ECO 2030 - Chapter 5: Efficiency

Surplus is a way of measuring who _______ from transactions, and by how much.

Benefits

In a market with voluntary transactions, The buyer is a winner. Neither the buyer nor seller are winners. Both the buyer and seller are winners. The seller is a winner.

Both the buyer and seller are winners.

The concept of surplus measures the benefit that people receive when they: Select all correct answers - Sell something for less than they would have been willing to accept. Buy something for less than they would have been willing to pay. Sell something for more than they would have been willing to accept. Buy something for more than they would have been willing to pay.

Buy something for less than they would have been willing to pay / sell somethint tor more than they would have been willing to accept.

The concept of surplus measures the benefit that people receive when they: Select all correct answers - Buy something for less than they would have been willing to pay. Sell something for less than they would have been willing to accept. Buy something for more than they would have been willing to pay. Sell something for more than they would have been willing to accept.

Buy something for less than they would have been willing to pay. Sell something for more than they would have been willing to accept.

When the price is lowered below the equilibrium price, although buyers lose some well-being because there are fewer transactions taking place, Sellers gain some well-being at the expense of buyers. Buyers gain some well-being at the expense of sellers. Buyers and sellers lose. Buyers and sellers gain.

Buyers gain some well-being at the expense of sellers.

Total surplus is a measure of the Combined benefits everyone receives from participating in an exchange. Benefits of consumers minus benefits of producers. Benefits of producers minus benefits of consumers. Revenues in excess of costs.

Combined benefits everyone receives from participating in an exchange.

Total ________ (consumer/producer) surplus is represented graphically by the area underneath the demand curve and above the equilibrium price.

Consumer

________ surplus is the net benefit that a consumer receives from purchasing a good or service.

Consumer

_______ (one word) loss is a loss of total surplus that occurs because the quantity traded is different from the market equilibrium quantity.

Deadweight

A line showing the maximum willingness to pay for all buyers is the ______ curve.

Demand

A line showing the maximum willingness to pay for all buyers is the _______ curve.

Demand

To describe the overall benefits that sellers received in a market, we can add up each seller's Ratio of what they are willing to accept and the mark the price. Difference between what they are willing to accept and the market price. Sum of what they are willing to accept and the market price. Product of what they are willing to accept and the market price.

Difference between what they are willing to accept and the market price.

To describe the overall benefits that buyers received in a market, we can add up each individual's Sum of what they are willing to pay and the market price. Product of what they are willing to pay and the market price. Difference between what they are willing to pay and the market price. Ratio of what they are willing to pay and the market price.

Difference between what they are willing to pay and the market price.

Equilibrium in a perfectly competitive, well-functioning market maximizes surplus and therefore is _________.

Efficient

When a perfectly competitive, well-functioning market maximizes total surplus, the market is said to be ___________.

Efficient

Willingness to pay for a product represents the price at which the benefit received is Less than the benefit of spending the money on another alternative. Equal to the benefit of spending the money on another alternative. Greater than the benefit of spending the money on another alternative. Equal to the price of another alternative.

Equal to the benefit of spending the money on another alternative.

At prices above or below the market equilibrium price, The market will function. Goods are not traded. Fewer trades take place, because some people are no longer willing to buy or sell. More trades take place, because many more people are willing to buy or sell.

Fewer trades take place, because some people are no longer willing to buy or sell.

At prices above or below the market equilibrium price, The market will not function. More trades take place, because many more people are willing to buy or sell. Fewer trades take place, because some people are no longer willing to buy or sell. Goods are not traded.

Fewer trades take place, because some people are no longer willing to buy or sell.

Measuring consumer surplus tells us How much better or worse off buyers are when the price changes. If buyers are better or worse off when the price changes. How much revenue producers will earn. How much income buyers will spend.

How much better or worse off buyers are when the price changes.

Measuring producer surplus tells us: If buyers are better or worse off when the price changes. How much better or worse off sellers are when the price changes. How much revenue producers will earn.

How much better or worse off sellers are when the price changes.

In a(n) _________ market, when quantity is at or close to zero, total surplus is lower than it could be of a well-being functioning market existed.

Inefficient

Some amount of producer surplus is transferred to consumers if price is artificially _______ (high/low).

Low

Some amount of producer surplus is transferred to producers to consumers if price is artificially ________ (high/low).

Low

Equilibrium in a perfectly competitive, well-functioning market Maximizes total surplus and is, therefore, efficient. Maximizes producer surplus and is, therefore, efficient. Maximizes consumer surplus and is, therefore, desirable. Generates positive surplus and is, therefore, desirable.

Maximizes total surplus and is, therefore, efficient.

Willingness to sell is the: Minimum price that a buyer is willing to accept in exchange for a good or service. Minimum price that a seller is willing to accept in exchange for s good or service. Maximum price that a buyer is willing to accept in exchange for a good or service. Maximum price that a seller is willing to accept in exchange for a good or service.

Minimum price that a seller is willing to accept in exchange for s good or service.

In a market where manufacturers produce and sell new products, the Minimum price will have to be high enough to cover the cost of production. Maximum price will have to be low enough to cover the cost of production. Minimum price will have to be low enough to cover the cost of production. Maximum price will have to be high enough to cover the cost of production.

Minimum price will have to be high enough to cover the cost of production.

Dead-weight loss is the total surplus at the market equilibrium before the intervention ______ the total surplus after a market intervention. Divided by Plus Minus Multiplied by

Minus

When there are people who would like to make exchanges but cannot, for one reason or another, we say that a market is Missing. Derived. Hidden. Unknown.

Missing.

In a zero-sum game, the Total value of the transaction is zero. Marginal value of a transaction is zero. Net value of a transaction is zero. Average value of a transaction is zero.

Net value of a transaction is zero.

The market is efficient at equilibrium because there is No exchange that can make anyone better off without someone becoming worse off. The same number of buyers and sellers. Coordination of buyers and sellers by the government. No exchange that will disappoint buyers and sellers.

No exchange that can make anyone better off without someone becoming worse off.

Sellers' willingness to sell is determined by the _________ cost of the sale.

Opportunity

The ______ cost of selling a product is the use or enjoyment that the seller could get from keeping the product or from doing something else with the money that would be required to make it.

Opportunity

When the price is artificially high and some transactions no longer take place, Select all correct answers - Part of the consumer and producer surplus is lost to both consumers and producers. All of the consumer and producer surplus is lost. Part of the produce surplus is transferred to consumers. Part of the consumer surplus is transferred to producers.

Part of the consumer and producer surplus is lost to both consumers and producers / Part of the consumer surplus is transferred to producers

When the price is artificially high and some transactions no longer take place, Select all that apply - All of the consumer and producer surplus is lost. Part of the producer surplus is transferred to consumers. Part of the consumer surplus is transferred to producers. Part of the consumer and producer surplus is lost to both consumers or producers.

Part of the consumer surplus is transferred to producers. Part of the consumer and producer surplus is lost to both consumers or producers.

When the price is artificially high and some transactions no longer take place, Select all that apply - Part of the producer surplus is transferred to producers. All of the consumer and producer surplus is lost. Part of the consumer and producer surplus is lost to both consumers or producers. Part of the consumer surplus is transferred to consumers.

Part of the producer surplus is transferred to producers. Part of the consumer and producer surplus is lost to both consumers or producers.

Part of consumer surplus is transferred to producers when _______ is artificially high.

Price

Measuring ________ surplus tells us how much better or worse off sellers are when the price changes.

Producer

The difference between the producer's willingness to sell and the actual price is the ________ surplus.

Producer

To describe the overall benefits that sellers received in a market, we can add up each seller's ______ surplus.

Producer

Which of the following statements are true if the price is artificially low and some transactions no longer take place? Select all that apply - Consumer surplus may rise or fall. Part of the consumer surplus is transferred to producers. All of the consumer and producer surplus is lost. Producer surplus falls.

Producer surplus falls.

Which of the following statements are true if the price is artificially low and some transactions no longer take place? Select all that apply - Producer surplus falls. All of the consumer and producer surplus is lost. Part of the consumer surplus is transferred to producers. Consumer surplus may rise or fall.

Producer surplus falls.

Which of the following statements are true if the price is artificially low and some transactions no longer take place? Select all that apply - Part of the consumer surplus is transferred to producers. Producer surplus falls. All of the consumer and producer surplus is lost. Consumer surplus may rise or fall.

Producer surplus falls. Consumer surplus may rise or fall.

Economists call the maximum price that a buyer is willing to pay the __________ (one word) price.

Reservation

The concept of surplus measures the benefit that people receive when they: Select all correct answers - Sell something for less than they would have been willing to accept. Buy something for less than they would have been willing to pay. Sell something for more than they would have been willing to accept. Buy something for more than they would have been willing to pay.

Sell something for more than they would have been willing to accept. Buy something for less than they would have been willing to pay.

The concept of surplus measures the benefit that people receive when they: Select all correct answers - Sell something for less than they would have been willing to accept. Sell something for more than they would have been willing to accept. Buy something for less than they would have been willing to pay. Buy something for more than they would have been willing to pay.

Sell something for more than they would have been willing to accept. Buy something for less than they would have been willing to pay.

Economists use the word surplus to describe which concepts? Select all that apply - Selling something for more than the minimum you would have accepted. Selling something for less than the minimum you would have accepted. Buying something for less than you would have been willing to pay. Buying something for more than you would have been willing to pay.

Selling something for more than the minimum you would have accepted. Buying something for less than you would have been willing to pay.

The relationship showing producers' willingness to sell is the _________ curve.

Supply

Total consumer surplus is represented graphically by the area underneath the ______ curve and _______ the equilibrium price.

Supply / demand

Calculations of _________ can clearly show who benefits and who loses from such as taxes and minimum wages.

Surplus

Suppose you get something for less than you would have been willing to pay, or sell it for more than the minimum you would have accepted. Economists use the word ______ to describe this concept.

Surplus

Suppose you get something for less than you would have been willing to pay, or sell it for more than the minimum you would have accepted. Economists use the word _______ to describe this concept.

Surplus

Using the concept of __________ is the best way to look at the benefits people receive from successful transactions.

Surplus

________ is a way of measuring who benefits from transactions, and by how much.

Surplus

We can calculate dead-weight loss by Select all that apply - The area of the dead-weight loss triangle on a graph. The producer surplus minus the consumer surplus. (Surplus/market equil before intervention minus surplus/market equil after intervention) divided by 2. Surplus/market equil before intervention minus surplus/market equil after intervention.

The area of the dead-weight loss triangle on a graph. Surplus/market equil before intervention minus surplus/market equil after intervention.

We can calculate dead-weight loss by Select all that apply - The area of the dead-weight loss triangle on a graph. Surplus/market equil before intervention minus surplus/market equil after intervention. (Surplus/market equil before intervention minus surplus/market equil after intervention) divided by 2. The producer surplus minus the consumer surplus.

The area of the dead-weight loss triangle on a graph. Surplus/market equil before intervention minus surplus/market equil after intervention.

When the price is above or below equilibrium price, ________. The value gained from voluntary trades is higher There is an increase in the number of trades The market is considered to be efficient The total surplus decreases relative to the market equilibrium

The total surplus decreases relative to the market equilibrium

When the price is above or below the equilibrium price, ______. There is an increase in the number of trades The value gained from voluntary trades is higher The market is considered to be efficient The total surplus decreases relative to the market equilibrium

The total surplus decreases relative to the market equilibrium

In market equilibrium, ________ surplus is maximized.

Total

When a perfectly competitive, well-functioning market is efficient, Total surplus is maximized. Consumer surplus is maximized. Producer surplus is maximized. Total revenue is maximized.

Total surplus is maximized.

The equilibrium price and quantity in a competitive market are important because, at this output level, the Total well-being of those involved is maximized. Well-being of those involved is positive. Price cannot change. Demand equals supply.

Total well-being of those involved is maximized.

Graphically, assuming an upward sloping supply curve, economic surplus is represented as the The square area under the equilibrium price and quantity. Triangular area below the supply and demand curve and the market quantity. Triangular area between a supply or demand curve and the market price. The square area above the equilibrium price and quantity.

Triangular area between a supply or demand curve and the market price.

T/F: Lack of accurate information or communication between potential buyers and sellers, lack of technology that would make the exchanges possible, or public policy are all reasons why a market might be missing

True

T/F: When a perfectly competitive well-functioning market is in equilibrium, total surplus is maximized.

True

The reservation price represents the buyer's maximum ________ to pay.

Willingness

Consumer surplus tells us that when price increases, consumers are _______ (one word) off.

Worse