Global Econ - Chapter 7

Cameron visits a sporting goods store to buy a new set of golf clubs. He is willing to pay $750 for the clubs but buys them on sale for $575. Cameron's consumer surplus from the purchase is Select one: a. $175. b. $575. c. $750. d. $1,325.

a. $175.

Figure 7-11 Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus due to new producers entering the market? Select one: a. $625 b. $2,500 c. $3,125 d. $5,625

a. $625

Consumer surplus in a market can be represented by the Select one: a. area below the demand curve and above the price. b. distance from the demand curve to the horizontal axis. c. distance from the demand curve to the vertical axis. d. area below the demand curve and above the horizontal axis.

a. area below the demand curve and above the price.

As a result of a decrease in price, Select one: a. new buyers enter the market, increasing consumer surplus. b. new buyers enter the market, decreasing consumer surplus. c. existing buyers exit the market, increasing consumer surplus. d. existing buyers exit the market, decreasing consumer surplus.

a. new buyers enter the market, increasing consumer surplus.

Figure 7-16 Refer to Figure 7-16. If the price of the good is $300, then producer surplus amounts to Select one: a. $100. b. $200. c. $300. d. $400.

b. $200

Figure 7-28 Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers Select one: a. and the marginal cost to sellers are both P2. b. is P2, and the marginal cost to sellers is P3. c. and the marginal cost to sellers are both P3. d. is P3, and the marginal cost to sellers is P2.

b. is P2, and the marginal cost to sellers is P3.

A seller is willing to sell a product only if the seller receives a price that is at least as great as the Select one: a. seller's producer surplus. b. seller's cost of production. c. seller's profit. d. average willingness to pay of buyers of the product.

b. seller's cost of production.

Efficiency in a market is achieved when Select one: a. a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. b. the sum of producer surplus and consumer surplus is maximized. c. all firms are producing the good at the same low cost per unit. d. no buyer is willing to pay more than the equilibrium price for any unit of the good

b. the sum of producer surplus and consumer surplus is maximized.

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to Select one: a. only existing customers who now get lower prices on the gowns they were already planning to purchase. b. only new customers who enter the market because of the lower prices. c. both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. d. Consumer surplus does not increase; it decreases.

c. both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices.

Which of the following will cause an increase in producer surplus? Select one: a. the imposition of a binding price ceiling in the market b. buyers expect the price of the good to be lower next month c. the price of a substitute increases d. income increases and buyers consider the good to be inferior

c. the price of a substitute increases

Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to Select one: a. only existing sellers who now receive higher prices on the pizzas they were already selling. b. only new sellers who enter the market because of the higher prices. c. both existing sellers who now receive higher prices on the pizzas they were already selling and new sellers who enter the market because of the higher prices. d. Producer surplus does not increase; it decreases.

c. both existing sellers who now receive higher prices on the pizzas they were already selling and new sellers who enter the market because of the higher prices.