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11. In market economies, goods are usually consumed by
a. those who are politically well connected.
b. those who are willing to pay the most for them.
c. those who are most deserving.
d. those who work the hardest.
Figure WPE. Emily’s Marginal Willingness to Pay
12. See Figure WPE. Emily’s total willingness to pay for
3 plums is about $______. [Choose the closest value.]
13. See Figure WPE. At a price of $5, how many plums
will Emily demand?
14. See Figure WPE. If the price is $6, Emily’s consumer
surplus will be about $_____. [Choose the closest
15. Suppose winter comes early in California and reduces
the size of the lemon crop. What happens to consumer
surplus in the market for lemons?
a. Consumer surplus is not affected by this change
in market forces.
b. It depends on whether the elasticity of demand
for lemons is more or less than 1.
c. Consumer surplus increases.
d. Consumer surplus decreases.
Scenario MRZ. Suppose Firm XYZ produces in a
perfectly competitive market and has the following
marginal costs: for each unit from 1 to 100, MC =
$20, and for each unit from 101 to 1000, MC = $30.
16. See Scenario MRZ. If the market price is $25, then
the firm will produce ______ units and get a producer
surplus of ______.
a. 0, 0
b. 1000, $5000
c. 100, $500
d. UNDEFINED, because price doesn’t equal
17. See Scenario MRZ. If the market price is $15 then
Firm XYZ will
a. continue to produce until price equals marginal
b. produce zero.
c. produce 100 units and raise its price to $20.
d. NONE of the above
18. If a product creates a negative externality, then
a. the social cost of production is lower than the
b. the free-market equilibrium output of the
product exceeds the efficient level.
c. the free-market equilibrium quantity is the
d. the marginal benefit of an additional unit of
production is increased.
19. When you calculate your (opportunity) costs of going
to college, what portion of your room-and-board
expenses should be included?
a. your full room-and-board expenses
b. none of your room-and-board expenses
c. your room-and-board expenses minus
room-and-board expenses you would have had
if you weren’t in college
d. your room-and-board expenses minus the
income you earn while attending college
20. A student spends $80 for a ticket to a concert of the
Ungrateful Living. But after an hour, she decides that
loud music is hurting her ears. If she is economically
rational, she should
a. stay at the concert, because $80 is a sunk cost.
b. leave and do something more fun.
c. stay at the concert, because she doesn’t want to
d. stay at the concert, because the tickets are not