Econ Test 2

Demand

Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.

the marginal benefit equals the marginal cost of the last unit sold.

In a competitive market equilibrium

Everyone will buy a ticket except for Esther.

Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one of the tickets is $10, a. everyone will buy a ticket except for Esther. b. only Anya and Basil will buy tickets. c. Celeste's consumer surplus is $25. d. the total consumer surplus from the purchase of tickets will be $61.

Basil will receive $2 of consumer surplus from buying one ticket.

Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one of the tickets is $18, a. Anya and Basil will each buy two tickets. b. Basil will receive $2 of consumer surplus from buying one ticket. c. Anya and Basil receive a total of $26 of consumer surplus from buying one ticket each. No one else will buy a ticket. d. Celeste, Dralon, and Esther will receive a total of $34 of consumer surplus since they will buy no tickets.

No one will buy a ticket.

Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one ticket is $25, everyone will buy a ticket. consumer surplus will be maximized. Anya's consumer surplus is $1. no one will buy a ticket.

Economic Surplus

________ is maximized in a competitive market when marginal benefit equals marginal cost.

-0.19

In December 2014, the average price of gasoline in the United States was $2.50 per gallon and consumers bought 7 percent more gasoline than they had during April 2014, when the average price was $3.60 per gallon. Based on these numbers, what was the price elasticity of demand for gasoline from April 2014 to December 2014?

the increase in quantity sold is large enough to offset the lower price.

When demand is elastic, a fall in price causes total revenue to rise because

the percentage change in quantity demanded exactly offsets the percentage change in price.

When demand is unit elastic, a change in price causes total revenue to stay the same because

the area under the demand curve

Consumer surplus in a market for a product would be equal to ________ if the market price was zero.

The marginal benefit of consuming a product is equal to its price.

Consumers are willing to purchase a product up to the point where

No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit.

Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. At a price of $18 consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity? No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit. Yes, otherwise consumers would not buy 40 units. Yes, because $18 shows what consumers are willing to pay for the product. No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th unit.

$100

Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of the deadweight loss at a price of $18? $100 $180 $660 $1,040

Yes, because $15 is the price where the marginal benefit is equal to the marginal cost.

Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. At the equilibrium price of $15 consumers are willing to buy 80 pounds of tiger shrimp. Is this an economically efficient quantity? No, the marginal benefit of the 80th unit exceeds the marginal cost of the 80th unit. Yes, because marginal cost is zero at the 80th unit. Yes, because $15 is the price where the marginal benefit is equal to the marginal cost. No, the marginal cost of the 80th unit exceeds the marginal benefit of the 80th unit.

$60

Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of consumer surplus at a price of $18? $60 $120 $180 $240

$240

Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of consumer surplus at the equilibrium price of $15? $60 $120 $180 $240

$300

Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of producer surplus at a price of $18? $240 $300 $340 $720

$160

Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of producer surplus at the equilibrium price of $15? $80 $160 $240 $320

$0

Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. Refer to Figure 4-3. What is the value of the deadweight loss at the equilibrium price of $15? $0 $40 $60 $100

how responsive quantity demanded is to a change in price.

Price elasticity of demand measures

Panel B

Refer to Figure 6-1. A perfectly elastic demand curve is shown in

Panel A

Refer to Figure 6-1. A perfectly inelastic demand curve is shown in

one

Refer to Figure 6-4. The absolute value of the price elasticity of demand at the midpoint of the demand curve is

lies below the midpoint of the curve.

Refer to Figure 6-4. The inelastic segment of the demand curve

The elastic portion of a straight-line, downward-sloping demand curve corresponds to the segment above the midpoint.

Refer to Figure 6-4. Which of the following statements about price elasticity of demand is true?

Consumer surplus decreases from $31 to $6.

Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one ticket rises from $10 to $19, only three tickets will be sold. consumer surplus decreases from $31 to $6. consumer surplus increases from $44 to $71. no one will buy a ticket.

the price received is at least equal to the additional cost of producing the product.

Suppliers will be willing to supply a product only if

A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent.

Suppose the value of the price elasticity of demand is -3. What does this mean?

above; below

The area ________ the market supply curve and ________ the market price is equal to the total amount of producer surplus in a market.

Consumer Surplus

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called