(Test Bank) ECON 201 QUESTION BANK

Unknown, 1

Business

Test Bank

1st Edition

• $10.00 $35.00

---

Description

Test Bank for ECON 201 QUESTION BANK, The downloadable file consists of 191 pages, and the total size of the file is 1.36 MB. Purchase now only for highly discounted price.

---

---

Study Note Preview

ECON 201 QUESTION BANK 1. Which tools allow economists to determine if the allocation of resources determined by free markets is desirable? a. profits and costs to firms b. consumer and producer surplus c. the equilibrium price and quantity d. incomes of and prices paid by buyers ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 001.07.3 - MC - MANK08 2. Economists typically measure efficiency using a. the price paid by buyers. b. the quantity supplied by sellers. c. total surplus. d. profits to firms. ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics Efficiency KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 002.07.3 - MC - MANK08 3. Consumer surplus equals the a. value to buyers minus the amount paid by buyers. b. value to buyers minus the cost to sellers. c. amount received by sellers minus the cost to sellers. d. amount received by sellers minus the amount paid by buyers. ANSWER: a DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 003.07.3 - MC - MANK08 4. Producer surplus equals the a. value to buyers minus the amount paid by buyers. b. value to buyers minus the cost to sellers. c. amount received by sellers minus the cost to sellers. d. amount received by sellers minus the amount paid by buyers. ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 004.07.3 - MC - MANK08 5. Total surplus a. can be used to measure a market’s efficiency. b. is the sum of consumer and producer surplus. c. is the value to buyers minus the cost to sellers. d. All of the above are correct. ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 005.07.3 - MC - MANK08 6. Total surplus is a. the total cost to sellers of providing the good minus the total value of the good to buyers. b. the total value of the good to buyers minus the cost to sellers of providing the good. c. the difference between consumer surplus and sellers’ cost. d. always smaller than producer surplus. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 006.07.3 - MC - MANK08 7. Total surplus is a. equal to consumer surplus minus producer surplus. b. equal to the total value to buyers minus the total cost to sellers. c. equal to consumers' willingness to pay plus producers’ cost. d. greater than the sum of consumer surplus plus producer surplus. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 007.07.3 - MC - MANK08 8. Total surplus is equal to a. value to buyers - profit to sellers. b. value to buyers - cost to sellers. c. consumer surplus x producer surplus. d. (consumer surplus + producer surplus) x equilibrium quantity. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM' S: Comprehension CUSTOM ID: 008.07.3 - MC - MANK08 9. Total surplus in a market is equal to a. value to buyers - amount paid by buyers. b. amount received by sellers - costs of sellers. c. value to buyers - costs of sellers. d. amount received by sellers - amount paid by buyers. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 009.07.3 - MC - MANK08 10. Total surplus in a market is equal to a. consumer surplu s + producer surplus. b. value to buyers - amount paid by buyers. c. amount received by sellers - costs of sellers. d. producer surplus - consumer surplus. ANSWER: a DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 010.07.3 - MC - MANK08 11. Total surplus is represented by the area a. under the demand curve and above the price. b. above the supply curve and up to the price. c. under the supply curve and up to the price. d. between the demand and supply curves up to the point of equilibrium. ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 011.07.3 - MC - MANK08 12. Total surplus is represented by the area below the a. demand curve and above the price. b. price and up to the point of equilibrium. c. demand curve and above the supply curve, up to the equilibrium quantity. d. demand curve and above the horizontal axis, up to the equilibrium quantity. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 012.07.3 - MC - MANK08 13. Which of the following is correct? a. Consumer surplus refers to a situation in which there are more buyers than sellers in a market. b. Producer surplus refers to a situation in which there are more sellers than buyers in a market. c. Total surplus is measured as the area below the demand curve and above the supply curve, up to the equilibrium quantity. d. All of the above are correct. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 013.07.3 - MC - MANK08 14. We can say that the allocation of resources is efficient if a. producer surplus is maximized. b. consumer surplus is maximized. c. total surplus is maximized. d. sellers’ costs are minimized. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Efficiency Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 014.07.3 - MC - MANK08 15. Efficiency in a market is achieved when a. a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. b. the sum of producer surplus and consumer surplus is maximized. c. all firms are producing the good at the same low cost per unit. d. no buyer is willing to pay more than the equilibrium price for any unit of the good. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics Efficiency KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 015.07.3 - MC - MANK08 16. At the equilibrium price of a good, the good will be purchased by those buyers who a. value the good more than price. b. value the good less than price. c. have the money to buy the good. d. consider the good a necessity. ANSWER: a DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics Efficiency KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 016.07.3 - MC - MANK08 17. At the equilibrium price of a good, the good will be sold by those sellers a. whose cost is more than price. b. whose cost is less than price. c. that can produce the good. d. enter the market first. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Producer theory KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 017.07.3 - MC - MANK08 18. Which of the following statements is not correct about a market in equilibrium? a. The price determines which buyers and which sellers participate in the market. b. Those buyers who value the good more than the price choose to buy the good. c. Those sellers whose costs are less than the price choose to produce and sell the good. d. Consumer surplus will be equal to producer surplus. ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 018.07.3 - MC - MANK08 19. Efficiency is attained when a. total surplus is maximized. b. producer surplus is maximized. c. all resources are being used. d. consumer surplus is maximized and producer surplus is minimized. ANSWER: a DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics Efficiency KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 019.07.3 - MC - MANK08 20. The distinction between efficiency and equality can be described as follows: a. Efficiency refers to maximizing the number of trades among buyers and sellers; equality refers to maximizing the gains from trade among buyers and sellers. b. Efficiency refers to minimizing the price paid by buyers; equality refers to maximizing the gains from trade among buyers and sellers. c. Efficiency refers to maximizing the size of the pie; equality refers to producing a pie of a given size at the least possible cost. d. Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society. ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics Efficiency KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 020.07.3 - MC - MANK08 21. If an allocation of resources is efficient, then a. consumer surplus is maximized. b. producer surplus is maximized. c. all potential gains from trade among buyers are sellers are being realized. d. the allocation achieves equality as well. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics Efficiency KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 021.07.3 - MC - MANK08 22. Moving production from a high-cost producer to a low-cost producer will a. lower total surplus. b. raise total surplus. c. lower producer surplus. d. raise producer surplus but lower consumer surplus. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 022.07.3 - MC - MANK08 23. Which of the following is correct? a. Efficiency deals with the size of the economic pie, and equality deals with how fairly the pie is sliced. b. Equality can be judged on positive grounds whereas efficiency requires normative judgments. c. Efficiency is more difficult to evaluate than equality. d. Equality and efficiency are both maximized in a society when total surplus is maximized. ANSWER: a DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 023.07.3 - MC - MANK08 Table 7-16 Price Quantity Demanded Quantity Supplied $12.00 0 36 $10.00 3 30 $ 8.00 6 24 $ 6.00 9 18 $ 4.00 12 12 $ 2.00 15 6 $ 0.00 18 0 24. Refer to Table 7-16. The equilibrium price is a. $10.00. b. $8.00. c. $6.00. d. $4.00. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Supply and demand Equilibrium KEYWORDS: BLOOM'S: Application CUSTOM ID: 024.07.3 - MC - MANK08 25. Refer to Table 7-16. At a price of $2.00, total surplus is a. larger than it would be at the equilibrium price. b. smaller than it would be at the equilibrium price. c. the same as it would be at the equilibrium price. d. There is insufficient information to make this determination. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 025.07.3 - MC - MANK08 26. Refer to Table 7 -16. Both the demand curve and the supply curve are straight lines. At equilibrium, consumer surplus is a. $24. b. $36. c. $42. d. $48. ANSWER: d DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.193 - Given a scenario describing buyers' willingness to pay, compute consumer surplus in a market. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Analysis CUSTOM ID: 026.07.3 - MC - MANK08 27. Refer to Table 7 -16. Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is a. $24. b. $32. c. $48. d. $64. ANSWER: a DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.194 - Given a scenario describing sellers' costs, compute producer surplus in a market. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM'S: Analysis CUSTOM ID: 027.07.3 - MC - MANK08 28. Refer to Table 7 -16. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is a. $44. b. $56. c. $72. d. $96. ANSWER: c DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Analysis CUSTOM ID: 028.07.3 - MC - MANK08 29. Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, consumer surplus will be a. $21. b. $28. c. $36. d. $42. ANSWER: c DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.193 - Given a scenario describing buyers' willingness to pay, compute consumer surplus in a market. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Analysis CUSTOM ID: 029.07.3 - MC - MANK08 30. Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, producer surplus will be a. $16. b. $18. c. $24. d. $26. ANSWER: b DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.194 - Given a scenario describing sellers' costs, compute producer surplus in a market. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM'S: Analysis CUSTOM ID: 030.07.3 - MC - MANK08 31. Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, total surplus will be a. $42. b. $48. c. $54. d. $60. ANSWER: c DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Analysis CUSTOM ID: 031.07.3 - MC - MANK08 32. Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If 6 units are bought and sold, then total surplus is a. $18 lower than it would be if the equilibrium number of units were bought and sold. b. $22 lower than it would be if the equilibrium number of units were bought and sold. c. $26 lower than it would be if the equilibrium number of units were bought and sold. d. $6 higher than it would be if the equilibrium number of units were bought and sold. ANSWER: a DIFFICUL TY: Challenging LEARNING OBJECTIVES: ECON.MANK.139 - Explain why the equilibrium quantity in a market maximizes total surplus in that market. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Analysis CUSTOM ID: 032.07.3 - MC - MANK08 Figure 7-18 33. Refer to Figure 7 -18. Suppose the willingness to pay of the marginal buyer of the 3rd unit is $125. Then total surplus is maximized if a. 1 unit of the good is produced and sold. b. 2 units of the good are produced and sold. c. 3 units of the good are produced and sold. d. 4 units of the good are produced and sold. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 033.07.3 - MC - MANK08 34. Refer to Figure 7-18. If total surplus is $240 and consumer surplus is a. $100, then the price of the good is $130. b. $130, then the price of the good is $120. c. $160, then the price of the good is $100. d. $120, then the price of the good is $90. ANSWER: c DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.193 - Given a scenario describing buyers' willingness to pay, compute consumer surplus in a market. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 034.07.3 - MC - MANK08 35. Refer to Figure 7-18. Total surplus amounts to $500 if consumer surplus amounts to a. $290 and if the price of the good is $150. b. $300 and if the price of the good is $130. c. $275 and if the price of the good is $160. d. $400 and if the price of the good is $100. ANSWER: a DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.193 - Given a scenario describing buyers' willingness to pay, compute consumer surplus in a market. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 035.07.3 - MC - MANK08 Figure 7-19 36. Refer to Figure 7-19. At the equilibrium price, consumer surplus is a. $100. b. $200. c. $50. d. $450. ANSWER: a DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.193 - Given a scenario describing buyers' willingness to pay, compute consumer surplus in a market. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 036.07.3 - MC - MANK08 37. Refer to Figure 7-19. At the equilibrium price, producer surplus is a. $300. b. $150. c. $450. d. $125. ANSWER: b DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.194 - Given a scenario describing sellers' costs, compute producer surplus in a market. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM'S: Application CUSTOM ID: 037.07.3 - MC - MANK08 38. Refer to Figure 7-19. At the equilibrium price, total surplus is a. $125. b. $450. c. $250. d. $500. ANSWER: c DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Supply and demand Equilibrium KEYWORDS: BLOOM'S: Application CUSTOM ID: 038.07.3 - MC - MANK08 39. Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be a. $187.50. b. $125.00. c. $250.00. d. $266.67. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Supply and demand Price ceilings KEYWORDS: BLOOM'S: Application CUSTOM ID: 039.07.3 - MC - MANK08 40. Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be a. $100.00 higher than it would be without the price floor. b. $50.00 lower than it would be without the price floor. c. $125.00 lower than it would be without the price floor. d. $62.50 lower than it would be without the price floor. ANSWER: d DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Supply and demand Price floors KEYWORDS: BLOOM'S: Application CUSTOM ID: 040.07.3 - MC - MANK08 41. Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be a. $137.50. b. $125.00. c. $187.50. d. $275.00. ANSWER: c DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics Price floors KEYWORDS: BLOOM'S: Application CUSTOM ID: 041.07.3 - MC - MANK08 Figure 7-20 42. Refer to Figure 7-20. Total surplus can be measured as the area a. JNK. b. JNML. c. JRL. d. JNL. ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 042.07.3 - MC - MANK08 43. Refer to Figure 7-20. For quantities less than M, the value to the marginal buyer is a. greater than the cost to the marginal seller, so increasing the quantity increases total surplus. b. less than the cost to the marginal seller, so increasing the quantity increases total surplus. c. greater than the cost to the marginal seller, so decreasing the quantity increases total surplus. d. less than the cost to the marginal seller, so decreasing the quantity increases total surplus. ANSWER: a DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 043.07.3 - MC - MANK08 44. Refer to Figure 7-20. For quantities greater than M, the value to the marginal buyer is a. greater than the cost to the marginal seller, so increasing the quantity increases total surplus. b. less than the cost to the marginal seller, so increasing the quantity increases total surplus. c. greater than the cost to the marginal seller, so decreasing the quantity increases total surplus. d. less than the cost to the marginal seller, so decreasing the quantity increases total surplus. ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 044.07.3 - MC - MANK08 Figure 7-21 45. Refer to Figure 7-21. Which area represents consumer surplus when the price is P1? a. A b. B c. C d. D ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.236 - Given a supply and demand graph, indicate the area that represents consumer surplus. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 045.07.3 - MC - MANK08 46. Refer to Figure 7-21. When the price is P1, area B represents a. total surplus. b. producer surplus. c. consumer surplus. d. profits. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.236 - Given a supply and demand graph, indicate the area that represents consumer surplus. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 046.07.3 - MC - MANK08 47. Refer to Figure 7-21. Which area represents producer surplus when the price is P1? a. A b. B c. C d. D ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.237 - Given a supply and demand graph, indicate the area that represents producer surplus. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM'S: Application CUSTOM ID: 047.07.3 - MC - MANK08 48. Refer to Figure 7-21. When the price is P1, area C represents a. total benefit. b. producer surplus. c. consumer surplus. d. None of the above is correct. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.237 - Given a supply and demand graph, indicate the area that represents producer surplus. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM'S: Application CUSTOM ID: 048.07.3 - MC - MANK08 49. Refer to Figure 7-21. When the price is P1, area A represents a. total benefit. b. producer surplus. c. consumer surplus. d. None of the above is correct. ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 049.07.3 - MC - MANK08 50. Refer to Figure 7-21. When the price is P1, area B+C represents a. total surplus. b. producer surplus. c. consumer surplus. d. None of the above is correct. ANSWER: a DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 050.07.3 - MC - MANK08 51. Refer to Figure 7-21. Which area represents total surplus in the market when the price is P1? a. A+B b. B+C c. C+D d. A+B+C+D ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 051.07.3 - MC - MANK08 Figure 7-22 52. Refer to Figure 7 -22. At the equilibrium price, consumer surplus is a. $1,000. b. $2,000. c. $3,500. d. $500. ANSWER: a DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.193 - Given a scenario describing buyers' willingness to pay, compute consumer surplus in a market. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 052.07.3 - MC - MANK08 53. Refer to Figure 7-22. If the price decreases from $80 to $70 due to a shift in the supply curve, consumer surplus increases by a. $250. b. $750. c. $1000. d. $500. ANSWER: b DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.193 - Given a scenario describing buyers' willingness to pay, compute consumer surplus in a market. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 053.07.3 - MC - MANK08 54. Refer to Figure 7 -22. At the equilibrium price, producer surplus is a. $5,000. b. $2,500. c. $3,500. d. $1,750. ANSWER: b DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.194 - Given a scenario describing sellers' costs, compute producer surplus in a market. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM'S: Application CUSTOM ID: 054.07.3 - MC - MANK08 55. Refer to Figure 7 -22. At the equilibrium price, total surplus is a. $2,500. b. $1,000. c. $3,500. d. $7,000. ANSWER: c DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 055.07.3 - MC - MANK08 56. Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus due to new producers entering the market would be a. $400. b. $800. c. $1,200. d. $900. ANSWER: a DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.194 - Given a scenario describing sellers' costs, compute producer surplus in a market. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM'S: Application CUSTOM ID: 056.07.3 - MC - MANK08 57. Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus to producers already in the market would be a. $1,600. b. $600. c. $800. d. $1,200. ANSWER: d DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.194 - Given a scenario describing sellers' costs, compute producer surplus in a market. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM'S: Application CUSTOM ID: 057.07.3 - MC - MANK08 58. Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus would be a. $2,500. b. $900. c. $800. d. $1,600. ANSWER: d DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.194 - Given a scenario describing sellers' costs, compute producer surplus in a market. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM'S: Application CUSTOM ID: 058.07.3 - MC - MANK08 59. Refer to Figure 7-22. The efficient price is a. $80, and the efficient quantity is 50. b. $70, and the efficient quantity is 60. c. $70, and the efficient quantity is 100. d. $50, and the efficient quantity is 60. ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics Efficiency KEYWORDS: BLOOM' S: Application CUSTOM ID: 059.07.3 - MC - MANK08 60. Refer to Figure 7-22. If 110 units of the good are bought and sold, then a. the marginal cost to sellers is equal to the marginal value to buyers. b. the marginal value to buyers is greater than the marginal cost to sellers. c. the marginal cost to buyers is greater than marginal value to sellers. d. producer surplus is greater than consumer surplus. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics Efficiency KEYWORDS: BLOOM'S: Application CUSTOM ID: 060.07.3 - MC - MANK08 61. Refer to Figure 7-22. If 40 units of the good are bought and sold, then a. the marginal cost to sellers is equal to the marginal value to buyers. b. the marginal value to buyers is greater than the marginal cost to sellers. c. the marginal cost to sellers is greater than the marginal value to buyers. d. producer surplus would be greater than consumer surplus. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics Efficiency KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 061.07.3 - MC - MANK08 Figure 7-23 62. Refer to Figure 7-23. The equilibrium price is a. P1. b. P2. c. P3. d. P4. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Supply and demand Equilibrium KEYWORDS: BLOOM'S: Application CUSTOM ID: 062.07.3 - MC - MANK08 63. Refer to Figure 7-23. At equilibrium, consumer surplus is represented by the area a. A. b. A+B+C. c. D+H+F. d. A+B+C+D+H+F. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.236 - Given a supply and demand graph, indicate the area that represents consumer surplus. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 063.07.3 - MC - MANK08 64. Refer to Figure 7-23. If the price were P3, consumer surplus would be represented by the area a. A. b. A+B+C. c. D+H+F. d. A+B+C+D+H+F. ANSWER: a DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.236 - Given a supply and demand graph, indicate the area that represents consumer surplus. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 064.07.3 - MC - MANK08 65. Refer to Figure 7-23. At equilibrium, producer surplus is represented by the area a. F. b. F+G. c. D+H+F. d. D+H+F+G+I. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.237 - Given a supply and demand graph, indicate the area that represents producer surplus. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM'S: Application CUSTOM ID: 065.07.3 - MC - MANK08 66. Refer to Figure 7-23. If the price were P1, producer surplus would be represented by the area a. F. b. F+G. c. D+H+F. d. D+H+F+G+I. ANSWER: a DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.237 - Given a supply and demand graph, indicate the area that represents producer surplus. TOPICS: Welfare economics Producer surplus KEYWORDS: BLOOM'S: Application CUSTOM ID: 066.07.3 - MC - MANK08 67. Refer to Figure 7-23. At equilibrium, total surplus is represented by the area a. A+B+C. b. A+B+D+F. c. A+B+C+D+H+F. d. A+B+C+D+H+F+G+I. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics KEYWORDS: BLOOM'S: Application CUSTOM ID: 067.07.3 - MC - MANK08 68. Refer to Figure 7-23. The efficient price -quantity combination is a. P1 and Q1. b. P2 and Q2. c. P3 and Q1. d. P4 and 0. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.014 - Assess a market's efficiency. TOPICS: Welfare economics Efficiency KEYWORDS: BLOOM'S: Application CUSTOM ID: 068.07.3 - MC - MANK08 Figure 7-24 69. Refer to Figure 7-24. At equilibrium, consumer surplus is measured by the area a. AHG. b. AFB. c. ABD. d. BDF. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.236 - Given a supply and demand graph, indicate the area that represents consumer surplus. TOPICS: Consumer surplus Welfare economics KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 069.07.3 - MC - MANK08 70. Refer to Figure 7-24. At equilibrium, consumer surplus is a. $18. b. $36. c. $54. d. $72. ANSWER: a DIFFICULTY: Easy