Consumers, Producers, and the Efficiency of Markets 1753
65.
You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley
Field. Assume the
ticket has no resale value. Willie Nelson is performing on the same night, and
his concert is your next-best
alternative activity. Tickets to see Willie Nelson cost $40. On any
given day, you would be willing to pay up to $50
to see and hear Willie Nelson perform. Assume
there are no other costs of seeing either event. Based on this
information, at a minimum, how
much would you have to value seeing the Cubs play the White Sox to accept the
ticket and go to
the game?
a.
$0
b.
$10
c.
$40
d.
$50
66.
A drought in California destroys many red grapes. As a result of the drought, the consumer
surplus in the market
for red grapes
a.
increases, and the consumer surplus in the market for red wine increases.
b.
increases, and the consumer surplus in the market for red wine decreases.
c.
decreases, and the consumer surplus in the market for red wine increases.
d.
decreases, and the consumer surplus in the market for red wine decreases.
67.
Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for
the book?
a. $6.
b.
$2.
c.
$8.
d.
$4.
68.
Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book,
then the price of the
book must be
a.
$3.
b.
$8.
c.
$5.
d.
$11.
69.
Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15. Chuck
values the dog show
at
a.
$5.
b.
$15.
c.
$20.
d.
$35.
70.
If a consumer places a value of $15 on a particular good and if the price of the good is $17, then
the
a.
consumer has consumer surplus of $2 if he or she buys the good.
b.
consumer does not purchase the good.
c.
market is not a competitive market.
d.
price of the good will fall due to market forces.
71.
If a consumer places a value of $20 on a particular good and if the price of the good is $25, then
the
a.
consumer has consumer surplus of $5 if he buys the good.
b.
consumer does not purchase the good.
c.
price of the good will rise due to market forces.
d.
market is out of equilibrium.
72.
If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good,
then for that
consumer, consumer surplus amounts to
a.
$4.
b.
$16.
c.
$20.
d.
$36.
73.
Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station
is $3.80. If she
purchases ten gallons of gasoline, then Kelly’s consumer surplus is
a. $1.40.
b. $14.
c. $3.80.
d. $52.
74.
Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer
surplus is
a. $650.
b. $150.
c. $250.
d. $400.
75.
Josh is willing to pay $500 for a set of tire, but he is able to pay $300 at the local tire store. His
consumer surplus is
a. $800.
b. $300.
c. $200.
d. $500.
76.
Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.
Lauren’s willingness to
pay was $35, Leslie’s willingness to pay was $25, and Lydia’s willingness
to pay was $30. Total consumer surplus
for these three would be
a.
$15.
b.
$30.
c.
$45.
d.
$90.
77.
Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at
a price of $20.
Brent’s willingness to pay was $22, Callie’s willingness to pay was $25, and Danielle‘s willingness
to pay was $30.
Which of the following statements is correct?
a.
Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been
a buyer.
b.
Brent’s consumer surplus is the smallest of the three individual consumer surpluses.
c.
For the three individuals together, consumer surplus amounts to $60.
d.
The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that
each one
placed the same value on that pencil sharpener.
78.
Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of
$80. Katie’s
willingness to pay was $100, Kendra’s willingness to pay was $95, and Kristen‘s
willingness to pay was $80. Which
of the following statements is correct?
a.
For the three individuals together, consumer surplus amounts to $35.
b.
Having bought the cell phone, Kristen is better off than she would have been had she not
bought it.
c.
Had the price of the cell phone been $95 rather than $80, Katie and Kendra definitely would
have been
buyers and Kristen definitely would not have been a buyer.
d.
The fact that all three individuals paid $80 for the same type of cell phone indicates that each
one placed the
same value on that cell phone.
79.
Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if
her willingness to
pay is
a.
$15.
b.
$90
c.
$105.
d. $75.
80.
Abraham drinks Mountain Dew. He can buy as many cans of Mountain Dew as he wishes at a
price of $0.55 per
can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for
the second can, $0.60 for the third
can, and $0.40 for the fourth can. Assume Abraham is rational
in deciding how many cans to buy. His consumer
surplus is
a. $0.50.
b. $0.60.
c. $0.70.
d. $1.00.
81.
Janine would be willing to pay $50 to see Les Misérables, but she buys a ticket for only $30.
Janine values the performance at
a. $20.
b.
$30.
c.
$50.
d.
$80.
82.
Chad is willing to pay $5.00 to get his first cup of morning latté. He buys a cup from a vendor
selling latté for $3.75 per cup. Chad’s consumer surplus is
a. $8.75.
b. $5.00.
c. $3.75.
d. $1.25.
83.
Chad is willing to pay $5.00 to get his first cup of morning latté; he is willing to pay $4.50 for a
second cup. He buys
his first cup from a vendor selling latté for $3.75 per cup. He returns to that
vendor later in the morning to find that
the vendor has increased her price to $3.90 per cup. Chad
buys a second cup. Which of the following statements is
correct?
a.
Chad’s willingness to pay for his second cup of latté was smaller than his willingness to pay for
his first cup
of latté.
b.
Chad’s consumer surplus on his second cup of latté was larger than his consumer surplus on his
first cup of
latté.
c.
Chad is irrational in that he is willing to pay a different price for his second cup of latté than
what he is
willing to pay for his first cup of latté.
d.
Chad places a higher value on his second cup of latté than on his first cup of latté.
84.
Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas.
When the price of
bananas falls from 50 cents a pound to 40 cents a pound,
a.
Henry experiences an increase in consumer surplus, but Janine does not.
b.
Janine experiences an increase in consumer surplus, but Henry does not.
c.
both Janine and Henry experience an increase in consumer surplus.
d.
neither Janine nor Henry experiences an increase in consumer surplus.
85.
Alex is willing to pay $10, and Bella is willing to pay $8, for 1 pound of ribeye steak. When the
price of ribeye steak
increases from $9 to $11,
a.
Alex experiences a decrease in consumer surplus, but Bella does not.
b.
Bella experiences a decrease in consumer surplus, but Alex does not.
c.
both Bella and Alex experience a decrease in consumer surplus.
d.
neither Bella nor Alex experiences a decrease in consumer surplus.
86.
Pat bought a new car for $15,500 but was willing to pay $24,000. The consumer surplus is
a. $8,500.
b. $15,500.
c. $24,000.
d. $39,500.
87.
Dawn’s bridal boutique is having a sale on evening dresses. The increase in consumer surplus
comes from the
benefit of the lower prices to
a.
only existing customers who now get lower prices on the gowns they were already planning to
purchase.
b.
only new customers who enter the market because of the lower prices.
c.
both existing customers who now get lower prices on the gowns they were already planning to
purchase and
new customers who enter the market because of the lower prices.
d.
Consumer surplus does not increase; it decreases.
88.
Jeff decides that he would pay as much as $2,000 for a new laptop computer. He buys the
computer and realizes a
consumer surplus of $300. How much did Jeff pay for his computer?
a. $300.
b. $1,700.
c. $2,000.
d. $2,300.
89.
Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying
one for $425. Billie Jo’s willingness to pay for the dishwasher is
a. $150.
b. $425.
c. $500.
d. $850.
90.
Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying
one for $350. Denise’s consumer surplus is
a. $150.
b.$350.
c. $500.
d. $850.
91.
Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in
buying one for $3,000. Michael‘s willingness to pay is
a. $500.
b. $3,000.
c. $3,500.
d. $6,500.
92.
Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in
buying one for $3,000. Michael‘s consumer surplus is
a. $500.
b. $3,000.
c. $3,500.
d. $6,500.
93.
Denise values a stainless steel dishwasher for her new house at $500. The actual price of the
dishwasher is $650. Denise
a.
buys the dishwasher, and on her purchase she experiences a consumer surplus of $150.
b.
buys the dishwasher, and on her purchase she experiences a consumer surplus of $-150.
c.
does not buy the dishwasher, and on her purchase she experiences a consumer surplus of
$150.
d.
does not buy the dishwasher, and on her purchase she experiences a consumer surplus of $0.
94.
Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase.
Ray’s willingness
to pay is
a. $13,000.
b. $105,000.
c. $118,000.
d. $131,000.
95.
Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the
computer and realizes
consumer surplus of $700. How much did Jeff pay for his computer?
a.
$700
b.
$2,300
c.
$3,000
d.
$3,700
96.
Cameron visits a sporting goods store to buy a new set of golf clubs. He is willing to pay $750 for
the clubs but
buys them on sale for $575. Cameron’s consumer surplus from the purchase is
a. $175.
b. $575.
c. $750.
d.$1,325.
97.
If the price a consumer pays for a product is equal to a consumer‘s willingness to pay, then the
consumer surplus
relevant to that purchase is
a.
zero.
b.
negative, and the consumer would not purchase the product.
c.
positive, and the consumer would purchase the product.
d.
There is not enough information given to answer this question.
98.
Suppose there is an early freeze in California that reduces the size of the lemon crop. What
happens to consumer
surplus in the market for lemons?
a.
Consumer surplus increases.
b.
Consumer surplus decreases.
c.
Consumer surplus is not affected by this change in market forces.
d.
We would have to know whether the demand for lemons is elastic or inelastic to make this
determination.
99.
Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last
tomato you bought
this week, you paid a price exactly equal to your willingness to pay. Then
a.
you should buy more tomatoes before the end of the week.
b.
you already have bought too many tomatoes this week.
c.
your consumer surplus on the last tomato you bought is zero.
d.
your consumer surplus on all of the tomatoes you have bought this week is zero.
100.
Suppose the market demand curve for a good passes through the point (quantity demanded =
100, price = $25). If
there are five buyers in the market, then
a.
the marginal buyer‘s willingness to pay for the 100th unit of the good is $25.
b.
the sum of the five buyers‘ willingness to pay for the 100th unit of the good is $25.
c.
the average of the five buyers‘ willingness to pay for the 100th unit of the good is $25.
d.
all of the five buyers are willing to pay at least $25 for the 100th unit of the good.
101.
If the cost of producing sofas decreases, then consumer surplus in the sofa market will
a.
increase.
b.
decrease.
c.
remain constant.
d.
increase for some buyers and decrease for other buyers.
102.
All else equal, what happens to consumer surplus if the price of a good increases?
a.
Consumer surplus increases.
b.
Consumer surplus decreases.
c.
Consumer surplus is unchanged.
d.
Consumer surplus may increase, decrease, or remain unchanged.
103.
All else equal, what happens to consumer surplus if the price of a good decreases?
a.
Consumer surplus increases.
b.
Consumer surplus decreases.
c.
Consumer surplus is unchanged.
d.
Consumer surplus may increase, decrease, or remain unchanged.
104.
Which of the following will cause an increase in consumer surplus?
a.
an increase in the production cost of the good
b.
a technological improvement in the production of the good
c.
a decrease in the number of sellers of the good
d.
the imposition of a binding price floor in the market