ECON Ch. 6
Producer surplus occurs when: a. an output sells for a price that is higher than its marginal cost to the seller. b. a producer is able to sell output at a price that is less than the maximum price buyers are willing to pay. c. the price charged for an output is equal to the marginal cost of the output. d. all sellers in a market charge the same price for an output.
a
When output sells for a price that is higher than its marginal cost to the seller (the minimum price the seller is willing to accept), the seller: a. enjoys a producer surplus. b. minimizes producer surplus. c. has a horizontal marginal cost curve. d. is inefficient.
a
Bert is willing to pay $50 for a jacket that is on sale for $39. If Bert buys the jacket, his consumer surplus will be: a. $0 b. $11 c. $39 d. $50
b
Ceteris paribus, if the marginal benefit of bananas decreases as the quantity of bananas consumed increases, then: a. banana consumers will have negative consumer surplus. b. the demand curve for bananas will slope downward. c. marginal utility increases as the number of bananas consumed increases. d. the demand for bananas is perfectly inelastic.
b
Ceteris paribus, when supply decreases, there is: a. an increase in price and an increase in consumer surplus. b. an increase in price and a decrease in consumer surplus. c. a decrease in price and an increase in consumer surplus. d. a decrease in price and a decrease in consumer surplus.
b
If a price floor is imposed at $8, the quantity bought and sold falls from ___ in equilibrium to ___ units. (graph 6.2) a. 200; 400 b. 400; 200 c. 600; 200 d. 400; 600
b
If a price floor is imposed at $8, total surplus (consumer plus producer surplus) is equal to: (graph 6.2) a. $800 b. $1,200 c. $1,600 d. $3,200
b
In free market equilibrium, total (consumer plus producer) surplus is equal to __. (graph 4.4) a. $10 b. $15 c. $20 d. $30
b
The efficient quantity in the market represented by the graph occurs when the marginal benefit of the last unit is equal to: (graph 4.4) a. $5 and the marginal cost of the last unit is equal to $2. b. $3 and the marginal cost of the last unit is also equal to $3. c. $2 and the marginal cost of the last unit is also equal to $2. d. $5 and the marginal cost of the last unit is equal to $3.
b
Assuming no market failures, an efficient level of an output exists when: a. everyone who is willing to buy the output is able to buy the output. b. total benefit is equal to total cost for all units bought and sold. c. marginal benefit is equal to marginal cost. d. marginal benefit plus marginal cost is maximized.
c
Buyers enjoy consumer surplus when the market price is _ than the highest price buyers would pay; sellers enjoy producer surplus when the market price is _ than the lowest price sellers would accept. a. lower; lower b. higher; higher c. lower; higher d. higher; lower
c
In equilibrium, consumer surplus is equal to: (graph 6.2) a. $400 b. $600 c. $800 d. $1,000
c
In equilibrium, producer surplus is equal to: (graph 6.2) a. $400 b. $600 c. $800 d. $1,000
c
The efficient level of output in the market represented by the graph occurs at quantity: (graph 4.4) a. 0, where MB > MC. b. 5, where MB > MC. c. 10, where MB = MC. d. 15, where MC > MB.
c
The marginal benefit of the 200th unit is equal to $____ and the marginal cost of the 200th unit is equal to $___. (graph 6.2) a. 6;6 b. 6;4 c. 8;4 d. 4;8
c
All of the following are possible sources of inefficiency except: a. taxes b. price ceilings c. negative externalities d. perfect competition
d
Which of the following statements best illustrates the existence of consumer surplus? a. Sally is willing to baby sit for $6 per hour but is paid $7 hour to baby sit. b. Bob was willing to pay no more than $125 for a ticket to the World Series and he was able to buy a ticket for $125. c. Rose's Flower Shop is selling surplus tulips at a price that is below cost because inventories are too high. d. Stan saved $50 to buy a cowboy hat he had been wanting. When he got to the store, the hat was on sale and he bought the hat for only $39 instead of $50.
d
If a price floor is imposed at $8, deadweight loss is equal to: (graph 6.2) a. $100 b. $200 c. $300 d. $400
d
A marginal cost curve can be interpreted as a: a. supply curve b. demand curve c. producer surplus d. consumer surplus curve
a
Ceteris paribus, a decrease in the demand for soda leads to: a. a decrease in the price of soda and a decrease in producer surplus. b. a decrease in the price of soda and an increase in producer surplus. c. an increase in the price of soda and a decrease in producer surplus. d. an increase in the price of soda and an increase in producer surplus.
a