7-2 to 7-4

Refer to Table 7-15. If each producer has one unit available for sale, and if the market equilibrium price is $70, how much is the combined total cost of all participating sellers in the market?

$100

Refer to Figure 7-11. If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?

$625

Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

ACH

Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2?

AHGB

Refer to Figure 7-23. At equilibrium, producer surplus is represented by the area

D+H+F

Efficiency is attained when Correct!

Total surplus is maximized

Which of the following will cause a decrease in producer surplus?

income increases and buyers consider the good to be inferior

Inefficiency exists in a market when a good is

not being produced by the lowest-cost producers

Refer to Figure 7-22. If 40 units of the good are bought and sold, then

the marginal value to buyers is greater than the marginal cost to sellers.

Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

$72

Laissez-faire is a French expression which literally means

Allow them to do

Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus would be

$1,600

Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be

187.50

Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. If Firm A produces a monitor that Cassie buys but David does not, then the market outcome illustrates which of the following principles? (i)Free markets allocate the supply of goods to the buyers who value them most highly, as measured by their willingness to pay.(ii)Free markets allocate the demand for goods to the sellers who can produce them at the least cost.

ii only

According to many economists, government restrictions on ticket scalping do all of the following except

keep the cost of tickets to all consumers low.