Chapter 7 Quiz

Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $425. Billie Jo's willingness to pay for the dishwasher is

$500

if the government imposes a price floor of $110 in this market, then consumer surplus will decrease by

$600

At equilibrium, consumer surplus is represented by the area

A+B+C

If the price of the product is $110, then who would be willing to purchase the product?

Calvin, Sam, and Andrew

when the price falls from P2 to P1, producer surplus

decrease by an amount equal to A+B

a result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

maximizes the combined welfare of buyers and sellers

Which area represents producer surplus when the price is P2?

ACH

Evan purchases a wall calendar for $9, and his consumer surplus is $1. How much is Evan willing to pay for the wall calendar?

$10

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing their event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?

$10

Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, producer surplus will be

$18

the equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market?

$400

both the demand curve and supply curve are straight lines. at equilibrium, consumer surplus is

$48

Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 2 if the price is

950

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market

may increase, decrease, or remain unchanged

as a result of a decrease in price

new buyers enter the market, increasing consumer surplus

cost is a measure of the

seller's willingness to sell

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

the value of tablets to consumers has increased, and the cost of producing tablets has decreased

the maximum price that a buyer will pay for a good is called

willingness to pay