Econ Chapter 7,8,9

Chad is willing to pay $5.00 to get his first cup of morning latté. He buys a cup from a vendor selling latté for $3.75 per cup. Chad's consumer surplus is

$1.25

Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is

$150

Roland mows Karla's lawn for $25. Roland's opportunity cost of mowing Karla's lawn is $20, and Karla's willingness to pay Roland to mow her lawn is $28. If Karla hires Roland to mow her lawn, Karla's consumer surplus is...?

$3

Roland mows Karla's lawn for $25. Roland's opportunity cost of mowing Karla's lawn is $20, and Karla's willingness to pay Roland to mow her lawn is $28. If Karla hires Roland to mow her lawn, Roland's producer surplus is...?

$5

Chad is willing to pay $5.00 to get his first cup of morning latté; he is willing to pay $4.50 for a second cup. He buys his first cup from a vendor selling latté for $3.75 per cup. He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup. Chad buys a second cup. Which of the following statements is correct?

Chad's willingness to pay for his second cup was smaller than his willingness to pay for his first cup

The benefit to buyers of participating in a market is measured by

Consumer surplus

Which of the following statements is not correct about a market in equilibrium?

Consumer surplus will be equal to producer surplus

A tax placed on buyers of tuxedoes shifts the

Demand curve for tuxedos downward, decreasing the price received by sellers of tuxedos and causing the quantity of tuxedos to decrease

Suppose Ireland exports beer to China and imports pineapples from the United States. This situation suggests that

Ireland has a comparative advantage relative to China in producing beer, and the United States has a comparative advantage relative to Ireland in producing pineapples.

Assume, for Mexico, that the domestic price of oranges without international trade is lower than the world price of oranges. This suggests that, in the production of oranges,

Mexico has a comparative advantage over other countries and Mexico will export oranges.

The benefit to sellers of participating in a market is measured by the

Producer Surplus

Assume, for Vietnam, that the domestic price of textiles without international trade is lower than the world price of textiles. This suggests that, in the production of textiles,

Vietnam has a comparative advantage over other countries and Vietnam will export textiles.

If an allocation of resources is efficient, then

all potential gains from trade among buyers are sellers are being realized

Suppose a tax is imposed on the sellers of fast-food French fries. The burden of the tax will

be shared by the buyers and sellers of fast-food French fries but not necessarily equally.

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When theprice of bananas falls from 50 cents a pound to 40 cents a pound

both Janine and Henry experience an increase in consumer surplus.

It does not matter whether a tax is levied on the buyers or the sellers of a good because

buyers and sellers will share the burden of the tax.

Trade among nations is ultimately based on

comparative advantage.

The principle of comparative advantage asserts that

countries can become better off by specializing in what they do best.

Deadweight loss is the

decline in total surplus that results from a tax

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

export copper, since that country has a comparative advantage in copper.

When a tax is placed on the buyers of a product, a result is that buyers effectively pay

more than before the tax, and sellers effectively receive less than before the tax.

Suppose the country of Ublary imposes a tariff on the import of energy drinks, a good that Ublary currently imports from abroad. What will happen to surplus in the Ublarian market for energy drinks?

producer surplus increases and total surplus decreases in the market for energy drinks.

Suppose the federal government doubles the gasoline tax. The deadweight loss associated with the tax

quadruples.

Which of the following events would increase producer surplus?

sellers cost stays the same and the price of the good increases

One result of a tax, regardless of whether the tax is placed on the buyers or the sellers, is that the

tax reduces the welfare of both buyers and sellers

consumer surplus

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price

the country will be an importer of the good.

When motorcycles are taxed and sellers of motorcycles are required to pay the tax to the government

the quantity of motorcycles bought and sold in the market is reduced.

Economists typically measure efficiency using

total surplus

At the equilibrium price of a good, the good will be purchased by those buyers who

value the good more than price.

At the equilibrium price of a good, the good will be sold by those sellers

whose cost is less than price.