quiz25 - Name: _ Class: _ Date: _ ID: A problemsetch7...

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Name: ________________________ Class: ___________________ Date: __________ ID: A 1 problemsetch7 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. The study of how the allocation of resources affects economic well-being is called a. consumer economics. b. macroeconomics. c. willingness-to-pay economics. d. welfare economics. ____ 2. One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of a. factor markets. b. energy markets. c. welfare economics. d. labor economics. ____ 3. Suppose 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. a resistance price. b. willingness to pay. c. consumer surplus. d. producer surplus. ____ 4. In which of the following circumstances would a buyer be indifferent about buying a good? a. The amount of consumer surplus the buyer would experience as a result of buying the good is zero. b. The price of the good is equal to the buyer`s willingness to pay for the good. c. The price of the good is equal to the value the buyer places on the good. d. All of the above are correct. ____ 5. If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to a. $4. b. $16. c. $20. d. $36. ____ 6. Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be a. $15. b. $30. c. $45. d. $90.
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Name: ________________________ ID: A 2 ____ 7. Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie willingness to pay was $100, Kendras`s willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct? a. For the three individuals together, consumer surplus amounts to $35. b. Having bought the cell phone, Kristen is better off than she would have been had she not bought it. c. Had the price of the cell phone been $95 rather than $80, Katie and Kendra definitely would have been buyers and Kristen definitely would not have been a buyer. d. The fact that all three individuals paid $80 for the same type of cell phone indicates that each one placed the same value on that cell phone. ____ 8. Noah drinks Dr. Pepper. He can buy as many cans of Dr. Pepper as he wishes at a price of $0.50 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Noah is rational in deciding how many cans to buy. His consumer surplus is a. $0.50. b.
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quiz25 - Name: _ Class: _ Date: _ ID: A problemsetch7...

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