Chapter 3 Econ

Suppose a consumer is willing to pay $20 for one good X, $10 for a second, and $5 for a third, and the market price is $4. What is the consumer surplus?

$23

Suppose seller X is willing to sell one good X for $5, a second good X for $10, a third for $16, a fourth for $25, and the market price is $20. What is seller X's producer surplus?

$29

Suppose Tucker Inc. is willing to sell one gizmo for $10, a second gizmo for $15, a third for $20, and the market price is $25. What is Tucker Inc.'s producer surplus?

$30

In Exhibit 14, if there is a shortage of video games of 200 units, the current price of video games must be

$40

If Sam is willing to pay $50 for one good X, $30 for a second, $20 for a third, $8 for a fourth, and the market price is $10. What is Sam's consumer surplus?

$70

Suppose each of the seven dwarfs buys four mugs of ginger ale per week from Snow White's café, when the price per mug is $2. If the seven dwarfs are the entire market demand for Snow White's ginger ale, which of the following is the correct value for market quantity demanded of ginger ale per week at a price of $2?

28

Which of the following causes a shortage to become larger?

A decrease in price

With an upward-sloping supply curve, which of the following is true?

A decrease in price results in a decrease in quantity supplied

Which of the following results from an increase in the price of a one-week vacation at beach resorts on the coast of Mexico?

An increase in the demand for vacations at resorts on Caribbean islands

Which of the following would not cause market demand for a normal good to decline?

An increase in the price of a substitute

Which of the following causes the demand for veggie burgers to increase?

An increase in the price of tofu burgers, perceived as a substitute by veggie burger consumers

As shown in Exhibit A-7, if the market is in equilibrium, represents producer surplus

BEF

As shown in Exhibit A-7, if the quantity supplied is 2 million pounds of ground beef per year, the result is a deadweight loss represented by area

CEFD

Deadweight loss is computed as the net of

Consumer surplus plus producer surplus

Which of the following is true in ski towns such as Crested Butte, Colorado, and Whistler, British Columbia during the peak winter ski season as compared to May and June?

Demand for motel rooms is higher

As shown in Exhibit A-7, if the market is in equilibrium, represents consumer surplus

EGH

Which of the following increases the supply of corn?

Farmers who grow soybeans can also grow corn, and the price of soybeans drops by 75 percent

Low-income families consume proportionately more of which of the following kinds of goods?

Inferior goods

If the quantity supplied exceeds the quantity demanded in a market, what is the result?

Overproduction

Which of the following decreases supply in the market for pizza?

Pizza shop employees successfully organize a union and negotiate a pay increase

In moving from a shortage toward the market equilibrium, which of the following is true?

Price rises

Deadweight loss is the result of

Underproduction

Under the law of demand, any increase in price will cause _____________ in quantity demanded

a decrease

An increase demand for any good or services is reflected graphically as

a rightward shift of the demand curve

Deadweight loss results from

a. equilibrium. b. underproduction. c. overproduction. none of the above

Consumer surplus measures the value between the price consumers are willing to pay and the _____

actual price paid

The law of demand is the principle that there is _________________ relationship between the price of a good and the quantity buyers are willing to purchase in a defined time period, ceteris paribus

an inverse

An increase in supply

appears as a rightward shift of the supply curve

In an efficient market, dead weight loss is

constant

As shown in Exhibit A-7, if the quantity supplied is 2 million pounds of ground beef per year, what is the result?

deadweight loss

As shown in Exhibit A-7, if the quantity supplied is 6 million pounds of ground beef per year, what is the result?

deadweight loss

A leftward shift in the demand curve is called a(an)

decrease in demand

The law of supply is the principle that the relationship between the price of a good and the quantity sellers are willing to offer for sale in a defined time period, ceteris paribus, is

direct

Deadweight loss is the net loss of

disequilibrium surplus

In Exhibit 14, if the price of video games was currently $45, there would be an __________ of __________ video games in this market.

excess demand; 100

In Exhibit 14, at any market price of video games below $50, a(n) __________ would result, causing price to __________.

excess demand; rise

Exhibit 14 presents supply and demand data for the video game market. If the price of video games was currently $70, there would be an _________ of ___________ video games in this market.

excess supply; 400

In Exhibit 14, at any market price of video games above $50, a(n) __________ would result, causing price to __________.

excess supply; fall

There is news that the price of Tucker's Root Beer will increase significantly next week. If the demand for Tucker's Root Beer reacts only to this factor and shifts to the right, the position of this demand curve has reacted to a change in

expectations

Some people will pay a higher price for brand-name goods. For example, some people buy Rolls Royce cars and Rolex watches to impress others. True or False: Knowingly paying higher prices for certain items just to be a "snob" violates the law of demand.

false

A rightward shift in the demand curve is called a(an)

increase in demand

If the quantity demanded exceeds the quantity supplied in a market, what is the result?

inefficiency

A curve that is derived by summing horizontally individual demand curves is called

market demand

A curve that is derived by summing horizontally individual supply curves is called

market supply

At the equilibrium price, deadweight loss is

minimized

An increase in demand for a good or service means that consumers will purchase

more at all possible prices

An increase in the quantity demanded for any good or service is reflected graphically as

movement down along the demand curve

A surplus occurs when

price is above the equilibrium

A shortage occurs when

price is below the equilibrium price

Producer surplus measures the value between the actual selling price and the _______

price sellers are willing to sell the product

A change in the quantity demanded for any good or service is caused by a change in

the price of that good or service

Deadweight loss is not the result of

zero producer surplus