Econ Exam 2

Chad is willing to pay $5 to get his first cup of morning latte. He buys a cup for 3.75. His consumer surplus is

$1.25

David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for 115, the second piano for 125, the third for 140, the fourth for 175. Assuming David is rational in deciding how many pianos to tune, his producer surplus is

30

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

?

Producer surplus equals

Amount received by sellers - Cost of sellers

Consumer surplus in a market can be represented by

Area below demand curve and above the price

Which of the following is not correct about market equilibrium?

Consumer surplus will equal producer surplus

Total surplus is equal to

consumer surplus + producer surplus

Which of the statements is not correct? a. Seller would be eager to sell product at price higher than cost b. Seller would refuse to sell product at price lower than cost c. A seller would be indifferent about selling a product at price equal to her cost d. Since sellers can't set the price for their product, they must be willing to sell their product at any price

d

If the demand for leather decreases, producer surplus in the leather market

decreases

Consumer Surplus

is the amount a consumer is willing to pay minus the amount a customer actually pays

Motor oil and gasoline are complements. If the price of motor oil increases, consumer surplus in the gas market

may increase, decrease, or remain unchanged