Macro CH 7&8

If Evan, Selena, Angie and Kris sell the good and the producer surplus is $700, then the price must have been...

$300

If the market price is $1.40, then consumer surplus amounts to?

$.60( 1.75-1.4= .35)+(1.55-1.4=.15)+(1.5-1.4=.1) .1+.15+.35=.6

If there is only one unit of the good, and the buyers bid against each other for the right to purchase it, then the consumer surplus will be

$10 or slightly less

Evan sells for 50 Selena sells for 100 Angie sells for 150 Kris sells for 200 If the sellers bid against each other for the right to sell the good to a consumer, the good will likely sell for..

$100 or slightly less

Welfare economics

The study of how the allocation of resources affect economic well-being

If Evan, Selena and Angie sell the good, and the resulting producer surplus is $300, then the price must have been...

$200

Suppose you sister inherits an antique doll from your great aunt. The doll has a sentimental value of $500 to you. If your sister sells you the doll for $200. Your consumer surplus is...

$300. ($500-$200)

If there is only one unit of the good, and the buyers bid against each other for the right to purchase it, then the good will sell for

$35 or slightly more

If the price is $20, then consumer surplus in the market is...

$45, and Quilana wilbur and Ming-la purchase the good

If the sellers bid against each other for the right to sell the good to a consumer, then the producer surplus will be

$50 or slightly less

Ronnie operates a lawn care service. On each day the cost of mowing the first lawn is $15. The cost of the second lawn is $25. And the cost of the third lawn is $40. His producer surplus is $100, if he charges all customers the same price, what price is he charging?

$60 per lawn. (60-15=45)(60-25=35) (60-40=20) 45+35+20=100

If the government imposes a $55 price floor, total surplus will be..

$62.50 lower than without the price floor

Calculating consumer surplus

1/2(h)*b

Figure 7-19: At the equilibrium price, consumer surplus is

100.......65-45=20/2=10 10*10=100

At equilibrium price, producer surplus is

150.....45-15=30/2=15 15*10=150

If the government imposes a $55 price ceiling, then the total surplus will be?

250.

Total surplus?

250. 100+150

Xavier(1) $1.75 Xavier(2) $1.55 Xavier(3) $1.15 Yadier(1) $1.50 Yadier(2) $1.25 Yadier(3) $.75 Zavi(1) $1.30 Zavi(2) $1.10 Zavi(3) $.7 If the market price is $1.40, then the market quantity for apples demanded per day is

3 apples per day (xavier 1, 2 and Yadier 1)

At Nick's bakery, the cost to make a cheese danish is $1.5 per danish. As a result of selling 10 danishes, Nick experiences a Producer surplus of $20. Nick must be selling his danishes for?

3.5 each. (3.5-1.5=2) (2*10=20)

Kristi and Rebecca sell lemonade for .5 per cup. it costs them .1 to make each cup. Their producer surplus is $20. How many cups did they sell?

50. (.5-.1=.4) .4*50=20

Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22

All 3 buyers experience the same loss of consumer surplus

Refer to the graph, which of the following is correct?

At P3, producer surplus is smaller than at P1

If the per-unit taxed is placed on a good in the market, the tax revenue is depicted by?

B+C (Two rectangles between CS and PS)

If the per-unit taxed is placed on a good in the market, the consumer surplus is area____ and producer surplus is area____.

Consumer: A Producer: D

If the government changes the per unit tax from 5 to 2.5 then the price paid by buyers would be 7.5, the price received by sellers would be 5 and the quantity sold would be 1.5 units. This lower tax rate would...

Decrease government revenue and decrease the deadweight loss from tax

If the government changed the per unit tax from 5 to 7.5 then the price paid by the buyer would be 10.5 and the price received by sellers would be 3 and the quantity sold would be .5 units. This higher tax rate would?

Decrease government revenue and increase the deadweight loss

If the per-unit taxed is placed on a good in the market, deadweight loss is shown by area____

E+F (two triangles closest to Equilibrium Quantity

As the size of the tax increases , the size of the deadweight loss first increases then decreases

False

Consumer surplus increases when the price increases

False

Producer surplus is the difference between willingness to pay and price paid for a good

False

Carlos WTP: 15 Quilana WTP: 25 Wilbur WTP: 35 Ming-la WTP: 45 If the market price is $20, who will purchase?

Quilana, Wilbur and Ming-La

The Deadweight loss from a tax...

Reflects the inefficiency in resource allocation because the tax distorts incentives

The deadweight loss from a tax is likely to be smallest when...

Supply is inelastic and demand is inelastic

The market of chocolate cupcakes is at an Equilibrium price of $4 and quantity of 300. The government levies a $1 per unit tax which decreases the quantity sold to 250. Which statement is INCORRECT?

Tax revenue collected is $300.

The equilibrium price in the market for gluten free muffins is $5, and at this price 300 gluten free muffins are bought and sold. At a quantity of 200 gluten free muffins the market is not efficient because:

The Value to the buyers exceeds the cost to the seller. The sum of consumer and producer surplus is not maximized Consumers would gain additional surplus if they purchased 100 more muffins Producers would gain additional surplus if they produced and sold 100 more muffins

The market for gluten free bread is characterized by an inelastic demand and an elastic supply. What would happen to the deadweight loss of a tax if the supply was also inelastic

The deadweight loss would decrease

A policymaker that wants to raise tax revenue while minimizing the deadweight loss should tax goods with inelastic supply and demand rather than goods with elastic demand

True

Taxes create market inefficiencies that can be measured as deadweight loss

True

The market equilibrium maximizes the sum of the producer and consumer surplus

True

Suppose you inherit a doll. The doll has a sentimental value of $100 to you. Jane is willing to pay $800 for the doll. If you sell the doll for $600, your producer surplus is___ and Jane's consumer surplus is____.

Your Producer Surplus: $500 ($600-$100) Jane's Consumer Surplus: $200 ($800(WTP)-$600)

If the market price increases from 1.4 to 1.6 then consumer surplus...

decreases by .45 from .6 to .15