Microeconomics Ch7

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?

$10

Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is

$24

Refer to Figure 7-5. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?

$2500

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

$300

Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. At equilibrium, consumer surplus is

$48

Refer to Table 7-11. 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 Figure 7-5. 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

Refer to Figure 7-6. When the price is P2, producer surplus is

A+B+C

Refer to Table 7-4. Who experiences the largest gain in consumer surplus when the price of an orange decreases from $1.05 to $0.75?

Allison

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

Dallas's consumer surplus would increase

Refer to Figure 7-5. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

Producer surplus increases by $3,125

On a graph, consumer surplus is represented by the area

below the demand curve and above price

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

Justin builds fences for a living. Justin's out-of-pocket expenses (for wood, paint, etc.) plus the value that he places on his own time amount to his

cost of building fences

The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate

decreases, and producer surplus decreases

If the cost of producing sofas decreases causing the price of sofas to decrease, consumer surplus in the sofa market will

increase

As a result of a decrease in price,

new buyers enter the market, increasing consumer surplus

Moving production from a high-cost producer to a low-cost producer will

raise total surplus

Efficiency in a market is achieved when

the sum of producer surplus and consumer surplus is maximized

If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

zero