consumer surplus.
E) deadweight loss.
36) In the figure above, the equilibrium market price is $20. Area A is the
A) marginal cost of 150th unit.
B) willingness to pay for the 150th unit.
C) producer surplus.
D) consumer surplus.
E) marginal benefit of 150th unit.
37) In the figure above, the equilibrium market price is $20. The producer surplus is shown by
the area
A) A.
B) B.
C) A + B.
D) A ÷ B.
E) A – B.
38) In the figure above, the equilibrium market price is $20. The producer surplus equals
A) $20.
B) $1,500.
C) $3,000.
D) 150.
E) $4,500.