ECON201 - Chapter 4 Homework
Consumer surplus is
the difference between the highest price a consumer is willing to pay and the price the consumer actually pays.
Producer surplus is
the difference between the lowest price a firm would be willing to accept and the price it actually receives.
Deadweight loss is
the reduction in economic surplus resulting from a market not being in competitive equilibrium.
Economic surplus is
the sum of consumer surplus and producer surplus.
Jill $4 Jose $3 Josh $2 Jordan $1 If the price of a bottle of orange juice is $0.75, then consumer surplus is an amount equal to the area
under the demand curve and above the $0.75 price for each individual who buys and consumes orange juice.
Jill $4 Jose $3 Josh $2 Jordan $1 If the price of a bottle of orange juice is $1.50, then consumer surplus is an amount equal to the area
under the demand curve and above the $1.50 price for each individual who buys and consumes orange juice.
Economic surplus in a market is the sum of _____ surplus and _____ surplus. In a competitive market, with many buyers and sellers and no government restrictions, economic surplus is at a _____ when the market is in _____.
consumer; producer; maximum; equilibrium
Jill $4 Jose $3 Josh $2 Jordan $1 Suppose the price of a bottle of orange juice rises to $1.50. Once the price of a bottle of orange juice rises to $1.50, the total consumer surplus received by these consumers is
$4.50
Jill $4 Jose $3 Josh $2 Jordan $1 If the price of a bottle of orange juice is $0.75, the total consumer surplus received by these consumers is
$7
The figure illustrates the market for apples in which the government has imposed a price floor of $14 per crate. How many crates of apples will be sold after the price floor has been imposed?
12 million
As the price of a good rises, consumer surplus and as the price of a good falls, consumer surplus
decreases increases
Will apple producers benefit from the price floor?
all of the above
Economists define economic efficiency in this way
all of the above.
On a shopping trip, Sofia decided to buy a light blue coat that had a price tag of $79.95. When she brought the coat to the store's sales clerk, Sofia was told that the coat was on sale, and she would pay 20 percent less than the price on the tag. After the discount was applied, Sofia paid $63.96, $15.99 less than the original price. The value of Sofia's consumer surplus from this purchase is
at least $15.99 since this is the difference between the price Sofia is willing to pay for the coat and the actual price she pays, but she could have be willing to pay more than $79.95 for the coat.
________ surplus is the difference between the highest price a consumer is willing to pay and the price the consumer actually pays. This component of economic surplus is illustrated in the diagram by area
consumer A
As the price of a good rises, producer surplus and as the price of a good falls, producer surplus
increases decreases
Economic efficiency is
is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production. & is a market outcome in which the sum of consumer surplus and producer surplus is at a maximum.
________ surplus is the difference between the lowest price a firm would be willing to accept and the price it actually receives. This component of economic surplus is illustrated in the diagram by area
producer B
Imposing price controls on goods would make them hard to find because
producers would not want to supply as much as they did before the price controls.
Because economic surplus is the _________ of the benefit to firms and the benefit to consumers, it is the best measure we have of the benefit to society from the production of a particular good or service. For this reason, it is appropriate to label economic surplus as __________ surplus.
sum social
Will there be a shortage or surplus? If there is a shortage or surplus, how large will it be? There will be a ______ of ___ million creates of apples per year
surplus 18 million
