Homework7
Alex is willing to pay $10, and Bella is willing to pay $8, for 1 pound of ribeye steak. When the price of ribeye steak increases from $9 to $11,
Alex experiences a decrease in consumer surplus, but Bella does not.
Inefficiency can be caused in a market by the presence of
a. market power. b. externalities. c. imperfectly competitive markets.
17. 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.
3. A demand curve reflects each of the following except the
ability of buyers to obtain the quantity they desire.
A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes
decreases, and the consumer surplus in the market for red wine decreases.
If the cost of producing sofas decreases, then consumer surplus in the sofa market will
increase
When there is a technological advance in the pork industry, consumer surplus in that market will
increase
Consumer surplus
is the amount a consumer is willing to pay minus the amount the consumer actually pays.
consumer surplus
measures the benefit buyers receive from participating in a market.
16. Cost is a measure of the
seller's willingness to sell
Total surplus is
the total value of the good to buyers minus the cost to sellers of providing the good
Producer surplus directly measures
the well-being of sellers.
The study of how the allocation of resources affects economic well-being is called
welfare economics
We can say that the allocation of resources is efficient if
total surplus is maximized
In a market, the marginal buyer is the buyer
who would be the first to leave the market if the price were any higher.
Suppose the demand for peaches decreases. What will happen to producer surplus in the market for peaches
It decreases
If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is
Zero
Consumer surplus is
a. a concept that helps us make normative statements about the desirability of market outcomes. b. represented on a graph by the area below the demand curve and above the price. c.a good measure of economic welfare if buyers' preferences are the primary concern
The marginal seller is the seller
who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher.
The maximum price that a buyer will pay for a good is called
willingness to pay