Microeconomics Chapter 7

Refer to Table 7-10. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 4 if the price is

$1,400.

Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers?

$2,500

Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

$250.00.

Refer to Table 7-4. If you have two (essentially) identical tickets that you sell to the group in an auction, what will be the selling price for each ticket?

$26

Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

$325.

Refer to Table 7-16. The equilibrium price is

$4.00.

Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, total surplus will be

$54.

Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, total surplus is

$72.

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

All of the above are correct.

Caroline sharpens knives in her spare time for extra income. Buyers of her service are willing to pay $2.95 per knife for as many knives as Caroline is willing to sharpen. On a particular day, she is willing to sharpen the first knife for $2.00, the second knife for $2.25, the third knife for $2.75, and the fourth knife for $3.50. Assume Caroline is rational in deciding how many knives to sharpen. Her producer surplus is

$1.85.

Producer surplus is the area

below the price and above the supply curve.

On a graph, the area below a demand curve and above the price measures

consumer surplus.

Which of the following will cause a decrease in consumer surplus?

the imposition of a binding price floor in the market

Economists typically measure efficiency using

total surplus.

Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15. Chuck values the dog show at

$20.

Refer to Table 7-12. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept?

$249

During the last two days, Chad purchased a latte from two different stores. The table below shows Chad's willingness to pay on each day and his consumer surplus from each purchase.

$3.75.

Refer to Table 7-4. If tickets sell for $40 each, then what is the total consumer surplus in the market?

$30.

Refer to Table 7-10. If the market price is $1,000, the producer surplus in the market is

$300.

Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is

$41.

Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, consumer surplus is

$48.

Bob purchases a book, and his consumer surplus is $3. If Bob is willing to pay $8 for the book, then the price of the book must be

$5.

Refer to Figure 7-19. If the government imposes a price floor of $55 in this market, then total surplus will be

$62.50 lower than it would be without the price floor.

Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus due to new producers entering the market?

$625

Tom tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $155 per tuning. One particular week, Tom is willing to tune the first piano for $120, the second piano for $125, the third piano for $140, and the fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. His producer surplus is

$80.

Refer to Table 7-10. If the market price is $1,200, the producer surplus in the market is

$800.

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

50.

Refer to Table 7-5. If the market price of an orange is $0.70, then the market quantity of oranges demanded per day is

6.

A seller's opportunity cost measures the

value of everything she must give up to produce a good.

Total surplus in a market is equal to

value to buyers - costs of 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

Suppose there is an early freeze in California that reduces the size of the lemon crop. What happens to consumer surplus in the market for lemons?

Consumer surplus decreases.

Which of the following statements is not correct about a market in equilibrium?

Consumer surplus will be equal to producer surplus.

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

David and Laura

Suppose the demand for peanuts increases. What will happen to producer surplus in the market for peanuts?

It increases.

Total surplus in a market will increase when the government

Neither a nor b is correct.

ABC Company incurs a cost of 50 cents to produce a dozen eggs, while XYZ Company incurs a cost of 70 cents to produce a dozen eggs. Which of the following price increases would cause both companies to experience an increase in producer surplus?

The price of a dozen eggs increases from 55 cents to 75 cents.

Consumer surplus is equal to the

Value to buyers - Amount paid by buyers.

Which of the following will cause an increase in consumer surplus?

a technological improvement in the production of the good

Total surplus is represented by the area

between the demand and supply curves up to the point of equilibrium.

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound,

both Janine and Henry experience an increase in consumer surplus.

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to

both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices.

When a buyer's willingness to pay for a good is equal to the price of the good, the

buyer is indifferent between buying the good and not buying it.

Refer to Table 7-5. If the market price of an orange increases from $0.70 to $1.40, then consumer surplus

decreases by $2.50.

A consumer's willingness to pay directly measures

how much a buyer values a good.

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6, producer surplus

might increase or decrease.

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

seller's cost of production.

Producer surplus is

the amount a seller is paid minus the cost of production.

Which of the following will cause an increase in producer surplus?

the price of a substitute increases

Efficiency in a market is achieved when

the sum of producer surplus and consumer surplus is maximized.

A simultaneous increase in both the demand for MP3 players and the supply of MP3 players would imply that

the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased. PreviousNext