Econ

Front 1

Welfare economics is the study of
the well-being of less fortunate people.

Back 1

False

Front 2

With respect to welfare economics,
the equilibrium price of a product is
considered to be the best price because it
maximizes total revenue to firms and total
utility to buyers.

Back 2

False

Front 3

Willingness to pay measures the
amount a buyer is willing to pay for a good
minus the amount the buyer actually pays
for it.

Back 3

False

Front 4

Consumer surplus is a buyer’s
willingness to pay minus the price.

Back 4

True

Front 5

A consumer’s willingness to pay
measures the cost of a good to the buyer.

Back 5

False

Front 6

If a consumer is willing and able to
pay $20.00 for a particular good but only
has to pay $14.00, the consumer surplus
is $6.00.

Back 6

True

Front 7

Belva is willing to pay $65.00 for a
pair of shoes for a formal dance. She finds
a pair at her favorite outlet shoe store for
$48.00. Belva’s consumer surplus is $17.

Back 7

True

Front 8

Shannon buys a new CD player for
her car for $135. She receives consumer
surplus of $25 on her purchase. Her
willingness to pay is $25.

Back 8

False

Front 9

Janine would be willing to pay $50
to see Les Misérables, but buys a ticket
for only $30. Janine values the
performance at $20.

Back 9

False

Front 10

Amy buys a new dog for $150. She
receives consumer surplus of $100 on her
purchase. Her willingness to pay is $50.

Back 10

False

Front 11

If the price a consumer pays for a
product is equal to a consumer’s
willingness to pay, then the consumer
surplus of that purchase would be zero.

Back 11

True

Front 12

Suppose there is an early freeze in
California that ruins the lemon crop.
Consumer surplus in the market for
lemons decreases.

Back 12

True

Front 13

If you pay a price exactly equal to
your willingness to pay, then your
consumer surplus is negative.

Back 13

False

Front 14

A demand curve measures a
buyer’s willingness to pay.

Back 14

True

Front 15

Consumer surplus equals the Value
to buyers – Amount paid by buyers.

Back 15

True

Front 16

The area below a demand curve
and above the price measures producer
surplus.

Back 16

False

Front 17

If the price of a good increases,
consumer surplus decreases.

Back 17

True

Front 18

When technology improves in the
ice cream industry, consumer surplus will
increase.

Back 18

True

Front 19

In most markets, consumer surplus
reflects economic well-being

Back 19

True

Front 20

Out-of-pocket expenses plus the
value of the seller’s own resources used in
production are considered to be the
seller’s total revenue.

Back 20

False

Front 21

According to the graph shown, B +
C represents total surplus in the market
when the price is P1.

Back 21

True

Front 22

Cost is a measure of the seller’s
willingness to sell.

Back 22

True

Front 23

Suppose the demand for nachos
increases. Producer surplus in the market
for nachos will increase.

Back 23

True

Front 24

Cost refers to a seller’s producer
surplus.

Back 24

False

Front 25

If demand decreases, the price of a
product, as well as producer surplus,
increases.

Back 25

False

Front 26

A supply curve can be used to
measure producer surplus because it
reflects the actions of sellers.

Back 26

False

Front 27

The Surgeon General announces
that eating chocolate increases tooth
decay. As a result, the equilibrium market
price of chocolate increases, and producer
surplus increases.

Back 27

False

Front 28

A seller would be willing to sell a
product ONLY IF the price received is less
than the cost of production.

Back 28

False

Front 29

Suppose consumer income
increases. If grass seed is a normal good,
the equilibrium price of grass seed will
decrease, and producer surplus in the
industry will decrease.

Back 29

False

Front 30

Producer surplus equals Value to
buyers – Amount paid by buyers.

Back 30

False

Front 31

Producer surplus is the area under
the supply curve to the left of the amount
sold.

Back 31

False

Front 32

According to the graph shown, B
represents consumer surplus when the
price is P1.

Back 32

True

Front 33

According to the graph shown, C
represents producer surplus when the
price is P1.

Back 33

True

Front 34

The marginal seller is the seller
who cannot compete with the other sellers
in the market.

Back 34

False

Front 35

Denea produces cookies. Her
production cost is $3 per dozen. She sells
the cookies for $8 per dozen. Her
producer surplus is $3 per dozen.

Back 35

False

Front 36

Donald produces nails at a cost of
$200 per ton. If he sells the nails for $500
per ton, his producer surplus is $200 per
ton.

Back 36

False

Front 37

If Roberta sells a shirt for $30, and
her producer surplus from the sale is $21,
her cost must have been $51.

Back 37

False

Front 38

According to the graph shown,
when the price is P2, producer surplus is
A.

Back 38

False

Front 39

At Nick’s Bakery, the cost to make
his homemade chocolate cake is $3 per
cake. He sells three and receives a total of
$21 worth of producer surplus. Nick must
be selling his cakes for $2 each.

Back 39

False

Front 40

We can say that the allocation of
resources is efficient if producer surplus is
maximized.

Back 40

False

Front 41

According to the graph shown,
when the price falls from P2 to P1,
producer surplus decreases by an amount
equal to A.

Back 41

False

Front 42

According to the graph shown, at
the price of P1, producer surplus is
A.

Back 42

False

Front 43

According to the graph shown,
when the price falls from P2 to P1,
producer surplus decreases by an amount
equal to A.

Back 43

False

Front 44

According to the graph shown, area
B represents producer surplus to new
producers entering the market as the
result of price rising from P1 to P2.

Back 44

True

Front 45

According to the graph shown, area
A represents producer surplus to new
producers entering the market as the
result of price rising from P1 to P2.

Back 45

False

Front 46

Producer surplus measures the
well-being of sellers.

Back 46

True

Front 47

total surplus = value to sellers –
costs of sellers is NOT correct.

Back 47

True

Front 48

Total surplus in a market is the total
costs to sellers of providing the goods less
the total value to buyers of the goods.

Back 48

False

Front 49

In a market, total surplus is equal to
producer surplus plus consumer surplus.

Back 49

True

Front 50

Total surplus in a market is
represented by the total area under the
demand curve and above the price.

Back 50

False

Front 51

At the equilibrium price, the good
will be purchased by those buyers who
value the good more than price.

Back 51

True

Front 52

Total surplus in a market equals
Value to buyers – Amount paid by buyers.

Back 52

False

Front 53

Total surplus in a market equals
Consumer surplus + Producer surplus.

Back 53

True

Front 54

An allocation of resources is said to
be inefficient if a good is not being
produced by the sellers with the lowest
cost.

Back 54

True

Front 55

When economists say that markets
are efficient, they are assuming that
markets are perfectly competitive.

Back 55

True

Front 56

. Efficiency occurs when total surplus
is maximized.

Back 56

True

Front 57

. Inefficiency exists in any economy
when a good is not being consumed by
buyers who value it most highly.

Back 57

True

Front 58

The “invisible hand” refers to the
marketplace guiding the self-interests of
market participants into promoting general
economic well-being.

Back 58

True

Front 59

Externalities are side effects
passed on to a party other than the buyers
and sellers in the market.

Back 59

True

Front 60

When markets fail, public policy can
do nothing to improve the situation.

Back 60

False

Front 61

For the most part, all governments, federal, 
state, and local, rely on taxes to raise revenue for 
public purposes.

Back 61

True

Front 62

The term tax incidence refers to the  Boston 
Tea Party.

Back 62

False

Front 63

The initial effect of a tax on the buyers of a 
good is on the supply of that good.

Back 63

False

Front 64

If a tax is imposed on the buyer of a product 
the demand curve would shift downward by the 
amount of the tax.

Back 64

True

Front 65

According to the graph shown, the 
equilibrium price in the market before the tax is 
imposed is $8.00.

Back 65

False

Front 66

According to the graph, the price buyers will 
pay after the tax is imposed is . $8.00.

Back 66

True

Front 67

According to the graph, the price sellers 
receive after the tax is imposed is $8.00.

Back 67

False

Front 68

A tax on the sellers of cell phones will 
reduce the size of the cell phone market.

Back 68

True

Front 69

A tax placed on the sellers of 
blueberries increases costs, lowers profit and 
shifts supply to the left (upward).

Back 69

True

Front 70

When analyzing the economic effects 
of government policies, supply and demand 
are useful tools of analysis.

Back 70

True

Front 71

The burden of a tax placed on a 
product depends on the supply and demand 
of that product.

Back 71

True

Front 72

Suppose that a tax is placed on 
DVDs. If the seller ends up paying the 
majority of the tax we know that the demand 
curve is more inelastic than the supply curve.

Back 72

False

Front 73

Suppose that a tax is placed on 
books. If the buyer pays the majority of the tax 
we know that the supply curve is more 
inelastic than the demand curve.

Back 73

False

Front 74

For the most part, a tax burden falls 
most heavily on the side of the market that is 
more inelastic.

Back 74

True

Front 75

If a tax is imposed on a market with 
elastic demand and inelastic supply, buyers 
will bear most of the burden of the tax.

Back 75

False

Front 76

Buyers of a product will pay the 
majority of a tax placed on a product when 
supply is more elastic than demand.

Back 76

True

Front 77

If a tax is imposed on a market with 
inelastic demand and elastic supply, buyers 
will bear most of the burden of the tax.

Back 77

True