Econ Exam 2

Consumer surplus in a market can be represented by the a. area below the demand curve and above the price b.distance from the demand curve to the horizontal axis c.distance from the demand curve to the vertical axis d. area below the demand curve and above the horizontal axis

a. area below the demand curve and above the price

a tax levied on the buyers of a good shifts the a.supply curve upward(or to the left) b.supply curve downward(to the right) c.demand curve upward(to the right) d.demand curve downward(to the left)

a.supply curve upward(or to the left)

Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor. On a particular day, he is willing to tutor the first hour for $10, the second hour for $18, the third hour for $28, and the fourth hour for $40. Assume Allen is rational in deciding how many hours to tutor. His producer surplus is a.$40 b.$64 c.$12 d.$56

b.$64

ABC Company incurs a cost of 50 cents to produce a dozen eggs, while XYZ Company incurs a cost of 70 cents to produce a dozen eggs. Which of the following price increases would cause both companies to experience an increase in producer surplus? a. The price of a dozen eggs increases from 40 cents to 55 cents. b. The price of a dozen eggs increases from 55 cents to 70 cents. c. The price of a dozen eggs increases from 55 cents to 75 cents. d. All of these price increases would cause both companies to experience a loss in producer surplus.

c. The price of a dozen eggs increases from 55 cents to 75 cents.

Another way to think of the marginal seller is the seller who a. will accept the lowest price of any seller in the market. b. requires the highest price of any potential seller in the market. c. would leave the market first if the price were any lower d. would leave the market last if the price falls

c. would leave the market first if the price were any lower

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for a.$2.00 b.$.50 c.$3.50 d.$5.00

c.$3.50

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 $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is a.$-15 b.$20 c.$30 d.$75

c.$30

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be a.$3 b.$2 c.$5 d.$4

c.$5

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book? a.$6 b.$2 c.$8 d.$4

c.$8

At present, the maximum legal price for a human kidney is $0. The price of $0 maximizes a. consumer surplus but nit producer surplus b.producer surplus but not consumer surplus c. both consumer and producer surplus d. neither consumer or producer surplus

d. neither consumer or producer surplus