Chapter 7 - Macro Economics
Refer to Figure 7-25. Suppose the government imposes a price floor of $28 in this market. If the sellers with the lowest cost are the ones who sell the good and the government does not purchase any excess units produced, then total surplus will be
$1, 120
Refer to Figure 7-12. If the equilibrium price is $350, what is the producer surplus?
$30,000
Refer to Figure 7-9. If the price of the good is $9.50, then producer surplus is
$8.50
Which of the following will cause an increase in consumer surplus?
a technological improvement in the production of the good
Refer to Figure 7-28. At the quantity Q3,
the marginal value to buyers is less than the marginal cost to sellers
Consumer surplus is equal to the
value to buyers - amount paid by buyers
Refer to Table 7-11. 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
Refer to Figure 7-12. If the equilibrium price is $200, what is the producer surplus
$7,500
Refer to Table 7-1. If the market price is $105,
Sam's consumer surplus is $30 and total consumer surplus is $90
The study of how the allocation of resources affects economic well-being is called
welfare economics
Market power refers to the
ability of market participants to influence price
The maximum price that a buyer will pay for a good is called
willingness to pay
Consumer surplus
is measured using the demand curve for a product
Welfare economics is the study of how
the allocation of resources affects economic well-being
Refer to Figure 7-25. At the equilibrium price, total surplus is
$1, 152
Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the producer surplus to new producers?
$3,750
Total surplus in a market will increase when the government
Answer: Neither a nor b is correct Choices: -Imposes a binding price floor or a binding price ceiling on that market -Imposes a tax on that market
A seller's willingness to sell is
Answer: All of the above Choices: -Measured by the seller's cost of production -Related to her supply curve, just as a buyer's willingess to buy is related to his demand curve -Less than the price received if producer surplus is a positive number
Total surplus
Answer: All of the above are correct Choices: -Can be used to measure a market's efficiency -Is the sum of consumer and producer surplus -Is the value to buyers minus the cost to sellers
Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?
Calvin and Sam
Refer to Table 7-1. IF the price of the product is $110, then who would be willing to purchase the product?
Calving, Sam, and Andrew
Total surplus measures the
buyers' willingness to pay less the sellers' cost
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
Producer surplus measures the
benefits to sellers of participating in a market
If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the
consumer does not purchase the good
Externalities are
side effects passed on to a party other than the buyers and sellers in the market
Total surplus is
the total value of the good to buyers minus the cost to sellers of providing the good
Refer to Figure 7-25. Suppose the government imposes a price ceiling of $16 in this market. If the buyers with the highest willingness to pay purchase the good, then total surplus will be
$1,024
Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for
$100 or slightly less
Refer to Figure 7-9. If producer surplus is $19, then the price of the good is
$13.50
Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is
$14
Refer to Table 7-1. If price of the product is $135, then the total consumer surplus is
$15
Refer to Figure 7-12. If the equilibrium price rises form $200 to $350, what is the additional producer surplus to initial producers?
$15,000
Refer to Figure 7-9. If the price of the good is $14, then producer surplus is
$20.50
Refer to Table 7-11. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been
$200
Refer to Figure 7-11. If Evan, Selena, and Kris sell the good, and the resulting producer surplus is $700, then the price must have been
$300
Refer to Table 7-1. If the price of the product is $122, then the toatl consumer surplus is
$41
When a buyer's willingness ot pay for a good is equal to the price of the good, the
buyer is indifferent between buying the good and not buying it
If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the
consumer does not purchase the good
A consumer's willingness to pay directly measures
how much a buyer values a good
Refer to Figure 7-28. At the quantitiy Q2, the marginal value to buyers
is P2, and the marginal cost to sellers is P3
Market power and externalities are examples of
market failure
Consumer surplus
measures the benefit buyers receive from participating in a market
A seller's opportunity cost measures the
value of everything she must give up to produce a good
Total surplus is equal to
value to buyers - cost to sellers