Economics Chapter 8 Module 8 – Consumer And Producer Surplus Page 62 The Total Producer Surplus The

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subject Authors Paul Krugman, Robin Wells

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Page 1
1.
A consumer's willingness to pay reflects the:
A)
maximum price at which he or she would buy a given good or service.
B)
minimum price at which he or she would buy a given good or service.
C)
cost of producing a given good or service.
D)
equilibrium price of a given good or service.
2.
A consumer's willingness to pay depends on the:
A)
cost of producing a given good or service.
B)
expected additional benefit of consuming a given good or service.
C)
size of the shortage of a given good or service.
D)
size of the surplus of a given good or service.
Use the following to answer questions 3-8:
3.
(Ref 8-1 Table: Willingness to Pay for Basketball Sneakers) The table Willingness to
Pay for Basketball Sneakers shows each consumer's willingness to pay for basketball
sneakers. Assume that each consumer wants to buy at most, one pair of sneakers. If the
price of basketball sneakers is $145, which consumer will purchase sneakers?
A)
Jamichael
B)
Corey
C)
Rudy
D)
Ray
4.
(Ref 8-1 Table: Willingness to Pay for Basketball Sneakers) The table Willingness to
Pay for Basketball Sneakers shows each player's willingness to pay for basketball
sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the
price of basketball sneakers is $125, which players will purchase sneakers?
A)
Jamichael and Javon
B)
Jamichael and Corey
C)
Jamichael, Corey, and Rudy
D)
Jamichael, Corey, Rudy, and Ray
Page 2
5.
(Ref 8-1 Table: Willingness to Pay for Basketball Sneakers) The table Willingness to
Pay for Basketball Sneakers shows each player's willingness to pay for basketball
sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the
price of basketball sneakers is $180, how many pairs will be purchased?
A)
none
B)
one
C)
two
D)
three
6.
(Ref 8-1 Table: Willingness to Pay for Basketball Sneakers) The table Willingness to
Pay for Basketball Sneakers shows each player's willingness to pay for basketball
sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the
price of basketball sneakers is $130, how many pairs will be purchased?
A)
none
B)
one
C)
two
D)
three
7.
(Ref 8-1 Table: Willingness to Pay for Basketball Sneakers) The table Willingness to
Pay for Basketball Sneakers shows each player's willingness to pay for basketball
sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the
price of basketball sneakers is $99, how many pairs will be purchased?
A)
one
B)
two
C)
three
D)
four
8.
(Ref 8-1 Table: Willingness to Pay for Basketball Sneakers) The table Willingness to
Pay for Basketball Sneakers shows each player's willingness to pay for basketball
sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the
price of basketball sneakers is $60, how many pairs will be purchased?
A)
five
B)
four
C)
three
D)
two
9.
Consumers' willingness to pay for a good is used to derive the _____ for that good.
A)
producer surplus
B)
cost of production
C)
supply curve
D)
demand curve
Page 3
10.
The total consumer surplus for good X cannot be calculated as the:
A)
sum of the individual consumer surpluses for all buyers of X.
B)
area below the demand curve for X and above the price paid for X.
C)
area bounded by the demand curve for X and the two axes.
D)
sum, for all buyers of X, of the difference between what each buyer is willing to
pay for X and the amount actually paid.
Use the following to answer questions 11-13:
11.
(Ref 8-2 Table: Consumer Surplus and Phantom Tickets) The table Consumer Surplus
and Phantom Tickets shows each student's willingness to pay for a Phantom of the
Opera ticket. Assume that each student wants to buy one ticket. If the price of a ticket to
see Phantom of the Opera is $50, then Robert's consumer surplus is:
A)
$60.
B)
$50.
C)
$10.
D)
$240.
12.
(Ref 8-2 Table: Consumer Surplus and Phantom Tickets) The table Consumer Surplus
and Phantom Tickets shows each student's willingness to pay for a Phantom of the
Opera ticket. Assume that each student wants to buy one ticket. If the box office price of
a ticket to see Phantom of the Opera is $50 and there is no other market for tickets, the
total consumer surplus for the five students is:
A)
$100.
B)
$175.
C)
$230.
D)
$240.
Page 4
13.
(Ref 8-2 Table: Consumer Surplus and Phantom Tickets) The table Consumer Surplus
and Phantom Tickets shows each student's willingness to pay for a Phantom of the
Opera ticket. Assume that each student wants to buy one ticket. If the box office price of
a ticket to see Phantom of the Opera is $130 and there is no other market for tickets, the
total consumer surplus for the five students is:
A)
$150.
B)
$125.
C)
$20.
D)
$0.
Use the following to answer questions 14-20:
14.
(Ref 8-3 Table: Consumer Surplus) Use Table: Consumer Surplus. Assume that each
student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is
$50, Lois's consumer surplus is:
A)
$60.
B)
$50.
C)
$15.
D)
$240.
15.
(Ref 8-3 Table: Consumer Surplus) Use Table: Consumer Surplus. Assume that each
student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is
$50, Narum's consumer surplus is:
A)
$60.
B)
$50.
C)
$15.
D)
$240.
Page 5
16.
(Ref 8-3 Table: Consumer Surplus) Use Table: Consumer Surplus. Assume that each
student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is
$75, Lois's consumer surplus is:
A)
$25.
B)
$60.
C)
$75.
D)
$100.
17.
(Ref 8-3 Table: Consumer Surplus) Use Table: Consumer Surplus. Assume that each
student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is
$75, Miguel's consumer surplus is:
A)
$60.
B)
$50.
C)
$15.
D)
$240.
18.
(Ref 8-3 Table: Consumer Surplus) Use Table: Consumer Surplus. Assume that each
student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is
$50 and there is no other market for tickets, total consumer surplus for the five students
is:
A)
$105.
B)
$130.
C)
$270.
D)
$320.
19.
(Ref 8-3 Table: Consumer Surplus) Use Table: Consumer Surplus. Assume that each
student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is
$75 and there is no other market for tickets, the total consumer surplus for the five
students is:
A)
$190.
B)
$125.
C)
$40.
D)
$0.
20.
(Ref 8-3 Table: Consumer Surplus) Use Table: Consumer Surplus. Assume that each
student wants to buy one ticket. If the tickets to The Nutty Nutcracker are free and there
is no other market for tickets, the total consumer surplus for the five students is:
A)
$0.
B)
$100.
C)
$150.
D)
$320.
Page 6
21.
We can measure total consumer surplus for good X as the:
A)
sum of the individual consumer surpluses for all buyers of X.
B)
area above the demand curve for X and below the price paid for X.
C)
area bounded by the demand curve for X and the two axes.
D)
area above the supply curve for X.
22.
Consumer surplus for an individual buyer is equal to the:
A)
consumer's willingness to pay for the good minus the marginal cost of producing
the good.
B)
price of the good minus the marginal cost of producing the good.
C)
consumer's willingness to pay for the good minus the price paid for the good.
D)
marginal cost of the good minus the consumer's willingness to pay for the good.
23.
Consumer surplus for a given good can be found by computing the area _____ the
_____ curve and _____ the price paid for the good.
A)
$100
B)
$50
C)
$150
D)
$500
24.
Ashley bought a new pair of jeans. When she walked out of the store, she thought, “I got
such a great deal; I would have paid $40 more for these jeans!” This best represents the
concept of:
A)
consumer surplus.
B)
producer surplus.
C)
total surplus.
D)
equilibrium.
25.
Mark and Rasheed are at the bookstore buying new calculators for the semester. Mark is
willing to pay $75 and Rasheed is willing to pay $100 for a graphing calculator. The
price for a calculator at the bookstore is $65. How much is their total consumer surplus?
A)
$10
B)
$35
C)
$45
D)
$60
Page 7
26.
Mark and Rasheed are at the bookstore buying new calculators for the semester. Mark is
willing to pay $75 and Rasheed is willing to pay $100 for a graphing calculator. The
price for a calculator at the bookstore is $65. How much is Mark's individual consumer
surplus?
A)
$10
B)
$25
C)
$35
D)
$75
27.
Vonda and Aleiyah are shopping together at the mall for new jeans. Vonda is willing to
pay $90 and Aleiyah is willing to pay $50 for a pair of jeans. If the price of jeans is $59,
how much total consumer surplus is achieved in this market?
A)
$0
B)
$9
C)
$31
D)
$40
28.
Consumer surplus is represented by the area _____ the demand curve and _____ the
price that the consumer pays.
A)
above; below
B)
above; above
C)
below; above
D)
below; below
29.
Jeanette is willing to pay $100 for the first pair of shoes, $80 for the second pair, $50 for
the third, and $30 for the fourth. If shoes cost $50 and assuming that she buys shoes
when she's indifferent about buying a given pair, Jeanette will buy _____ pairs of shoes
and her total consumer surplus equals _____.
A)
four; $110
B)
three; $230
C)
three; $80
D)
four; $80
30.
Adie wants to take some online classes this semester. She is willing to pay $1,000 for
the first class, $800 for the second, $700 for the third, and $500 for the fourth. If online
classes cost $750, Adie will take _____ online classes, and her consumer surplus will
equal _____.
A)
producer surplus; BCD
B)
consumer surplus; 0CDE
C)
consumer surplus; BCD
D)
net benefit; 0BDE
Page 8
31.
Along a given downward-sloping demand curve, an increase in the price of a good will
_____ consumer surplus.
A)
increase
B)
decrease
C)
not change
D)
The answer cannot be determined without information about the supply curve.
32.
Which situation would most likely cause a decrease in consumer surplus in the toy
market?
A)
The cost of shipping increases because of higher oil prices.
B)
Consumer income increases.
C)
There is an unexpected baby boom.
D)
A new assembly line design increases worker productivity.
33.
Vonda and Aleiyah are shopping together at the mall for new jeans. Vonda is willing to
pay $90 and Aleiyah is willing to pay $50 for a pair of jeans. What is the gain in total
consumer surplus when the price decreases from $59 to $40?
A)
$10
B)
$29
C)
$31
D)
$60
34.
Some smaller retailers often go out of business when Walmart opens a new store. The
most likely reason for this development is that:
A)
Walmart practices unfair pricing methods that reduce consumer surplus over time.
B)
consumers in those areas receive no consumer surplus from Walmart.
C)
consumers in those areas receive a larger consumer surplus from shopping at
Walmart than from the smaller stores.
D)
smaller stores increase prices to compete.
35.
An increase in the consumer surplus in the market for milkshakes may result from a(n)
_____ in the _____ of milkshakes.
A)
increase; price
B)
increase; supply
C)
decrease; demand
D)
decrease; supply
Page 9
36.
Along a given downward-sloping demand curve, an increase in the price of a good will:
A)
increase consumer surplus.
B)
decrease consumer surplus.
C)
have no effect on consumer surplus.
D)
decrease producer surplus.
37.
Suppose the United States removes sugar quotas and the market price of sugar drops. If
the demand curve for candy bars is downward-sloping, in the candy bar market we
would expect the:
A)
consumer surplus to increase.
B)
consumer surplus to decrease.
C)
consumer surplus to be unchanged.
D)
deadweight loss to increase.
38.
If the demand curve for ice cream is downward-sloping and the supply of it decreases,
there is _____ in consumer surplus.
A)
an increase
B)
a decrease
C)
no change
D)
It's impossible to tell what will happen to consumer surplus.
39.
When there is a bountiful harvest of grapefruit, assuming that the demand curve for
grapefruit is downward-sloping, total consumer surplus in the grapefruit market:
A)
will increase.
B)
will decrease.
C)
will remain the same.
D)
may change, but we can't tell how.
40.
Along a given downward-sloping demand curve, a decrease in the price of a good will
_____ consumer surplus.
A)
increase
B)
decrease
C)
have no effect on
D)
It's impossible to tell what will happen to consumer surplus.
Page 10
41.
Which scenario is most likely to increase consumer surplus in the market for cotton
T-shirts?
A)
Weather provides for a bountiful cotton harvest.
B)
Consumer incomes fall and cotton T-shirts are normal goods.
C)
The price of polyester T-shirts falls.
D)
The price of industrial sewing machines used to produce garments increases.
42.
The number of seats in a football stadium is fixed at 70,000. The team raises the price of
a ticket from $30, at which 70,000 are sold, to $40, and it sells 60,000 tickets. The price
change caused a change in the consumer surplus of:
A)
-$10.
B)
-$650,000.
C)
-$100,000.
D)
-$10,000.
43.
Figure: The Market for Hamburgers.
Use Figure: The Market for Hamburgers. The figure The Market for Hamburgers shows
the weekly market for hamburgers in Irvine, Kentucky. If the price of a hamburger is $1
and 200 hamburgers are supplied, producer surplus will equal:
A)
$60.
B)
$65.
C)
$50.
D)
$360.
Page 11
44.
Figure: The Market for Hamburgers.
Use Figure: The Market for Hamburgers. The figure The Market for Hamburgers shows
the weekly market for hamburgers in Irvine, Kentucky. If 400 hamburgers are sold,
producer surplus will equal:
A)
$650.
B)
$400.
C)
$510.
D)
$200.
Page 12
45.
Figure: The Market for Hamburgers.
Use Figure: The Market for Hamburgers. The figure The Market for Hamburgers shows
the weekly market for hamburgers in Irvine, Kentucky. If the price of burgers falls from
$1.50 to $1.00, there is a loss in producer surplus. How much of the loss accrues as a
direct result of the hamburgers that are no longer supplied in the market?
A)
$50
B)
$45
C)
$75
D)
$90
Page 13
Use the following to answer questions 46-48:
46.
(Ref 8-4 Figure: Producer Surplus) Look at the figure Producer Surplus. When the price
falls from $45 to $35, producer surplus _____ for a total producer surplus of _____.
A)
increases by $10; $140
B)
decreases by $40; $60
C)
increases by $35; $180
D)
decreases by $10; $140
47.
(Ref 8-4 Figure: Producer Surplus) Look at the figure Producer Surplus. When the price
rises from $25 to $35, producer surplus _____ for a total producer surplus of _____.
A)
increases by $10; $30
B)
decreases by $10; $30
C)
increases by $30; $60
D)
decreases by $35; $100
Page 14
48.
(Ref 8-4 Figure: Producer Surplus) Look at the figure Producer Surplus. Total producer
surplus is _____ when the price is $45.
A)
$40
B)
$60
C)
$100
D)
$85
Use the following to answer questions 49-52:
49.
(Ref 8-5 Figure: Producer Surplus II) Look at the figure Producer Surplus II. At a price
of P1, producer surplus equals the area:
A)
LMK.
B)
P1K0.
C)
P2M0.
D)
P2P1KM.
50.
(Ref 8-5 Figure: Producer Surplus II) Look at the figure Producer Surplus II. At a price
of P2, producer surplus equals the area:
A)
LMK.
B)
P1K0.
C)
P2M0.
D)
P2P1KM.
Page 15
51.
(Ref 8-5 Figure: Producer Surplus II) Look at the figure Producer Surplus II. If the price
falls from P2 to P1, producer surplus decreases by the area:
A)
LMK.
B)
P1K0.
C)
P2M0.
D)
P2P1KM.
52.
(Ref 8-5 Figure: Producer Surplus II) Look at the figure Producer Surplus II. If the price
rises from P1 to P2, producer surplus increases by the area:
A)
LMK.
B)
P1K0.
C)
P2M0.
D)
P2P1KM.
Use the following to answer questions 53-56:
53.
(Ref 8-6 Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the
price of the good is $2, producer surplus will equal:
A)
$20.
B)
$40.
C)
$60.
D)
$80.
Page 16
54.
(Ref 8-6 Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the
price of the good is $4, producer surplus will equal:
A)
$20.
B)
$40.
C)
$60.
D)
$80.
55.
(Ref 8-6 Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the
price of the good increases from $3 to $4, producer surplus will increase by:
A)
$5.
B)
$15.
C)
$25.
D)
$35.
56.
(Ref 8-6 Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the
price of the good decreases from $2 to $1, producer surplus will decrease by:
A)
$5.
B)
$15.
C)
$25.
D)
$35.
57.
Anna is willing to sell her 20-year-old boat, but not for less than $2,300. For Anna, the
value of this boat is _____ $2,300.
A)
more than
B)
less than
C)
equal to
D)
There is not enough information to answer the question.
Use the following to answer questions 58-61:
Page 17
58.
(Ref 8-7 Table: Producer Surplus and Phantom Tickets) The table Producer Surplus and
Phantom Tickets shows the minimum price at which each of the students is willing to
sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to
sell. If the price for Phantom tickets is $55, which student has the highest individual
producer surplus?
A)
Tim
B)
Laura
C)
Rick
D)
Ralph
59.
(Ref 8-7 Table: Producer Surplus and Phantom Tickets) The table Producer Surplus and
Phantom Tickets shows the minimum price at which each of the students is willing to
sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to
sell. If the price for Phantom tickets is $140 and there is no other market for tickets,
total producer surplus for these five students is:
A)
$139.
B)
$110.
C)
$40.
D)
$379.
60.
(Ref 8-7 Table: Producer Surplus and Phantom Tickets) The table Producer Surplus and
Phantom Tickets shows the minimum price at which each of the students is willing to
sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to
sell. Given the information in the table, if the price for Phantom tickets is $55, total
producer surplus for the five students is:
A)
$54.
B)
$79.
C)
$84.
D)
$64.
61.
(Ref 8-7 Table: Producer Surplus and Phantom Tickets) The table Producer Surplus and
Phantom Tickets shows the minimum price at which each of the students is willing to
sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to
sell. Given the information in the table, if these students can sell their Phantom tickets
for only $5, then:
A)
Tim will be the only student not to sell his ticket.
B)
Whitney, Ralph, and Rick will sell their tickets.
C)
the total producer surplus for the five students will be $4.
D)
the total producer surplus for the five students will be $330.
Page 18
62.
The total producer surplus in the Wisconsin milk market is the:
A)
sum of the individual producer surpluses in this market.
B)
sum of all prices paid multiplied by the number of gallons of milk sold.
C)
total revenue of the milk producers in Wisconsin.
D)
total cost of selling milk in Wisconsin.
63.
The total producer surplus for a good cannot be calculated as the:
A)
sum of the individual producer surpluses for all sellers of the good.
B)
area below the supply curve for the good up to the quantity of the good sold.
C)
area above the supply curve and below the price that sellers receive for the good
being sold.
D)
sum, for all sellers of the good, of the difference between what each seller receives
and the minimum amount he or she is willing to accept for selling the good.
Use the following to answer questions 64-70:
64.
(Ref 8-8 Table: Producer Surplus) Use Table: Producer Surplus. If the price of a ticket
to see The Nutty Nutcracker is $50, then Francisco's producer surplus is:
A)
$0.
B)
$40.
C)
$90.
D)
$240.
Page 19
65.
(Ref 8-8 Table: Producer Surplus) Use Table: Producer Surplus. If the price of a ticket
to see The Nutty Nutcracker is $50, then Dudley's producer surplus is:
A)
$0.
B)
$25.
C)
$60.
D)
$240.
66.
(Ref 8-8 Table: Producer Surplus) Use Table: Producer Surplus. If the price of a ticket
to see The Nutty Nutcracker is $75, then Caitlin's producer surplus is:
A)
$0.
B)
$74.
C)
$75.
D)
$100.
67.
(Ref 8-8 Table: Producer Surplus) Use Table: Producer Surplus. If the price of a ticket
to see The Nutty Nutcracker is $75, then Dudley's producer surplus is:
A)
$15.
B)
$25.
C)
$50.
D)
$240.
68.
(Ref 8-8 Table: Producer Surplus) Use Table: Producer Surplus. If the price of a ticket
to see The Nutty Nutcracker is $50 and there is no other market for tickets, then total
producer surplus for the five students is:
A)
$50.
B)
$74.
C)
$100.
D)
$276.
69.
(Ref 8-8 Table: Producer Surplus) Use Table: Producer Surplus. If the price of a ticket
to see The Nutty Nutcracker is $75 and there is no other market for tickets, the total
producer surplus for the five students is:
A)
$190.
B)
$139.
C)
$75.
D)
$40.
Page 20
70.
(Ref 8-8 Table: Producer Surplus) Use Table: Producer Surplus. If the tickets to The
Nutty Nutcracker are free and there is no other market for tickets, the total producer
surplus for the five students is:
A)
$276.
B)
$100.
C)
$74.
D)
$0.
71.
We can measure total producer surplus for good X as the:
A)
$120.
B)
$60.
C)
$360.
D)
$180.
72.
Producer surplus for an individual seller is equal to the:
A)
price received for selling the good minus the cost of producing the good.
B)
cost of the good minus the willingness to pay for the good.
C)
willingness to pay for the good minus the price received for selling the good.
D)
cost of the good minus the price received for selling the good.
73.
Maria wants to get rid of her bookshelf. She is willing to give it away, but her neighbor
offers to pay $30 for it. Maria takes a:
A)
consumer surplus gain.
B)
consumer surplus loss.
C)
producer surplus gain.
D)
producer surplus loss.
74.
Producer surplus is represented by the area _____ the supply curve and _____ the price
received by the seller.
A)
above; above
B)
above; below
C)
below; above
D)
below; below
Page 21
75.
Mountain River Adventures offers whitewater rafting trips down the Colorado River. It
costs the firm $100 for the first raft trip per day, $120 for the second, $140 for the third,
and $160 for the fourth. If the market price for a raft trip is $150, Mountain River
Adventures will offer _____ trips per day and will have producer surplus equal to _____
per day.
A)
three; $90
B)
three; $10
C)
two; $220
D)
four; $80
76.
Luis is willing to sell his pool table for no less than $600, but if he gets $840, the
producer surplus Luis receives is:
A)
D, E, and F
B)
B and C
C)
D and E
D)
A, B, and C
77.
Mountain River Adventures offers whitewater rafting trips down the Colorado River. It
costs the firm $100 for the first raft trip per day, $120 for the second, $140 for the third,
and $160 for the fourth. If the market price for a raft trip was $120 but has now
increased to $150, the gain in producer surplus is equal to:
A)
$20.
B)
$70.
C)
$80.
D)
$90.
78.
Along a given supply curve, an increase in the price of a good will:
A)
increase producer surplus.
B)
decrease producer surplus.
C)
increase consumer surplus.
D)
decrease producer surplus and increase consumer surplus.
79.
Assuming that the supply curve of cupcakes is upward-sloping and demand for
cupcakes decreases, there is a(n) _____ in _____ surplus.
A)
increase; producer
B)
increase; consumer
C)
increase; total
D)
decrease; producer
Page 22
80.
Along the upward-sloping supply curve for brownies, a decrease in the price of
brownies will:
A)
increase producer surplus.
B)
decrease producer surplus.
C)
increase consumer surplus.
D)
increase producer surplus and consumer surplus.
81.
Peanut butter and jelly are complements in consumption. Assuming that the supply
curve of peanut butter is upward-sloping, if there is a decrease in the price of jelly,
producer surplus in the peanut butter market:
A)
will increase.
B)
will decrease.
C)
will not change.
D)
may change, but it is impossible to tell whether it will increase or decrease.
82.
Equilibrium in the market for peanut butter is disturbed by an increase in the price of
peanuts. Assuming that the supply curve of peanut butter is upward-sloping, producer
surplus in the peanut butter market:
A)
will increase.
B)
will decrease.
C)
will not change.
D)
may change, but we cannot determine the change without more information.
83.
If the supply curve of ice cream is upward-sloping and demand for it decreases, there
will be _____ in producer surplus.
A)
an increase
B)
a decrease
C)
no change
D)
It's impossible to tell what will happen to producer surplus.
84.
When a new medical report extols the health advantages of grapefruit, assuming an
upward-sloping supply curve, producer surplus in the grapefruit market:
A)
will increase.
B)
will decrease.
C)
will remain the same.
D)
may change, but we can't tell how.
Page 23
85.
Along a given upward-sloping supply curve, a decrease in the price of a good will
_____ producer surplus.
A)
increase
B)
decrease
C)
have no effect on
D)
It's impossible to tell what will happen to producer surplus.
86.
If the price of a good rises along an upward-sloping supply curve, then producer
surplus:
A)
will increase.
B)
will decrease.
C)
will remain the same.
D)
may change, but we can't tell how.
87.
Along a given upward-sloping supply curve, a decrease in price will cause producer
surplus to:
A)
increase.
B)
decrease.
C)
stay the same.
D)
We cannot determine what producer surplus will do without information about the
demand curve.
88.
If the cost to download a song from the Internet falls from $0.99 to $0.50 along an
upward-sloping supply curve, producer surplus in the market for MP3 players is likely
to:
A)
increase.
B)
decrease.
C)
not change.
D)
We cannot determine what producer surplus will do without information about
consumer surplus.
Page 24
Use the following to answer question 89:
89.
(Ref 8-9 Figure: Producer Surplus and Supply) Look at the figure Producer Surplus and
Supply. The difference between the total revenue received by sellers and their total cost
is called _____, which is depicted by area _____ if the amount sold is E.
A)
consumer surplus; ABD
B)
producer surplus; 0BDE
C)
profit; ABD
D)
producer surplus; ABD
Use the following to answer questions 90-94:
Page 25
90.
(Ref 8-10 Figure: Consumer Surplus I) Look at the figure Consumer Surplus I. At a
price of P1, consumer surplus equals the area:
A)
ABP2.
B)
AFP1.
C)
AQ30.
D)
P1P2BF.
91.
(Ref 8-10 Figure: Consumer Surplus I) Look at the figure Consumer Surplus I. At a
price of P2, consumer surplus equals the area:
A)
ABP2.
B)
AFP1.
C)
AQ30.
D)
P1P2BF.
92.
(Ref 8-10 Figure: Consumer Surplus I) Look at the figure Consumer Surplus I. If the
good is being given away for free, consumer surplus equals the area:
A)
ABP2.
B)
AFP1.
C)
BGF.
D)
AQ30.
93.
(Ref 8-10 Figure: Consumer Surplus I) Look at the figure Consumer Surplus I. If the
price falls from P2 to P1, consumer surplus increases by the area:
A)
ABP2.
B)
AFP1.
C)
BGF.
D)
P1P2BF.
94.
(Ref 8-10 Figure: Consumer Surplus I) Look at the figure Consumer Surplus I. If the
price rises from P1 to P2, consumer surplus decreases by the area:
A)
ABP2.
B)
AFP1.
C)
BGF.
D)
P1P2BF.
Page 26
Use the following to answer questions 95-98:
95.
(Ref 8-11 Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the
price of the good is $2, consumer surplus will equal:
A)
$30.
B)
$45.
C)
$60.
D)
$90.
96.
(Ref 8-11 Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the
price of the good is $4, consumer surplus will equal:
A)
$5.
B)
$10.
C)
$20.
D)
$40.
97.
(Ref 8-11 Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the
price of the good increases from $3 to $4, consumer surplus will decrease by:
A)
$5.
B)
$10.
C)
$15.
D)
$20.
Page 27
98.
(Ref 8-11 Figure: Consumer Surplus II) Look at the figure Consumer Surplus II. If the
price of the good decreases from $2 to $1, consumer surplus will increase by:
A)
$5.
B)
$10.
C)
$25.
D)
$35.
Use the following to answer questions 99-101:
99.
(Ref 8-12 Figure: Consumer Surplus III) In the figure Consumer Surplus III, when the
price falls from $30 to $25, consumer surplus _____ for a total consumer surplus of
_____.
A)
increases by $25; $74
B)
decreases by $15; $34
C)
increases by $15; $64
D)
increases by $5; $54
Page 28
100.
(Ref 8-12 Figure: Consumer Surplus III) In the figure Consumer Surplus III, when the
price rises from $30 to $35, consumer surplus _____ for a total consumer surplus of
_____.
A)
decreases by $15; $34
B)
increases by $15; $64
C)
increases by $25; $74
D)
decreases by $5; $44
101.
(Ref 8-12 Figure: Consumer Surplus III) In the figure Consumer Surplus III, total
consumer surplus is _____ when the price is $10.
A)
$50
B)
$59
C)
$124
D)
$144
102.
A consumer's willingness to pay for a surfboard is the minimum price at which he or she
would buy the surfboard.
A)
True
B)
False
103.
Gehrig is willing to pay $90 for a cap made of raccoon skin. Suppose he finds such a
cap for $71 on eBay. If Gehrig buys the cap for $71, he will have an individual
consumer surplus of $71.
A)
True
B)
False
104.
Consumer surplus is the amount buyers actually pay for a good minus the maximum
amount they are willing to pay for it.
A)
True
B)
False
105.
One way to measure the gain to consumers from a drug that has the potential to reduce
obesity is to measure what people are willing to pay for the good and subtract the
amount they have to pay.
A)
True
B)
False
Page 29
106.
If the cost of soybeans (the major ingredient in tofu) decreases, consumer surplus in the
market for tofu will decrease.
A)
True
B)
False
107.
Floyd's cost of selling haircuts is the lowest price at which he is willing to sell haircuts.
A)
True
B)
False
108.
For calculating producer surplus, it is important to distinguish between the minimum
price at which a seller is willing to sell a good and the seller's cost.
A)
True
B)
False
109.
Producer surplus is the amount sellers receive from the sale of a good minus the
minimum amount they are willing to accept for supplying the good.
A)
True
B)
False
110.
All else equal, when the supply curve shifts left, the producer surplus increases.
A)
True
B)
False
111.
Assuming that gasoline and cars are complements in consumption, if the price of
gasoline rises, the producer surplus of auto manufacturers decreases.
A)
True
B)
False
Page 30
Use the following to answer questions 112-113:
112.
(Ref 8-13 Table: Workouts) Use Table: Workouts. Several times each week Eli works
out at a health club, but because he is not a member, he pays $10 each time he uses the
club facilities. How many times per week will Eli use the health club for a workout, and
how much consumer surplus does he receive?
113.
(Ref 8-13 Table: Workouts) Use Table: Workouts. Suppose that Eli receives an offer
from the club for a weekly membership fee of $50 that allows him to use the club as
much as he wants. Assuming Eli joins the club, how many times will Eli use the club
per week, and how much consumer surplus will he receive?
Use the following to answer questions 114-115:
Page 31
114.
(Ref 8-14 Figure: Demand for Cincinnati Reds Games Tickets) The figure Demand for
Cincinnati Red Games Tickets represents Jeff's annual demand for tickets to Cincinnati
Reds baseball games. At $20, Jeff will purchase five tickets. How much consumer
surplus does Jeff receive?
115.
(Ref 8-14 Figure: Demand for Cincinnati Reds Games Tickets) The figure Demand for
Cincinnati Red Games Tickets represents Jeff's annual demand for tickets to Cincinnati
Reds baseball games. Suppose the Reds required all fans to purchase a $12 parking pass
for each game. This effectively raises the price of a ticket to $32, and Jeff will decrease
his quantity demanded for Reds baseball by one ticket this year. How much consumer
surplus has Jeff lost?
Use the following to answer questions 116-120:
116.
(Ref 8-15 Table: Willingness to Pay for Peanuts) Using the table Willingness to Pay for
Peanuts, if the price of a bag of peanuts is $4, what is the value of George's consumer
surplus?
A)
$4
B)
$3
C)
$6
D)
$10
117.
(Ref 8-15 Table: Willingness to Pay for Peanuts) Using the table Willingness to Pay for
Peanuts, if the price of a bag of peanuts is $6, what is the total value of consumer
surplus?
A)
$4
B)
$3
C)
$6
D)
$10
Page 32
118.
(Ref 8-15 Table: Willingness to Pay for Peanuts) Using the table Willingness to Pay for
Peanuts, if the price of a bag of peanuts is $9, who will purchase a bag?
A)
George only
B)
all of the consumers
C)
Dave only
D)
Alvin and Theodore only
119.
(Ref 8-15 Table: Willingness to Pay for Peanuts) Using the table Willingness to Pay for
Peanuts, if the price of a bag of peanuts is $3, the total value of consumer surplus is
equal to:
A)
$12.
B)
$26.
C)
$10.
D)
$21.
120.
(Ref 8-15 Table: Willingness to Pay for Peanuts) Using the table Willingness to Pay for
Peanuts, if the price of a bag of peanuts is $2, _____ would purchase a bag.
A)
all of the consumers.
B)
everyone except Dave.
C)
everyone except George.
D)
no one.
121.
Christine has a linear demand curve for candy. If she wants to see her consumer surplus
_____, she would like to see a(n) _____ in the market price of candy.
A)
increase; decrease
B)
increase; increase
C)
decrease; decrease
D)
not change; decrease
122.
Along a straight-line downward-sloping demand curve, a decrease in the market price of
a good:
A)
will cause no change in consumer surplus.
B)
will increase consumer surplus.
C)
will decrease consumer surplus.
D)
may either decrease or increase consumer surplus.
Page 33
Use the following to answer questions 123-127:
123.
(Ref 8-16 Table: Firm's Willingness) The table Firm's Willingness explains the relation
between the number of reports a firm is willing to produce and the lowest price it is
willing to accept to prepare those reports. If the price of a report is $11, what is the
value of producer surplus for this firm?
A)
$11
B)
$17
C)
$27
D)
$40
124.
(Ref 8-16 Table: Firm's Willingness) The table Firm's Willingness explains the relation
between the number of reports a firm is willing to produce and the lowest price it is
willing to accept to prepare those reports. If the price of a report is $12, what is the
value of producer surplus for the firm?
A)
$27
B)
$21
C)
$16
D)
$42
125.
(Ref 8-16 Table: Firm's Willingness) The table Firm's Willingness explains the relation
between the number of reports a firm is willing to produce and the lowest price it is
willing to accept to prepare those reports. If the price of a report is $6, how many
reports will be produced?
A)
five
B)
four
C)
three
D)
two
Page 34
126.
(Ref 8-16 Table: Firm's Willingness) The table Firm's Willingness explains the relation
between the number of reports a firm is willing to produce and the lowest price it is
willing to accept to prepare those reports. Which market price would result in four
reports being produced?
A)
$2
B)
$6
C)
$8
D)
$12
127.
(Ref 8-16 Table: Firm's Willingness) The table Firm's Willingness explains the relation
between the number of reports a firm is willing to produce and the lowest price it is
willing to accept to prepare those reports. If the price of reports is $15, how many
reports will the firm produce, and what will the producer surplus be?
A)
one; $0
B)
three; $23
C)
five; $0
D)
five; $33
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Answer Key
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