Ch. 7
the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
Consumer surplus is
side effects passed on to a party other than the buyers and sellers in the market.
Externalities are
who would be the first to leave the market if the price were any higher.
In a market, the marginal buyer is the buyer
consumer surplus
On a graph, the area below a demand curve and above the price measures
P2
Refer to Figure 7-16. The equilibrium price is
$25
Refer to Figure 7-6. If the price of the good is $14, then producer surplus is
$8.00
Refer to Figure 7-6. If the price of the good is $8.50, then producer surplus is
$20
Refer to Table 7-1. If price of the product is $30, then the total consumer surplus is
Mike, Sandy, and Jonathan
Refer to Table 7-1. If the price of the product is $15, then who would be willing to purchase the product?
$46
Refer to Table 7-1. If the price of the product is $18, then the total consumer surplus is
No one
Refer to Table 7-1. If the price of the product is $51, then who would be willing to purchase the product?
$75
Refer to Table 7-4. If tickets sell for $20 each, then what is the total consumer surplus in the market?
consumer surplus + producer surplus.
Total surplus in a market is equal to
the total value of the good to buyers minus the cost to sellers of providing the good.
Total surplus is
value to buyers - cost to sellers.
Total surplus is equal to
how the allocation of resources affects economic well-being.
Welfare economics is the study of
buyer is indifferent between buying the good and not buying it.
When a buyer's willingness to pay for a good is equal to the price of the good, the
amount a seller is paid minus the cost of production.
Producer surplus is the
A+B+C
Refer to Figure 7-1. When the price is P1, consumer surplus is
A
Refer to Figure 7-1. When the price is P2, consumer surplus is
decreases by an amount equal to B+C.
Refer to Figure 7-1. When the price rises from P1 to P2, consumer surplus
C
Refer to Figure 7-11. When the price is P1, producer surplus is
A+B+C
Refer to Figure 7-11. When the price is P2, producer surplus is
total surplus
Refer to Figure 7-14. When the price is P1, area B+C represents
B
Refer to Figure 7-14. Which area represents consumer surplus when the price is P1?
C
Refer to Figure 7-14. Which area represents producer surplus when the price is P1?
A+B+C
Refer to Figure 7-16. At equilibrium, consumer surplus is represented by the area
D+H+F
Refer to Figure 7-16. At equilibrium, producer surplus is represented by the area
F
Refer to Figure 7-16. If the price were P1, producer surplus would be represented by the area
A
Refer to Figure 7-16. If the price were P3, consumer surplus would be represented by the area
$750
Refer to Table 7-6. If the market price is $1,000, the producer surplus in the market is
$550
Refer to Table 7-6. If the market price is $900, the producer surplus in the market is
$400
Refer to Table 7-8. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market?
$45
Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be
Dianne is an eager supplier
Refer to Table 7-6. If the price is $1,000,
willingness to pay
The maximum price that a buyer will pay for a good is called the
whether equilibrium outcomes are socially desirable.
An example of normative analysis is studying
how much a buyer values a good
A consumer's willingness to pay directly measures
decreases, and the consumer surplus in the market for red wine decreases.
A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes
the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased.
A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that
cost of mowing lawns
Ally mows lawns for a living. Ally's out-of-pocket expenses (for equipment, gasoline, and so on) plus the value that she places on her own time amount to her
how market forces produce equilibrium
An example of positive analysis is studying