ECON 4
Refer to Figure 4.2. Which area represents the increase in producer surplus when the price rises from P1 to P2?
AHGB
Consumer surplus is
the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?
$2,500
Which area represents consumer surplus at a price of P1?
ABD
If the market price is $5.50, the consumer surplus in the market will be Table 4.1. BuyerWTPDavid$8.50Laura$7.00Megan$5.50Mallory$4.00Audrey$3.50
$4.50.
According to the table, if the market price is $1,000, the producer surplus in the market would be SellerCostDale$1500Jill$1200Denise$1000Catherine$750Jackson$500
$750
At the market-clearing equilibrium, total surplus is represented by the area
A + B + C + D + E + F.
Refer to Figure 4.1. Which area represents consumer surplus at a price of P2?
ACG
Which area represents producer surplus when the price is P1?
BCG
In a pure market economy, the "for whom" or distribution question is largely answered
according to the needs of individuals and groups in society.
Producer surplus is the area
below the price and above the supply curve.
A consumer's willingness to pay measures
how much a buyer values a good.
The equilibrium of supply and demand in a market
maximizes the total benefits received by buyers and sellers.
Inefficiency exists in any economy when a good is
not being consumed by buyers who value it most highly.
Refer to Figure 4.1. When the price falls from P1 to P2, which area represents the increase in consumer surplus to existing buyers?
BCFD
When a market is in equilibrium, which of the following would not be correct?
Consumer surplus will be equal to producer surplus.
Refer to Table 4.1. If the market price is $6.90, who will purchase the good?
David and Laura
Refer to Figure 4.4. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?
Producer surplus increases by $3,125.
A demand curve reflects each of the following EXCEPT the
ability of buyers to obtain the quantity they desire.
On a graph, consumer surplus is represented by the area
below the demand curve and above price.
Suppose Chris and Laura attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called
willingness to pay.