Quiz 6.3

Alice, Amber, and Andi make and sell pottery. Alice is willing to sell a 5 inch pot for $40, Amber is willing to sell a 5 inch pot for $44, and Andi is willing to sell a 5 inch pot for $78. If each of the ladies is able to sell one 5 inch pot for $80, what is their combined producer surplus? combined producer surplus: $

$78

Gary Parker is willing to pay $700 for a new iPad. Apple (the producer of iPads) is selling a new iPad for $600. It costs Apple $400 to produce this iPad. How much economic surplus does Apple receive if Gary purchases this iPad? $600 $200 $100 $700

B

If the price of a 5 inch pot is $50, which of the ladies will sell their pots? Alice only Alice and Amber Alice, Amber, and Andi Andi only

B

Juan McDonald is willing to pay $600 for a new iPad. Apple (the producer of iPads) is selling a new iPad for $700. It costs Apple $400 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because ____ would be better off due to the transaction. will not; only Juan will not; only Apple will; both Juan and Apple will; neither Juan nor Apple

B

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does the coffee shop receive when Kevin purchases the latte? $2 $1 $4 $6

B

Juan McDonald is willing to pay $900 for a new iPad. He offers to pay $800 for an iPad at the Apple store. It costs Apple $700 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because ____ would be better off due to the transaction. will not; only Apple will; neither Juan nor Apple will; both Juan and Apple will not; only Juan

C

Suppose that Michelle buys a cappuccino from Paul's Cafe and Bakery for $5.75. Michelle was willing to pay up to $7.75 for the cappuccino, and Paul's Cafe and Bakery was willing to accept $2.25 for the cappuccino. Based on this information, answer the following questions. Michelle's consumer surplus: $ Paul's Cafe and Bakery's producer surplus: $

CS: 2 PS: 3.5

On a market graph, economic surplus can be identified as the area that is to the: right of the quantity and between the demand and supply curves. right of the quantity, above the demand curve, and below the supply curve. left of the quantity, above the demand curve, and below the supply curve. left of the quantity and between the demand and supply curves.

D

Producer surplus is shown graphically as the area above the supply curve and above the market price. under the demand curve and below the market price. under the demand curve and above the market price. above the supply curve and below the market price.

D

Producer surplus is the difference between the maximum price a seller is willing to accept and the market price. the maximum price a buyer is willing to pay and the market price. the market price and the minimum price a buyer is willing to pay. the market price and the minimum price a seller is willing to accept.

D

The producer surplus on a unit sold equals: (price minus marginal cost) multiplied by (1/2 quantity sold). 1/2 (price times quantity minus marginal cost). marginal benefit minus price. price minus marginal cost.

D