Beef Producers Association

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1.
Suppose that Larry, Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin’s first movie. Each has in mind a maximum amount that he will bid. This maximum is called
A) producer surplus.
B) willingness to pay.
C) consumer surplus.
D) a resistance price.
2.
Nathan buys a new sound system for his dorm room for $1500. He receives consumer surplus of $500 from the purchase. How much does Nathan value his sound system?
A) $400
B) $1500
C) $900
D) $2000
3.
The Heart Association says that eating beef causes heart attacks. As a result, the equilibrium market price of beef
A) increases, and producer surplus increases.
B) increases, and producer surplus decreases.
C) decreases, and producer surplus decreases.
D) decreases, and producer surplus increases.
4.
This table refers to five possible buyers’ willingness to pay for a case of Vanilla Coke.
According to the table shown, if the price of Vanilla Coke is $6.90, who will purchase the good?

BuyerWillingness to Pay
David$8.50
Laura$6.80
Megan$5.50
Mallory$4.00
Audrey$3.50

A) David
B) All five would purchase Vanilla Coke, just in different amounts
C) Megan, Mallory and Audrey
D) David and Laura
5.
This table refers to five possible buyers’ willingness to pay for a case of Vanilla Coke.

According to the table shown, if the market price is $5.50, the consumer surplus in the market will be

BuyerWillingness to Pay
David$8.50
Laura$7.00
Megan$6.00
Mallory$4.00
Audrey$3.50

A) $5.00
B) $4.50
C) $3.00
D) $21.00
6.
Consumer surplus is
A) a seller’s willingness to pay minus the price.
B) the price of the product minus the buyer’s willingness to pay.
C) the difference between a buyer’s willingness to pay minus the market price.
D) a buyer’s willingness to pay plus the market price.
7.
Orange juice and apple juice are substitutes. Bad weather that sharply reduced the orange harvest would
A) increase consumer surplus in the market for orange juice but decrease producer surplus in the market for apple juice.
B) decrease consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice.
C) increase consumer surplus in the market for orange juice and increase producer surplus in the market for apple juice.
D) decrease consumer surplus in the market for orange juice but increase producer surplus in the market for apple juice.
8.
A seller would be willing to sell a product ONLY IF the price received is
A) higher than or equal to the cost of production.
B) equal to or lower than than the cost of production
C) at least double the cost of production.
D) less than the cost of production.
9.
The table represents the costs of five possible sellers.
According to the table shown, if the market price is $1,000, the producer surplus in the market would be

SellersCost
Dale$1500
Jill$1200
Denise$1000
Catherine$750
Jackson$600

A) $750 and sellers would be Jackson, Catherine and Denise
B) $650 and sellers would be Jackson, Catherine and Denise
C) $750 and sellers would be Dale, and Jill
D) $2,250 and sellers would be all
10.
In the absence of any price floors or price ceiling, a market is allowed to move freely to its equilibrium price and quantity, then an increase in demand will
A) reduce producer surplus.
B) increase producer surplus.
C) not affect producer surplus.
D) possibly increase, decrease or not affect producer surplus

1. B
2. B
3. D
4. D
5. B
6. A
7. D
8. A
9. D
10.D