MicroEconomics - Pearson - Chapter 4 Concept Check and Vocabulary

Refer to the graph to the right. When the market price of a cup of tea is​ $2.00, what is the producer surplus from selling the 40th cup of​ tea?

$0.20

Price Ceiling

A legally determined maximum price that sellers may charge

Price Floor

A legally determined minimum price that sellers may receive.

Black Market

A market in which buying and selling take place at prices that violate government price regulations.

Economic Efficiency

A market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum.

Refer to the graph to the right. When​ 15,000 cups of tea are produced and consumed per​ month, which of the following is​ true?

All of the following are true. A. The level of output is economically efficient. B. The sum of consumer and producer surplus is maximized. C. The marginal benefit to buyers of the last cup of tea is equal to the marginal cost of producing the last cup of tea.

When the government imposes price floors or price​ ceilings, which of the following​ occurs?

All of the following occur A. Some people win. B. Some people lose. C. There is a loss of economic efficiency.

Refer to the graph to the right. Which of the following represents the deadweight loss when the price of tea is​ $2.20 per​ cup?

Area C​ + E

Which of the following terms corresponds to a market in which buying and selling take place at prices that violate government price​ regulations?

Black Market

Below are both a demand schedule and a demand curve... Which one is best suited to find the quantity demanded at a price of​ $4.00?

Demand Schedule

True or False - Consumer surplus and producer surplus measure the total benefit consumers and producers receive from participating in a market

False

True or False - Increasing the minimum wage will increase the income of some​ low-income workers, and will also likely increase employment.

False

Refer to the graphs above. In each of the​ graphs, a curve has shifted as a result of a new Social Security tax. In which graph do workers bear a larger burden from the​ tax?

In both​ cases, the burden on workers is the same.

Tax Incidence

The actual division of the burden of a tax betwen buyers and sellers in a market.

Marginal benefit

The additional benefit to a consumer from consuming one more unit of a good or service

Marginal Cost

The additional cost to a firm of producing one more unit of a good or service

Which of the following is the definition of consumer​ surplus?

The difference between the highest price a consumer is willing to pay and the price the consumer actually pays.

Consumer Surplus

The difference between the highest price a consumer is willing to pay for a good or service and the actual price the consumer pays

Producer Surplus

The difference between the lowest price a firm would be willing to accept for a good or service and the price it actually receives.

Deadweight Loss

The reduction in economic surplus resultig from a market not being in competitive equilibrium

Economic Surplus

The sum of consumer surplus and producer surplus

True or False - Economic surplus is the sum of consumer surplus and producer surplus.

True

Discussions of the economic results of rent control and of federal farm programs would be considered​ ________ analysis, and discussions of whether rent control and the farm programs are good or bad policies would be considered​ ________ analysis.

positive; normative

The minimum wage acts like a​ ________ by keeping wages of​ low-skilled workers​ ________ their equilibrium level.

price​ floor; above

The term tax incidence refers to

the actual division of the burden of a tax between buyers and sellers in a market.

Refer to the graph to the right. After the government imposes a price of​ $3.50 in this​ market, area A represents

the consumer surplus transferred to producers

Which of the following is the definition of producer​ surplus?

the difference between the lowest price a firm would have been willing to accept and the price it actually receives

When a competitive market is in​ equilibrium, what is the economically efficient level of​ output?

the output level where marginal cost is equal to marginal benefit

Refer to the graph to the right. After rent control is​ imposed, area A represents

the producer surplus transferred from landlords to renters.

Refer to the graph to the right. The graph shows the market demand for satellite television service. If the market price is​ $81, which consumers receive consumer surplus in this​ market?

those willing to pay more than​ $81