Chapter Seven Homework - Microeconomics

Refer to Figure 7-1. When the price is P1, consumer surplus is

A+B+C

Refer to Figure 7-4. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

ABED

Refer to Figure 7-4. Which area represents producer surplus when the price is P2?

ACF

Refer to Table 7-2. If the market price is $3.80,

Megan's consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80.

Refer to Table 7-3. If the market price of an orange increases from $0.60 to $1.05, total consumer surplus

decreased by $2.25

Refer to Table 7-5. At a price of $4.00, total surplus is

less than it would be at the equilibrium price.

Refer to Table 7-3. If the market price of an orange is $1.20, consumer surplus amounts to

$1.40

Refer to Table 7-3. The market quantity of oranges demanded per day is exactly 5 if the price of an orange, P, satisfies

$0.75 < P < $0.80.

Refer to Figure 7-1. When the price is P2, consumer surplus is

A

Refer to Table 7-5. As the table suggests, the demand curve is a straight line and so is the supply curve. Take this into account and suppose the price is $8, with only 4 pizzas being bought and sold. Total surplus amounts to

$36

Refer to Figure 7-4. Which area represents the increase in producer surplus when the price rises from P1 to P2?

AFEB

Refer to Table 7-3. Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40?

Alex

Refer to Table 7-3. Who experiences the largest gain in consumer surplus when the price of an orange decreases from $1.05 to $0.75?

Alex and Barb experience the same gain in consumer surplus, and Carlos's gain is zero.

Refer to Figure 7-4. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

DEF

Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good?

David and Laura

Even though participants in the economy are motivated by self-interest, the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.

TRUE

Unless markets are perfectly competitive, they may fail to maximize the total benefits to buyers and sellers.

TRUE

Willingness to pay

measures the value that a buyer places on a good.

Refer to Table 7-4. Who is a marginal seller when the price is $1,200?

only Jill

Refer to Table 7-5. As the table suggests, the demand curve is a straight line and so is the supply curve. Taking this into account, when there is equilibrium, total surplus is

$48

Refer to Table 7-4. If the market price is $1,000, the producer surplus in the market is

$750

Refer to Table 7-5. The equilibrium or market-clearing price is

$8.00

Refer to Table 7-3. If the market price of an orange is $1.20, the market quantity of oranges demanded per day is

3

Refer to Table 7-3. Which of the following statements is correct?

Neither Barb's consumer surplus nor Carlos's consumer surplus can exceed Alex's consumer surplus, for any price of an orange.

Refer to Figure 7-1. Area C represents

consumer surplus to new consumers who enter the market when the price falls from P2 to P1.

Refer to Figure 7-1. When the price rises from P1 to P2, consumer surplus

decreases by an amount equal to B + C.

A consumer's willingness to pay directly measures

how much a buyer values a good.

Refer to Table 7-4. Suppose each of the five sellers can supply at most one unit of the good; then the market quantity supplied is exactly 3 if the price is

$1,170

Refer to Table 7-5. As the table suggests, the demand curve is a straight line and so is the supply curve. Take this into account and suppose the price is $8, with only 4 pizzas being bought and sold. Consumer surplus amounts to

$12

Refer to Table 7-5. As the table suggests, the demand curve is a straight line and so is the supply curve. Taking this into account, when there is equilibrium, consumer surplus is

$16

Refer to Table 7-4. If the market price is $1,100, the combined total cost of all participating sellers is

$2,250

Refer to Table 7-5. As the table suggests, the demand curve is a straight line and so is the supply curve. Take this into account and suppose the price is $8, with only 4 pizzas being bought and sold. Producer surplus amounts to

$24

Refer to Table 7-5. As the table suggests, the demand curve is a straight line and so is the supply curve. Taking this into account, when there is equilibrium, producer surplus is

$32

Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be

$4.50

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

$45

Refer to Table 7-3. If the market price of an orange is $0.70, the market quantity of oranges demanded per day is

7

Refer to Table 7-3. If the market price of an orange is $0.40,

7 oranges are demanded per day and total consumer surplus amounts to $5.50.

Refer to Table 7-2. Which of the following is not true?

All of the above are true.

Refer to Figure 7-4. Which area represents producer surplus when the price is P1?

BCE

Refer to Figure 7-1. When the price rises from P1 to P2, which of the following statements is not true?

Buyers place a higher value on the good after the price increase.

Refer to Table 7-4. If the price is $775, who would be willing to supply the product?

Catherine and Jackson

Refer to Table 7-4. If the price is $1,000,

Catherine is an eager supplier.

Welfare economics is the study of

how the allocation of resources affects economic well-being.

Consumer surplus

is the difference between the amount that a consumer actually pays for a good and the amount that the consumer is willing to pay for the good.