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Economics 101 Practice Test: Consumers, Producers, and the Efficiency of Markets
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Consumers, producers, and the efficiency of markets are related to the following topics: Consumers: The price at which consumers are willing to pay for a product Producers: The people who create and supply goods or services Market efficiency: The degree to which market prices reflect all available information  In an efficient market, prices accurately reflect all available information, which ensures that resources are allocated to their highest valued uses and that there is no waste or inefficiency. The basic economic laws of supply and demand drive this efficiency.  Here are some other... Show more
Economics 101 Practice Test: Consumers, Producers, and the Efficiency of Markets
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25 Questions

1. Donald produces nails at a cost of $200 per ton. If he sells the nails for $500 per ton, his producer surplus is
2. The height of a demand curve represents the
3. If Dale sells a shirt for $40, and his producer surplus from the sale is $23, his cost must have been
4. Cost is a measure of the
5. An increase in the price of a good will cause
6. If the price of the product is equal to a consumer’s willingness to pay, then the consumer surplus of that purchase would be
7. Producer surplus can be defined as the
8. The area below a demand curve and above the price measures
9. The equilibrium of supply and demand in a market
10. Consumer surplus equals
11. Al is willing to pay $40.00 for a video of the movie Castaways. He finds a copy at his favorite video store for $15. Al’s consumer surplus is
12. What will happen to consumer surplus if the price of a good falls?
13. If a consumer is willing and able to pay $15.50 for a particular good but the price of the good is $16.00, then the
14. Producer surplus is the area
15. Economists refer to the study of how the allocation of resources affects economic well-being as
16. Total surplus in a market equals
17. Welfare economics is the study of
18. With respect to welfare economics, the equilibrium price of a product is considered to be the best price because it
19. The “invisible hand” refers to the
20. Producer surplus is the
21. Sharon values a lawnmower at $300, but buys it for $200. Sharon’s willingness to pay is
22. Julie buys a new pair of boots for $100. She receives a consumer surplus of $25 on her purchase. Her willingness to pay is
23. When we measure a buyer’s willingness to pay, we are measuring
24. Willingness to pay measures the
25. If you pay a price exactly equal to your willingness to pay, then

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