ECON 2302 - Chapter 7

Producer surplus measures the

benefits to sellers of participating in a market.

Cost is a measure of the

seller's willingness to sell.

Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?

Calvin and Sam

Refer to Table 7-1. If the price of the product is $90, then who would be willing to purchase the product?

Calvin, Sam, Andrew, and Lori

Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

$160, then the price of the good is $100.

Refer to Table 7-12. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept?

$249

David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is

$30

Refer to Table 7-16. The equilibrium price is

$4

Refer to Table 7-12. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market?

$400

Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, consumer surplus is

$48

George produces cupcakes. His production cost is $10 per dozen. He sells the cupcakes for $16 per dozen. His producer surplus per dozen cupcakes is

$6

Tom tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $155 per tuning. One particular week, Tom is willing to tune the first piano for $120, the second piano for $125, the third piano for $140, and the fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. His producer surplus is

$80

Market power refers to the

ability of market participants to influence price.

Consumer surplus is the

amount a consumer is willing to pay minus the amount the consumer actually pays.

A seller's willingness to sell is a) measured by the seller's cost of production. b) related to her supply curve, just as a buyer's willingness to buy is related to his demand curve. c) less than the price received if producer surplus is a positive number. d) All of the above are correct.

d) All of the above are correct.

Total surplus a) can be used to measure a market's efficiency. b) is the sum of consumer and producer surplus. c) is the value to buyers minus the cost to sellers. d) All of the above are correct.

d) All of the above are correct.

Total surplus is

equal to the total value to buyers minus the total cost to sellers.

Consumer surplus

measures the benefit buyers receive from participating in a market.

Refer to Table 7-16. At a price of $2.00, total surplus is

smaller than it would be at the equilibrium price.

Consumer surplus is

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.