Econ module 6 quizzes

Frieda is at her local florist to buy a dozen roses. She is willing to pay $75 for the roses, and buys them for $75. Frieda's consumer surplus from the purchase is

$0

Arthur buys a new cell phone for $150. He receives consumer surplus of $150 from the purchase. How much does Arthur value his cell phone?

$300

Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is: $325. $200. $125. $75.

$75.

Which of the following statements is true? Consumer surplus measures the net benefit from participating in a market. When a market is in equilibrium consumer surplus equals producer surplus. Consumer surplus measures the total benefit from participating in a market. Producer surplus measures the total benefit received by producers from participating in a market.

Consumer surplus measures the net benefit from participating in a market.

________ is maximized in a competitive market when marginal benefit equals marginal cost.

Economic surplus

If marginal benefit is greater than marginal cost, output is inefficiently high. T/F

F

The total amount of producer surplus in a market is equal to the area below the supply curve. T/F

F

The following equations represent the demand and supply for silver pendants. QD = 50 - 2P QS = -10 + 2P What is the equilibrium price (P) and quantity (Q - in thousands) of pendants? P = $10; Q = 30 thousand P = $15; Q = 20 thousand P = $20; Q = 15 thousand P = $50; Q = 10 thousand

P = $15; Q = 20 thousand

If the quantity of fishing poles demanded is represented by the equation QD = 60 - P then the corresponding price of fishing poles is represented by the equation P = -60 + QD. P = QD + 60. P = 60 - QD. P = 0.6QD + 10.

P = 60 - QD.

If the price of chewing gum is represented by equation P = 25 - 0.5 QD, then the corresponding quantity of chewing gum demanded is represented by the equation QD = 50 -2P. QD = 0.5P + 25. QD = -5 + 10P. QD = 2P - 0.5.

QD = 50 -2P.

If the price of hairspray is represented by equation P = 10 - 0.2 QD, then the corresponding quantity of hairspray demanded is represented by the equation

QD = 50 -5P.

Marginal cost is the additional cost to a firm of producing one more unit of a good or service. T/F

T

Producer surplus is the difference between the lowest price a firm is willing to accept for a product and the price it actually receives for the product. T/F

T

Marginal cost is the additional cost to a firm of producing one more unit of a good or service. T/F

True

The area ________ the market supply curve and ________ the market price is equal to the total amount of producer surplus in a market.

above; below

Marginal benefit is equal to the ________ benefit to a consumer receives from consuming one more unit of a good or service.

additional

Consumer surplus in a market for a product would be equal to ________ if the market price was zero.

area under demand curve

________ refers to the reduction in economic surplus resulting from not being in competitive equilibrium.

deadweight loss

The difference between the ________ and the ________ from the sale of a product is called producer surplus. cost to produce a product; price a firm actually receives highest price a firm wold have been willing to accept; lowest price it was willing to accept lowest price a firm would have been willing to accept; price it actually receives cost to produce a product; profit received

lowest price a firm would have been willing to accept; price it actually receives

The difference between the ________ and the ________ from the sale of a product is called producer surplus. cost to produce a product; profit received lowest price a firm would have been willing to accept; price it actually receives highest price a firm wold have been willing to accept; lowest price it was willing to accept cost to produce a product; price a firm actually receives

lowest price a firm would have been willing to accept; price it actually receives

In a competitive market the demand curve shows the ________ received by consumers and the supply curve shows the ________.

marginal benefit; marginal cost

A ________ curve shows the marginal cost of producing one more unit of a good or service.

supply

Marginal cost is the average cost of producing a good or service. the additional cost to a firm of producing one more unit of a good or service. the total cost of producing one unit of a good or service. the difference between the lowest price a firm would have been willing to accept and the price it actually receives.

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

The total amount of producer surplus in a market is equal to the area between the demand curve and the supply curve below the market price. the area above the market supply curve and below the market price. the area above the market supply curve. the difference between quantity supplied and quantity demanded.

the area above the market supply curve and below the market price.

Economic efficiency in a competitive market is achieved when

the marginal benefit equals the marginal cost from the last unit sold.

In a competitive market equilibrium consumers and producers benefit equally . the marginal benefit equals the marginal cost of the last unit sold. total consumer surplus equals total producer surplus. marginal benefit and marginal cost are maximized.

the marginal benefit equals the marginal cost of the last unit sold.

Willingness to pay measures

the maximum price that a buyer is willing to pay for a good.

Suppliers will be willing to supply a product only if the price received is at least double the additional cost of producing the product. the price is higher than the average cost of producing the product. the price received is less than the additional cost of producing the product. the price received is at least equal to the additional cost of producing the product.

the price received is at least equal to the additional cost of producing the product.

Suppliers will be willing to supply a product only if the price received is at least equal to the additional cost of producing the product. the price received is less than the additional cost of producing the product. the price is higher than the average cost of producing the product. the price received is at least double the additional cost of producing the product.

the price received is at least equal to the additional cost of producing the product.

If, in a competitive market, marginal benefit is less than marginal cost:

the quantity sold is greater than the equilibrium quantity.

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which economic surplus is minimized. the sum of consumer surplus and producer surplus is at a maximum. the sum of the benefits to firms is equal to the sum of the benefits to consumers. the sum of consumer surplus and producer surplus is minimized

the sum of consumer surplus and producer surplus is at a maximum.

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which the sum of the benefits to firms is equal to the sum of the benefits to consumers. the sum of consumer surplus and producer surplus is at a maximum. the sum of consumer surplus and producer surplus is minimized. economic surplus is minimized.

the sum of consumer surplus and producer surplus is at a maximum.