1.

Reference: Ref 4-1

(Table: Willingness to Pay for Basketball Sneakers) If the price of basketball sneakers is $180, how many
pairs will be purchased?
a. 0
b. 3
c. 1
d. 2

2. 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 total consumer surplus?
a. $60
b. $10
c. $35
d. $45
3. Figure: Market Demand

Reference: Ref 4-8

(Figure: Market Demand) Look at the figure Market Demand. The amount by which the total benefits to
consumers exceed their total expenditure is called ________, and if the price is B, is depicted by the area
________.
a. producer surplus; BCD
b. consumer surplus; 0CDE
c. net benefit; 0BDE
d. consumer surplus; BCD

4. An increase in the consumer surplus in the market for milkshakes may result from:
a. an increase in the supply of milkshakes.
b. an increase in the price of milkshakes.
c. a decrease in the supply of milkshakes.
d. a decrease in the demand for milkshakes.
5. Figure: Consumer Surplus I

Reference: Ref 4-9

(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. AFP1.
b. ABP2.
c. P1P2BF.
d. BGF.

6.

Reference: Ref 4-13

(Table: Producer Surplus and Phantom Tickets) Look at the table Producer Surplus and Phantom Tickets. 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. $40.
b. $110.
c. $379.
d. $139.
7. We can measure total producer surplus for good X as:
a. the area between the demand curve for X and the supply curve for X.
b. the area bounded by the supply curve for X and the two axes.
c. the area below the supply curve for X and above the price of X.
d. the sum of the individual producer surpluses for all buyers of X.

8. Luis is willing to sell his pool table for $600, but if he gets $840, the producer surplus Luis receives is
________.
a. $600
b. $840
c. $240
d. $1440

9. Figure: Producer Surplus II

Reference: Ref 4-20

(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. P2M0.
b. P2P1KM.
c. LMK.
d. P1K0.
10. Figure: Producer Surplus III

Reference: Ref 4-21

(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. $35.
b. $15.
c. $25.
d. $5.

11. Suppose you pay $8 to see Tom Cruise in his next movie. Suppose Mr. Cruise receives $21 million to work
in this movie. This means that:
a. you would have been better off being more self-reliant in the movie market.
b. you and Tom Cruise benefitted from this transaction.
c. you received a consumer surplus of $8.
d. Tom Cruise received a producer surplus of $21 million.
12. Figure: The Gains from Trade

Reference: Ref 4-24

(Figure: The Gains from Trade) Look at the figure The Gains from Trade. What is the total surplus in this
market when the demand curve is D1 and the market is in equilibrium?
a. $31.25
b. $90
c. $25
d. $62.50
13. Figure: Consumer and Producer Surplus

Reference: Ref 4-25

(Figure: Consumer and Producer Surplus) Look at the figure Consumer and Producer Surplus. In the
accompanying figure, an increase in supply will:
a. decrease producer surplus.
b. increase consumer surplus and total surplus.
c. increase producer surplus.
d. decrease total surplus.

14. 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. False
b. True

15. A situation in which purchases do not occur because the value the potential seller places on the good
exceeds the value a potential consumer places on the good will occur in:
a. a market dominated by government regulation.
b. a centralized market system.
c. a market made up of many buyers and sellers.
d. well-functioning markets.
16. Which of the following statements is true about market failures? I. A seller produces too much of the good
at too high a price. II. Decision makers consider market prices to be beyond their control. III. External costs
are not considered in production decisions by producers.
a. Statements I and II are true.
b. Statement I is true.
c. Statement III is true.
d. Statements I, II, and III are true.