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Exam 7: Consumers, Producers, and the Efficiency of Markets

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Question 61

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Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price rises from $10 to $15, what is the change in total consumer surplus in the market?

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Question 62

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When demand increases so that market price increases, producer surplus increases because (1) producer surplus received by existing sellers increases, and (2) new sellers enter the market.

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Question 63

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Consumer surplus is a good measure of economic welfare if policymakers want to

When the demand for a good increases and the supply of the good remains unchanged, consumer surplus

Total surplus is represented by the area below the

Figure 7-15 -Refer to Figure 7-15. Suppose producer surplus is larger than C but smaller than A+B+C. The price of the good must be

Figure 7-24 -Refer to Figure 7-24. At equilibrium, consumer surplus is

Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is pleased since she paid $8,000 for the car but would have been willing to pay $11,000 for the car. Susie's consumer surplus is $2,000.

Table 7-16 The following table represents the costs of five possible sellers. Seller Cost ($) -Refer to Table 7-16. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?

All else equal, what happens to consumer surplus if the price of a good decreases?

Efficiency is attained when

Table 7-15 -Refer to Table 7-15. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. Which of the following graphs represents the market supply curve?

Figure 7-20 -Refer to Figure 7-20. For quantities less than M, the value to the marginal buyer is

Consumer surplus

Figure 7-29 -Refer to Figure 7-29. Which of the following statements is correct?

Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept?

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. Who experiences the largest gain in consumer surplus when the price of an orange decreases from $1.05 to $0.75?

Suppose you sell a kayak for $600, but you were willing to sell it for $450. The buyer was willing to pay $650. The total surplus is $200.

Figure 7-16 -Refer to Figure 7-16. Producer surplus amounts to $300 if the price of the good is

Figure 7-34 -Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total producer surplus assuming those producers with the lowest cost are the ones who supply the market?