Econ 202 test #2

Which describes the fairness efficiency tradeoff?

Actions intended to make economic outcones fairer can cause effiecency to decrease.

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?

$200

Amanda Mendez goes to a local café and orders a sandwich. Her willingness to pay for that sandwich is $10. The price of the sandwich is $4. The cost to the cafe to produce that sandwich is $1. How much economic surplus does Amanda receive when she purchases the sandwich?

$6

Which statement about consumer surplus?

Consumer surplus is the gains from trade on the part of the consumer that result from a market transaction.

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; both Juan and Apple

Carlos buys six new plants for his garden. If he was purchased according to the rational rule, his consumer surplus on the sixth plant is equal to

Zero

Producer surplus is shown graphically as the area

above the supply curve and below the market price

Social welfare spending in Sweden occupies too large a portion of the national budget

normative economics

The richest 1% of Americans should pay more taxes than the rest of the 99%.

normative economics

Producer surplus is the difference between

the market price and the minimum price a seller is willing to accept

Consumer surplus is shown graphically as the area

under the demand curve and above the market price

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 Kevin gain when he purchases the latte?

$4

Which of the following statements about economic surplus is FALSE?

Economic surplus is the area below the supply curve, above the demand curve, and to the right of quantity sold.

On a market graph, economic surplus can be identified as the area that is to the:

Left of the quantity and between the demand and supply curves.

normative statement says

Something about how the world ought to be

Positive statements say

Something that describes how the world currently is

Consumer surplus is represented by the area _____ the demand curve and _____ the price that the consumer pays.

below, above

A decrease in the supply of coconut will increase the price of German chocolate cake, a good which requires coconut shavings as a key ingredient

positive economics

As minimum wage increases, the prices of all goods and services also tends to increase.

positive economics

The producer surplus on a unit sold equals

price minus marginal cost

Consumer surplus is equal to the difference between

the maximum price a buyer is willing to pay and the market price

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 Apple