1.)To describe the overall benefits that sellers received in a market, we can add up:

multiple choice

• each consumer's consumer surplus.
• each seller's producer surplus.
• the market's total surplus.
• each seller's total surplus.

2.)Refer to the demand schedule below:

Price($)	Quantity Demanded
80	0
70	50
60	100
50	150
40	200
30	250
20	300
10	350
0	400

Price decreases from $30 to $20.

Demand is

(Click to select) elastic unit-elastic inelastic , and total revenue

(Click to select) decreases stays the same increases .

3.)At market equilibrium:

multiple choice

• producer surplus is equal to consumer surplus.
• total surplus is maximized.
• producer surplus cannot be increased.
• consumer surplus cannot be increased.
• All of these are true.

4.)Which of the following could cause there to be a missing market?

multiple choice

• Lack of information
• Public policy that prevents a market from existing
• The lack of technology needed to make exchanges
• Inability of buyers and sellers to communicate
• All of these could create missing markets

5.)If price decreases by 10 percent and quantity supplied decreases by 5 percent, supply is

(Click to select) inelastic elastic unit-elastic .

6.)Suppose that the market for pizza is in equilibrium. If regulators decrease the price below the equilibrium price, which of the following would be true?

multiple choice

• Total surplus would increase.
• Consumer surplus might or might not increase.
• Producer surplus would increase.
• Society would be better off.

7.)If the price of a haircut is $10, the number of haircuts provided is 200. If the price rises to $15 per haircut, barbers will work much longer hours, and the supply of haircuts will increase to 250.

Instructions: Round your answer to two decimal places.

The price elasticity of supply for haircuts between $10 and $15 using the mid-point method is .

8.)Suppose the price of peanut butter rises from $2 to $3 per jar.

Instructions: Round your answer to three decimal places and include a negative sign if appropriate.

a. The quantity of jelly purchased falls from 20 million jars to 15 million jars. The cross-price elasticity of demand between peanut butter and jelly using the mid-point method is .

The goods are

(Click to select) complements substitutes .

b. The quantity of jelly purchased rises from 15 million jars to 20 million jars. The cross-price elasticity of demand between peanut butter and jelly using the mid-point method is .

The goods are

(Click to select) complements substitutes .

10.) (Click to select) Producer Total Net Consumer surplus is the net benefit that a producer receives from the sale of a good or service.

11.)a. If price elasticity of supply is 2 and price increases by 2 percent, quantity supplied will

(Click to select) increase decrease by

(Click to select) < 2 percent > 2 percent .

b. If price elasticity of supply is 0.7 and price decreases by 2 percent, quantity supplied will

(Click to select) increase decrease by

(Click to select) > 2 percent < 2 percent .

12.)If income increases by 10 percent and the quantity demanded of a good then decreases by 5 percent, the good is:

multiple choice

• normal and income-inelastic.
• normal and income-elastic.
• inferior and income-elastic.
• inferior and income-inelastic.

13.)The following table gives the demand schedule (willingness to pay) for eight consumers, each of whom wishes to buy one unit of this good.

Consumer	Willingness to pay
1	$50
2	$40
3	$35
4	$30
5	$25
6	$22
7	$20

8

$19

If the market price of the good is $25, consumer(s) will purchase the good. Total consumer surplus will be $ .

If the market price of the good is $45, consumer(s) will purchase the good. Total consumer surplus will be $ .

15.)If price decreases by 10 percent and quantity demanded increases by 10 percent, demand is

(Click to select) elastic inelastic unit-elastic .

16.)a. If price elasticity of demand is -1.7 and price increases by 2 percent, quantity demanded will

(Click to select) increase decrease by

(Click to select) > 2 percent 2 percent < 2 percent .

b. If price elasticity of demand is -0.9 and price decreases by 2 percent, quantity demanded will

(Click to select) decrease increase by

(Click to select) < 2 percent 2 percent > 2 percent

17.)Moe's Pizzeria says, "I am willing to sell a pizza for $4." The price of a pizza is $8.

Moe's producer surplus is

Which of the following isnot a true statement about Moe's producer surplus?

multiple choice

• Producer surplus represents the net benefit that Moe receives from selling pizza.
• Producer surplus depends on both willingness to sell and price of the product.
• Producer surplus does not depend on the value that consumers place on pizza.
• Moe's producer surplus would increase if the price fell.

18.)Deadweight loss is a loss of

(Click to select) net consumer producer total surplus that occurs because the quantity traded is different from the market equilibrium quantity.

19.)The following table gives the supply and demand schedules for eight firms and eight consumers, each of whom has one unit of this good to sell or wishes to purchase one unit.

Firm	Willingness to Sell	Consumer	Willingness to Pay
1	$5	1	$50
2	$10	2	$40
3	$15	3	$35
4	$20	4	$30
5	$25	5	$25
6	$28	6	$22
7	$29	7	$20

8

$30

8

$19

The equilibrium price in this market is $ . At that price, units of the good will be bought and sold.

Total producer surplus will be

Total consumer surplus will be

Total surplus in the market will be

20.)The demand curve is a line showing the

(Click to select) maximum minimum average total willingness to pay for all buyers.

22.)If the price elasticity of demand for used cars priced between $3,000 and $5,000 is -0.8 (using the mid-point method), what will be the percentage change in the quantity demanded when the price of a used car falls from $5,000 to $3,000?

Instructions: Round your answer to the nearest whole number.

percent