Micro Econ Quiz #7: Consumer/producer surplus etc

Figure 8-2The vertical distance between points A and B represents a tax in the market. Refer to Figure 8-2. The loss of consumer surplus associated with some buyers dropping out of the market as a result of the tax is

$1.50.

Table 7-12 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. 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

Scenario 8-2 Roland mows Karla's lawn for $25. Roland's opportunity cost of mowing Karla's lawn is $20, and Karla's willingness to pay Roland to mow her lawn is $28. Refer to Scenario 8-2. If Karla hires Roland to mow her lawn, Roland's producer surplus is

$5.

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

55 cents.

Refer to Figure 7-15. When the price is P2, producer surplus is

A+B+C.

The supply curve for whiskey is the typical upward-sloping straight line, and the demand curve for whiskey is the typical downward-sloping straight line. When whiskey is taxed, the area on the relevant supply-and-demand graph that represents

All of the above are correct.

Figure 8-8Suppose the government imposes a $10 per unit tax on a good. Refer to Figure 8-8. The tax causes consumer surplus to decrease by the area

B+C.

Which of the following events would increase producer surplus?

Sellers' costs stay the same and the price of the good increases.

Total surplus measures the

buyers' willingness to pay less the sellers' costs.

A decrease in the size of a tax is most likely to increase tax revenue in a market with

elastic demand and elastic supply.