Micro Ch. 7 Quiz

Suppose there is an early freeze in California that reduces the size of the lemon crop. As the price of lemons rises, what happens to consumer surplus in the market for lemons?

Consumer surplus decreases.

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.

On a graph, the area below a demand curve and above the price measures

consumer surplus.

If the cost of producing tables increases causing the price of tables to increase, consumer surplus in the table market will

decrease.

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.

Welfare economics implies that the equilibrium price of a product is considered to be the best price

maximizes the combined welfare of buyers and sellers.

A supply curve can be used to measure producer surplus because it reflects

seller's costs.

Cost is a measure of the

seller's willingness to sell.

Producer surplus is

the amount a seller is paid minus the cost of production.