Chapter 3 Microeconomics

A demand curve shows...
A. the willingness to pay for particular quantities.
B. the marginal value placed on particular quantities.
C. quantity demanded at different prices.
D. All of the above are correct

If the price of wheat rises, then...
A. the quantity demanded of wheat falls.
B. the quantity supplied of wheat falls.
C. the demand curve for wheat shifts to the right, and the supply curve of wheat shifts to the left.
D. the demand curve for wheat shifts to the left, and the supply curve of wheat shifts to the right.
E. the demand curve for wheat shifts to the left, and the supply curve of wheat shifts to the left.

Consumer surplus is represented by...
A. the area below the demand curve and above the horizontal axis.
B. the area below the demand curve and above the price.
C. the area above the supply curve and below the price.
D. the area below the supply curve and above the horizontal axis.
E. the area above the supply curve and below the demand curve.

Which of the following is correct?
A. Consumer surplus is the maximum price that a consumer is willing to pay.
B. Graphically, consumer surplus is the area beneath the demand curve and above the price.
C. Mr. Bill is willing to pay $10 for one pound of clay. If the price for one pound of clay is $2, then Mr. Bill
receives consumer surplus of $8.
D. Both (B) and (C) are true.
E. (A), (B), and (C) are true.

here are three identical vases available to be purchased. Susan is willing to pay $30 for the first, $25 for the second, and $20 for the third. If the price of each vase is $23, what is Susan's consumer surplus for the amount she chooses to purchase?
A. $2.
B. $7.
C. $9.
D. $55.
E. $75.

Greg buys a stereo. He is willing to pay $750, but the price is only $500. The stereo cost $300 to produce. What is Greg's consumer surplus from this purchase?
A. $750
B. $500
C. $450
D. $300
E. $250

A good is "inferior" when...
A. it has a low price.
B. it is of low quality.
C. your demand for it is unchanged when its price falls.
D. your demand for it expands when its price falls.
E. your demand for it expands when your income falls.

Canned tuna is an inferior good. Which of the following would cause the demand curve for canned tuna to shift down and to the left?
A. Fall in incomes
B. Fall in the price of canned tuna
C. Rise in the cost of producing canned tuna
D. Rise in incomes
E. Rise in the price of canned tuna

Oak tables and maple tables are substitutes. Which of the following will happen as a result?Suppose the price of maple tables decreases
A. Demand curve for oak tables shifts up and to the right.
B. Demand curve for oak tables shifts down and to the left.
C. Demand curve for maple tables shifts up and to the right.
D. Demand curve for maple tables shifts down and to the left.

Hot dogs and buns are complements. Which of the following would cause the demand curve for buns to shift up and to the right?
A. A fall in the price of buns
B. A fall in the price of hot dogs
C. A rise in the price of buns
D. A rise in the price of hot dogs

You want to purchase a new Mini Cooper convertible.
rebate on Mini Coopers starting next month. As a result, your demand for Mini Coopers today...
A. does not shift.
B. shifts up and to the right.
C. shifts down and to the left.
D. could shift to the left or right, depending on whether it is a normal or inferior good.

Producer surplus measures...
A. the seller's gains from trade.
B. the buyer's gains from trade.
C. production costs.
D. inefficiencies.
E. unsold inventories.

Producer surplus is represented by...
A. the area below the demand curve and above the horizontal axis.
B. the area below the demand curve and above the price.
C. the area above the supply curve and below the price.
D. the area below the supply curve and above the horizontal axis.
E. the area above the supply curve and below the demand curve.

Suppose Stacy receives a producer surplus of $5 for each apple pie that she sells at a price of $11. This implies that Stacy's marginal cost of producing an apple pie is...
A. $5
B. $6
C. $11
D. $16
E. None of the above

Wheat is the main input in the production of flour. If the price of wheat increases, then...
A. the demand curve of flour will shift down and to the right.
B. the demand curve of flour will shift up and to the left.
C. the supply curve of flour will shift down and to the right.
D. the supply curve of flour will shift up and to the left.

If the number of sellers of a good increases, the...
A. supply curve shifts up and to the left.
B. supply curve shifts down and to the right.
C. demand curve shifts down and to the left.
D. demand curve shifts up and to the right.

If a firm expects the price of their product to increase in the future, then...
A. the demand today will decrease.
B. the price today will decrease.
C. the supply today will increase.
D. the supply today will decrease.

Joe runs a landscaping company out of a spare bedroom that could've been rented to college students. If the average rents in Joe's neighborhood rise, then his company's supply curve will shift...
A. up and to the left because his opportunity cost of using the bedroom as an office increased.
B. up and to the left because his opportunity cost of using the bedroom as an office decreased.
C. down and to the right because his opportunity cost of using the bedroom as an office increased.
D. down and to the right because his opportunity cost of using the bedroom as an office decreased.

Which of the following factors causes the supply curve for a product to shift down and to the right?
A. An increase in taxes on the product
B. A decrease in preferences for the product
C. A decrease in the costs of production
D. An increase in the price of a substitute.
E. A decrease in subsidies for the product

Which of the following would increase producer surplus in the market for oak tables?
A. A price increase
B. A price decrease
C. Both (A) and (B) are correct.
D. None of the above are correct.