econ chap 7

Refer to Table 7-11. The equilibrium price is 1 $10.00. 2 $8.00. 3 $6.00. 4 $4.00

$4.00

Refer to Figure 7-4. Which area represents producer surplus when the price is P1? 1 BCG 2 ACH 3 ABGD 4 DGH

BCG

Which of the following events would increase producer surplus? 1 Sellers' costs stay the same and the price of the good increases. 2 Sellers' costs increase and the price of the good stays the same. 3 Sellers' costs increase and the price of the good decreases. 4 Sellers' costs stay the same and the price of the good decreases.

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

Refer to Figure 7-1. Area C represents the 1 decrease in consumer surplus which results from a downward-sloping demand curve. 2 consumer surplus to new consumers who enter the market when the price falls from P2 to P1. 3 increase in producer surplus when quantity sold increases from Q2 to Q1. 4 decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2

consumer surplus to new consumers who enter the market when the price falls from P2 to P1.

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 1 producer surplus. 2 producer deficit. 3 cost of building fences. 4 profit.

cost of building fences.

Steak and chicken are substitutes. A sharp reduction in the supply of steak would 1 increase consumer surplus in the market for steak and decrease producer surplus in the market for chicken. 2 increase consumer surplus in the market for steak and increase producer surplus in the market for chicken. 3 decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken. 4 decrease consumer surplus in the market for steak and decrease producer surplus in the market for chicken.

decrease consumer surplus in the market for steak and increase producer surplus in the market for chicken.

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market 1 decreases. 2 is unchanged. 3 increases. 4 may increase, decrease, or remain unchanged.

may increase, decrease, or remain unchanged.

Cost is a measure of the 1 seller's willingness to sell. 2 seller's producer surplus. 3 producer shortage. 4 seller's willingness to buy

seller's willingness to sell

Efficiency in a market is achieved when 1 a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs. 2 the sum of producer surplus and consumer surplus is maximized. 3 all firms are producing the good at the same low cost per unit. 4 no buyer is willing to pay more than the equilibrium price for any unit of the good

the sum of producer surplus and consumer surplus is maximized.

A seller's opportunity cost measures the 1 value of everything she must give up to produce a good. 2 amount she is paid for a good minus her cost of providing it. 3 consumer surplus. 4 out-of-pocket expenses to produce a good but not the value of her time

value of everything she must give up to produce a good.

Refer to Figure 7-1. When the price is P1, consumer surplus is 1 A. 2 A+B. 3 A+B+C. 4 A+B+D.

A+B+C.

What happens to consumer surplus in the cell phone market if cell phones are normal goods and buyers of cell phones experience an increase in income? 1 Consumer surplus decreases. 2 Consumer surplus remains unchanged. 3 Consumer surplus increases. 4 Consumer surplus may increase, decrease, or remain unchanged.

Consumer surplus may increase, decrease, or remain unchanged.

For each of the three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse is the only three buyers of oranges, and only three oranges can be supplied per day. ​Refer to Table 7-4. Which of the following statements is correct? 1 Neither Bob's consumer surplus nor Charisse's consumer surplus can exceed Allison's consumer surplus, for any price of an orange. 2 All three individuals will buy at least one orange only if the price of an orange is less than $0.25. 3 If the price of an orange is $0.60, then consumer surplus is $4.90. 4 Charisse will always have the highest consumer surplus

Neither Bob's consumer surplus nor Charisse's consumer surplus can exceed Allison's consumer surplus, for any price of an orange.

On a graph, consumer surplus is represented by the area 1 between the demand and supply curves. 2 below the demand curve and above price. 3 below the price and above the supply curve. 4 below the demand curve and to the right of equilibrium price.

below the demand curve and above price.

A drought in California destroys many red grapes causing the prices of both red grapes and red wine to rise. As a result, the consumer surplus in the market for red grapes 1 increases, and the consumer surplus in the market for red wine increases. 2 increases and the consumer surplus in the market for red wine decreases. 3 decreases, and the consumer surplus in the market for red wine increases. 4 decreases, and the consumer surplus in the market for red wine decreases.

decreases, and the consumer surplus in the market for red wine decreases.

Moving production from a high-cost producer to a low-cost producer will 1 lower the total surplus. 2 raise total surplus. 3 lower producer surplus. 4 raise producer surplus but lower consumer surplus.

2 raise total surplus.