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

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Question 81

Multiple Choice

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Consumer surplus

A) is closely related to the supply curve for a product.
B) is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward- sloping line.
C) is measured using the demand curve for a product.
D) does not reflect economic well-being in most markets.

E) B) and C)
F) All of the above

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Question 82

Multiple Choice

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Which of the following will cause a decrease in consumer surplus?

A) an increase in the number of sellers of the good
B) a decrease in the production cost of the good
C) sellers expect the price of the good to be lower next month
D) the imposition of a binding price floor in the market

E) A) and B)
F) All of the above

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Question 83

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Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called

If Rosa is willing to pay $450 for hockey tickets and has consumer surplus of $175, the price of the tickets is $625.

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

Which of the following equations is not valid?

Ronnie operates a lawn-care service. On each day, the cost of mowing the first lawn is $15, the cost of mowing the second lawn is $25, and the cost of mowing the third lawn is $40. His producer surplus on the first three lawns of the day is $100. If Ronnie charges all customers the same price for lawn mowing, that price is

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, how much consumer surplus do consumers entering the market after the price drop receive?

If a market is in equilibrium, then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good.

Suppose John's cost for performing some carpentry work is $120. If John is paid $200 for the carpentry work, what is his producer surplus?

Table 7-1 -Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product?

Justin builds fences for a living. Justin's out­of­pocket expenses for wood, paint, etc.) plus the value that he places

Figure 7-24 -Refer to Figure 7-24. The equilibrium allocation of resources is

Table 7-1 -Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is

Table 7-3 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22?

Figure 7-17 -Refer to Figure 7-17. If the supply curve is S and the demand curve is D, what is total producer surplus at the equilibrium price?

Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is

The decisions of buyers and sellers that affect people who are not participants in the market create

Figure 7-4 -Refer to Figure 7-4. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?

Figure 7-21 -Refer to Figure 7-21. Which area represents total surplus in the market when the price is P1?