ECON Chapter 6

When the price is raised above the equilibrium price, _________gain some well-being at the expense of ________ although they also lose some well-being because there are fewer transactions taking place. Listen to the complete question

Blank 1: sellers or producers Blank 2: buyers or consumers

Total producer surplus is represented graphically by the area above the _______curve and_______ the equilibrium price.

Blank 1: supply Blank 2: below, underneath, under, or beneath

________ loss is a loss of total surplus that occurs because the quantity traded is different from the market equilibrium quantity.

Deadweight

What is true about total surplus?

It is the sum of consumer and producer surplus It exists as a result of participation in market exchanges

Markets can be missing for a variety of reasons, including which of the following? - Buyers and sellers do not know one another - There are too many buyers and not enough sellers - Lack of accurate information or communication between potential buyers and sellers - Public policy prevents the market from existing - Lack of technology that would make the exchanges possible

Lack of accurate information or communication between potential buyers and sellers Public policy prevents the market from existing Lack of technology that would make the exchanges possible

When the price is _____ the equilibrium price, sellers gain some well-being at the expense of buyers, but they also lose some well-being because there are fewer transactions taking place.

greater than

Part of consumer surplus is transferred to producers when price is artificially

increased

The demand curve is a line showing the _______ willingness to pay for all buyers.

maximum

When there are people who would like to make exchanges but cannot, for one reason or another, we say that a market is

missing

Consumer surplus is the _________ benefit that a consumer receives from purchasing a good or service.

net

Producer surplus is the ________ benefit that a producer receives from the sale of a good or service.

net

The difference between the producer's willingness to sell and the actual price is the

net benefit that a producer receives from the sale of a good or service.

At prices above or below the market equilibrium price, fewer trades take place. When compared to a market at the equilibrium price, the value that would have been gained from voluntary trades

no longer exists.

The difference between the producer's willingness to sell and the actual price is the _______ surplus.

producer

Total _____surplus is represented by the area of the graph above the supply curve and below the equilibrium price.

producer

Economists call the maximum price that a buyer is willing to pay the ___________price.

reservation

The relationship showing producers' willingness to sell is the ______ curve

supply

The relationship showing producers' willingness to sell is the _______curve

supply

Calculations of _______ can clearly show who benefits and who loses from policies such as taxes and minimum wages.

surplus

Calculations of _________can clearly show who benefits and who loses from policies such as taxes and minimum wages.

surplus

Using the concept of _________ is the best way to look at the benefits people receive from successful transactions.

surplus

In market equilibrium,

total surplus is maximized.

The equilibrium price and quantity in a competitive market are important because, at this output level, the

total well-being of those involved is maximized.

Suppose a demand curve has a vertical intercept of (0,80). Suppose a supply curve has a vertical intercept of (0,0). The equilibrium price is $30 and the equilibrium quantity is 40. The total surplus is _____ dollars.

1600 Reason: The area of total surplus is [(1/2(80 - 30) x 40) + (1/2(30 - 0) x 40)].

Suppose a supply curve has a vertical intercept of (0,0); the equilibrium price is $40 and the equilibrium quantity is 100. The producer surplus is _____ dollars

2000

Suppose a demand curve has a vertical intercept of (0,100). Suppose a supply curve has a vertical intercept of (0,0). The equilibrium price is $50 and the equilibrium quantity is 60. The total surplus is _____ dollars.

3000 Reason: The area is 1/2 base x height: 1/2((100 - 0) x 60).

Suppose a supply curve has a vertical intercept of (0,0); the equilibrium price is $30 and the equilibrium quantity is 40. The producer surplus, therefore, is _____ dollars.

600 Reason: The area is 1/2 base x height: 1/2(40 x 30).

Total ______surplus is represented graphically by the area underneath the demand curve and above the equilibrium price. Total _______surplus is represented by the area of the graph above the supply curve and below the equilibrium price

Blank 1: consumer or buyer Blank 2: producer, seller, or supplier

Total consumer surplus is represented graphically by the area underneath the _______ curve and _______ the equilibrium price.

Blank 1: demand Blank 2: above

Total consumer surplus is represented graphically by the area underneath the _______curve and ______the equilibrium price.

Blank 1: demand Blank 2: above

_________ is represented graphically by the area underneath the demand curve and above the equilibrium price.

Consumer surplus

When the price is artificially high and some transactions no longer take place, what happens?

Part of the consumer surplus is transferred to producers Part of the consumer and producer surplus is lost to both consumers and producers

Which term do we use to describe the net benefit that a producer receives from the sale of a good or service?

Producer surplus

Lack of accurate information or communication between potential buyers and sellers, lack of technology that would make the exchanges possible, or public policy are all reasons why a market might be missing.

True

True or False: Lack of accurate information or communication between potential buyers and sellers, lack of technology that would make the exchanges possible, or public policy are all reasons why a market might be missing.

True

True or False: When a perfectly competitive well-functioning market is in equilibrium, total surplus is maximized.

True

When the price is ________ the equilibrium price, buyers gain some well-being at the expense of sellers, but they also lose some well-being because there are fewer transactions taking place.

below

The concept of surplus measures the benefit that people receive when they:

buy something for less than they would have been willing to pay. sell something for more than they would have been willing to accept.

The reservation price is each

buyer's maximum willingness to pay for a good or service.

In market equilibrium,

buyers are perfectly matched to sellers.

Total surplus is a measure of the

combined benefits everyone receives from participating in an exchange.

Consumer surplus is the net benefit that a

consumer receives from purchasing a good or service.

The difference between willingness to pay and the actual price is the net benefit that a

consumer receives from purchasing a good or service.

A line showing the maximum willingness to pay for all buyers is the ______ curve

demand

Consumer surplus is measured by the

difference between willingness to pay and the actual price.

At prices above or below the market equilibrium price,

fewer trades take place, because some people are no longer willing to buy or sell.

The relationship showing producers' willingness to sell is the ____ curve.

supply

is a way of measuring who benefits from transactions, and by how much.

surplus

Graphically, surplus is represented as the _______shaped area between a supply or demand curve and the market quantity.

triangle

Graphically, assuming an upward sloping supply curve, economic surplus is represented as the

triangular area between a supply or demand curve and the market price.

Part of consumer surplus is transferred to producers

when price is artificially increased.

The supply curve is upward-sloping because producers are ________ to sell more at higher prices.

willing