Chapter 7 Exam - Micro

Refer to Figure 7-19. At the equilibrium price, consumer surplus is

A - $100

Refer to Figure 7-10. Which area represents producer surplus when the price is P1?

A - BCG

Willingness to pay

A - measures the value that a buyer places on a good.

Cost is a measure of the

A - seller's willingness to sell.

Consumer surplus is

A - the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

Efficiency is attained when

A - total surplus is maximized.

Refer to Figure 7-19. At the equilibrium price, producer surplus is

B - $150

Refer to Table 7-2. If the market price is $5.50, the consumer surplus is

B - $4.50

Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hours for as many hours Allen is willing to tutor. On a particular day, he is willing to tutor the first hour for $10, the second hour for $28, and the fourth hour for $40. Assume Allen is rational in deciding how many hours to tutor. His producer surplus is

B - $64

Refer to Figure 7-10. Which area represents producer surplus when the price is P2?

B - ACH

Refer to Figure 7-21. Which area represents consumer surplus when the price is P1?

B - B

All else equal, what happens to consumer surplus if the price of a good increases?

B - Consumer surplus decreases.

Refer to Table 7-2. If the market price is $3.80,

B - Megan's consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80

Refer to Figure 7-19. At the equilibrium price, total surplus is

C - $250

Refer to Figure 7-19. If the government imposes a price ceiling of $55 in this market, then total surplus will be

C - $250

Janine would be willing to pay $50 to see Les Misarables, but she buys a ticket for only $30. Janine values the performance at

C - $50

Refer to Figure 7-21. When the price is P1, area B+C represents

C - Consumer surplus

Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market.

C - DGH

A supply curve can be used to measure producer surplus because it reflects

C - sellers' cost

Economist typically measure efficiency using

C - total surplus.

Total surplus in a market is equal to

C - value to buyers - cost of sellers.

Chad is willing to pay $5.00 to get his first cup of morning latte. He buys a cup from a vendor selling latte for $3.75 per cup. Chad's consumer surplus is

D - $1.25

Refer to Figure 7-2. If the price of the good is $100, then consumer surplus amounts to

D - $125

Refer to Figure 7-2. If the price of the good is $80, then consumer surplus amounts to

D - $185

Refer to Figure 7-10. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

D - ABGD

Refer to Figure 7-10. Which area represents the increase in producer surplus when the price rises from P1 to P2?

D - AHGB

Refer to Table 7-2. Which of the following is not true?

D - All of the above are correct

Refer to Table 7-2. If the price of Vanilla Coke is $6.90, who will purchase the good?

D - David and Laura

A demand curve reflects each of the following except the

D - ability of buyers to obtain the quantity they desire.

Consumer surplus is

D - all of the above are correct