Microeconomics: Chapter 4 Graded Homework

In the graph above, efficiency in this market is achieved at a price of:

$10

Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is consumer surplus?

$11

The price of green grapes increases from $1.90 to $2.30 per pound. When this happens, the amount of grapes sold drops from 500 pounds to 400 pounds. Assuming that the demand and supply of grapes held steady, what is the value of the loss of consumer surplus that occurred?

$180

Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is producer surplus?

$4

Jonathan purchased coffee for $5 at Jennifer's coffee shop; however, he was willing to pay $9. Jennifer was willing to accept $3 for the coffee. The results of this transaction are a consumer surplus of:

$4 and a producer surplus of $2.

In the graph, which price would NOT allow for an effective price floor?

$6

In the graph, how much is deadweight loss at a price of $12?

$70

In the graph, which price would NOT allow for an effective price floor?

$8

When supply of a product increases, ceteris paribus, what happens to firms' willingness to produce and to the amount of producer surplus?

They both increase.

Markets tend to provide too little of products with external benefits.

True

When a scarce good or resource is consumed by the person who does not value it most, economists refer to the situation as:

a misallocation of resources.

Consider the graph. If the price is raised from $8 to $12, consumer surplus:

decreases by $120 and deadweight loss increases by $70.

Suppose a price floor is set on cane sugar that is approximately three times the equilibrium price. One of the effects is a(n):

drop in the quantity of sugar consumed.

Consumer surplus is defined as the:

gap between the demand curve and the market price.

Producer surplus is defined as the:

gap between the supply curve and the market price.

A good example of a government-imposed price floor is:

minimum wage

"Price gouging" laws are types of _____ and often result in _____.

price ceilings; shortages of a scarce good

A good example of a government imposed-price ceiling is:

rent controls

Flu vaccination shots provide external benefits. Thus:

too few flu vaccination shots are given.

The measure of society's benefits due to a market transaction is called:

total surplus.