Quiz - Chapter 7 - Welfare Economics
Suppose there is an early freeze in California that reduces the size of the lemon crop. What happens to consumer surplus in the market for lemons?
Consumer Surplus decreases
On a graph, the area below a demand curve and above the price measures
Consumer surplus
Which of the following events would increase producer surplus?
Sellers' costs stay the same and the price of the good increases.
If a consumer places a value of $14 on a particular good and if the price of the good is $12, then the
consumer enjoys consumer surplus if he or she buys the good
If the cost of producing tables increases causing the price of tables to increase, consumer surplus in the table market will
decrease
Welfare economics implies that the equilibrium price of a product is considered to be the best price because it
maximizes the combined welfare of buyers and sellers
A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it
maximizes the combined welfare of buyers and sellers.
Cost is a measure of the
seller's willingness to sell
A supply curve can be used to measure producer surplus because it reflects
sellers' costs
Producer surplus is
the amount a seller is paid minus the cost of production