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

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Question 141

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Consumer surplus measures the benefit to buyers of participating in a market.

A) True
B) False

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Question 142

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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 Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5.If the market price of an orange is $0.40,then

A) 6 oranges are demanded per day, and consumer surplus amounts to $4.45.
B) 6 oranges are demanded per day, and consumer surplus amounts to $5.10.
C) 7 oranges are demanded per day, and consumer surplus amounts to $5.35.
D) 7 oranges are demanded per day, and consumer surplus amounts to $5.50.

E) C) and D)
F) A) and B)

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Question 143

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Figure 7-11 -Refer to Figure 7-11.At the equilibrium price,producer surplus is

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

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

Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

The "invisible hand" refers to

Suppose your own demand curve for tomatoes slopes downward.Suppose also that,for the last tomato you bought this week,you paid a price exactly equal to your willingness to pay.Then

Brock is willing to pay $400 for a new suit,but he is able to buy the suit for $350.His consumer surplus is

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S and the demand curve shifts from D to D',what is the increase in producer surplus to existing producers?

At any quantity,the price given by the supply curve shows the cost of the lowest-cost seller.

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.

Let P represent price; let Qˢ represent quantity supplied; and assume the equation of the supply curve is .If 80 units of the good are produced and sold,then producer surplus amounts to $1,200.

Answer each of the following questions about supply and producer surplus. a.What is producer surplus,and how is it measured? b.What is the relationship between the cost to sellers and the supply curve? c.Other things equal,what happens to producer surplus when the price of a good rises? Illustrate your answer on a supply curve.

Table 7-7 The following table represents the costs of five possible sellers. -Refer to Table 7-7.If the market price is $900,the combined total cost of all participating sellers is

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S and the demand curve shifts from D to D',what is the change in producer surplus?

Table 7-11 -Refer to Table 7-11.Both the demand curve and the supply curve are straight lines.If the price is $4 but only 6 units are bought and sold,consumer surplus will be

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 Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5.If the market price of an orange is $1.20,then the market quantity of oranges demanded per day is

Markets will always allocate resources efficiently.

If the government imposes a binding price floor in a market,then the consumer surplus in that market will increase.