Micro Economics Chapter 7

If the market price of an orange is $1.20, consumer surplus amounts to

$1.40.

As the table suggests, the demand curve is a straight line and so is the supply curve. Take this into account and suppose the price is $8, with only 4 pizzas being bought and sold. Total surplus amounts

$36

If the price of Vanilla Coke is $6.90, who will purchase the good?

David and Laura

If the market price is $3.80,

Megan's consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80.

At a price of $4.00, total surplus is

less than it would be at the equilibrium price.

The market quantity of oranges demanded per day is exactly 5 if the price of an orange, P, satisfies

$0.75 < P < $0.80

As the table suggests, the demand curve is a straight line and so is the supply curve. Take this into account and suppose the price is $8, with only 4 pizzas being bought and sold. Consumer surplus amounts to

$12

As the table suggests, the demand curve is a straight line and so is the supply curve. Taking this into account, when there is equilibrium, consumer surplus is

$16

As the table suggests, the demand curve is a straight line and so is the supply curve. Take this into account and suppose the price is $8, with only 4 pizzas being bought and sold. Producer surplus

$24

As the table suggests, the demand curve is a straight line and so is the supply curve. Taking this into account, when there is equilibrium, producer surplus is

$32

If the market price is $5.50, the consumer surplus in the market will be

$4.50.

Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be

$45.

If the market price of an orange is $1.20, the market quantity of oranges demanded per day is

4

If the market price of an orange is $0.70, the market quantity of oranges demanded per day is

7

If the market price of an orange is $0.40,

7 oranges are demanded per day and total consumer surplus amounts to $5.50.

Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40?

Alex

Who experiences the largest gain in consumer surplus when the price of an orange decreases from $1.05 to $0.75?

Alex and Barb experience the same gain in consumer surplus, and Carlos's gain is zero.

Which of the following is not true?

All of the above are true.

Which of the following statements is correct?

Neither Barb's consumer surplus nor Carlos's consumer surplus can exceed Alex's consumer surplus, for any price of an orange.

Consumer surplus

is the difference between the amount that a consumer actually pays for a good and the amount that the consumer is willing to pay for the good.

Willingness to pay

measures the value that a buyer places on a good.

If the market price of an orange increases from $0.60 to $1.05, total consumer surplus

decreases by $2.25.

When the price rises from P1 to P2, which of the following statements is not true?

decreases by an amount equal to C.

A consumer's willingness to pay directly measures

how much a buyer values a good.

Welfare economics is the study of

how the allocation of resources affects economic well-being.

Even though participants in the economy are motivated by self-interest, the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.

true

Unless markets are perfectly competitive, they may fail to maximize the total benefits to buyers and sellers

true