Market Equilibrium and Product Price Part 2

In Exhibit 4-9 the equilibrium price and quantity in the market are:

$1.00, 200.

In Exhibit 4-10, the equilibrium price is:

$2.

In Exhibit 4-11, the equilibrium price per bushel of wheat is:

$2.

Suppose Jones sells a good for $100 at a yard sale. If the producer surplus from the sale is $75, Jones's cost of the good must have been:

$25

Suppose Tucker Inc. is willing to sell one gizmo for $10, a second gizmo for $15, a third for $20, and the market price is $25. What is Tucker Inc.'s producer surplus?

$30

Suppose Alice sells a good for $60 on eBay. If the producer surplus from the sale is $25, Alice's cost of the good must have been:

$35

Suppose Sue's buys a good for $60 on eBay. If the consumer surplus from the sale is $25, Sue would have been willing to pay:

$35

In Exhibit 4-7, the equilibrium price of a movie ticket is:

$4

Deadweight loss is the net loss of:

both a and b consumer surplus and producer surplus

Using supply and demand curve analysis, the triangular area above the equilibrium price and under the demand curve is:

consumer surplus

Total surplus equals:

consumer surplus + producer surplus

Initially the market shown in Exhibit 4-3 is in equilibrium at P3, Q3 (E3). Changes in market conditions result in a new equilibrium at P2, Q2 (E2). This change is stated as a:

decrease in demand and a decrease in quantity supplied

The market shown in Exhibit 4-2 is initially in equilibrium at E3. Changes in market conditions result in a new equilibrium at E4. This change is stated as a(n):

decrease in supply and a decrease in quantity demanded.

The market shown in Exhibit 4-3 is initially in equilibrium at E4. Changes in market conditions result in a new equilibrium at E3. This change is stated as a(n):

decrease in supply and a decrease in quantity demanded.

A drought destroys much of the grape crop. As a result, consumer surplus in the market for wine:

decreases

A drought destroys much of the peach crop. As a result, consumer surplus in the peach market:

decreases

Initially the market shown in Exhibit 4-3 is in equilibrium at P2, Q2 (E2). Changes in market conditions result in a new equilibrium at P2, Q4 (E4). This change is stated as a(n):

increase in supply and an increase in demand.

The market shown in Exhibit 4-2 is initially in equilibrium at E1. Changes in market conditions result in a new equilibrium at E2. This change is stated as a(n):

increase in supply and an increase in quantity demanded.

Consumer surplus:

is illustrated by the area under the demand curve and above the market price.

Suppose seller X is willing to sell one good X for $5, a second good X for $10, a third for $16, a fourth for $25, and the market price is $20. What is seller X's producer surplus?

not $15

At $30 each, Jack will buy 1 Blu-ray and at $25, he will purchase 2. If the price is $20, Jack's consumer surplus is:

not $20

If Bill is willing to pay $10 for one good X, $8 for a second, and $6 for a third, and the market price is $5, then Max's consumer surplus is:

not $24

Suppose Gizmo Inc. is willing to sell one gizmo for $10, a second gizmo for $12, a third for $14, and a fourth for $20, and the market price is $20. What is Gizmo Inc.'s producer surplus?

not $24

Suppose Sam buys a good for $100 at a yard sale. If consumer surplus from the sale is $75, Sam would have been willing to pay:

not $25

Ceteris paribus, an increase in the supply of a good causes which of the following?

not A

The above figure shows the market for pizza. The market is in equilibrium when people learn that eating pizza helps prevent heart disease. What point represents the most likely new price and quantity?

not A

Producer surplus:

not A, B

Suppose the current price of a pound of steak is $12 per pound and the equilibrium price is $9 per pound. In this case, there is a

not C, A

As shown in Exhibit 3A-2, if the market price falls from P1 to P2, then:

not deadweight loss increases

Deadweight loss results from:

not equilibrium, overproduction

Producer surplus measures the value between the actual selling price and the:

price sellers are willing to sell the product.

Assume no price ceiling exists and a market is in equilibrium. Then a price ceiling is established which is below the market equilibrium. What would result?

shortage

Using the data in the table above, if the price of a stapler is $5, then there is a ________ of staplers and the quantity of staplers demanded ________ the quantity of staplers supplied.

shortage; is greater than

The table above shows the situation in the gasoline market in Tulsa, Oklahoma. If the price of a gallon of gasoline is $3.62, then

there is a shortage of gasoline in tulsa

Exhibit 4-1 shows that at a price of $3.00,

there will be excess quantity supplied

Assume a ceiling price is set above the equilibrium price. The final result is the equilibrium price.

true

The points along the demand curve represent the maximum willingness of consumers to purchase a product.

true

Total producer surplus is the area below the equilibrium price and above the supply curve.

true

In an efficient market, deadweight loss is ____.

zero

In Exhibit 4-2, which of the following might cause a shift from S1 to S2?

A decrease in input prices.

Which of the following statements is correct?

All of these -total surplus is the sum of consumer and producer surplus -deadweight loss is the net loss of both consumer and producer surplus resulting from underproduction of over production of a product -deadweight loss is a measure of market inefficiency

Deadweight loss is the result of:

All of these are correct -overproduction -disequilibrium -underproduction

Which of the following would occur if the government imposed a price floor (support price) of $4 per bushel in the wheat market shown in Exhibit 4-11?

Buyers would not purchase all of the wheat grown.

If the quantity supplied exceeds the quantity demanded in a market, then the result is which of the following?

Deadweight loss Inefficiency Overproduction Each of these are true.

In Exhibit 4-2 an increase in supply would cause a movement from which equilibrium point to another, other things being equal?

E1 to E2

In Exhibit 4-3, an increase in demand would cause a movement from which equilibrium point to another, other things being equal?

E1 to E4

In Exhibit 4-3, an increase in quantity supplied would cause a movement from which equilibrium point to another, other things being equal?

E1 to E4

Beginning from an equilibrium at point E2 in Exhibit 4-3, an increase in demand for good X, other things being equal, would move the equilibrium point to:

E3

In Exhibit 4-2, a decrease in quantity demanded would cause a movement from which equilibrium point to another, other things being equal?

E3 to E4.

Beginning from an equilibrium at point E1 in Exhibit 4-2, an increase in demand for good X, other things being equal, would move the equilibrium point to:

E4

The market shown in Exhibit 4-2 is initially in equilibrium at point E1. Union negotiations for workers producing good X result in a wage increase. Other things being equal, which of the following is the new equilibrium after this wage increase is in effect?

E4

If the quantity demanded exceeds the quantity supplied in a market, then the result is which of the following?

Each of these are true. -underproduction -inefficiency -deadweight loss

An increase in both supply and demand causes which of the following?

Equilibrium price change is indeterminate.

Assume a price floor is set above the equilibrium price. The result is a shortage.

False

At the equilibrium price, deadweight loss is minimized.

False

Consumer surplus measures the value between the price consumers are willing to pay for a product and the preference price.

False

Producer surplus measures the value between the actual selling price and the profit-maximization price.

False

The deadweight loss equals the consumer surplus minus the producer surplus resulting from a non-equilibrium price.

False

The points along the supply curve represent the maximum willingness of firms to accept payment for a product offered for sale at various prices.

False

Total consumer surplus is measured by the total area under the market demand curve and below the equilibrium price.

False

Total producer surplus is measured by the total area under the equilibrium price and below the supply curve.

False

Which of the following is not true concerning consumer surplus?

It is graphically the area under the demand curve and above the market price.

An increase in consumers' incomes will have what effect on the equilibrium in the restaurant meals market?

Price will increase, and quantity will increase.

In Exhibit 4-10, assume that the government initially sets a price floor of $4 for apricots, and then removes the $4 price floor. What effect will this price change have?

The quantity of apricots supplied will decline.

Which of the following would occur if the government set a price ceiling of $1 in the market shown in Exhibit 4-10?

There would be a shortage of apricots.

Assume demand is held constant and supply increases. The result is a decrease in the equilibrium price and an increase in the equilibrium quantity of the item bought and sold.

True

Assuming supply is held constant, an increase in demand for a product will cause an increase in the equilibrium price and the amount bought and sold.

True

Deadweight loss results from a misallocation of resources.

True

Consumer surplus measures the value between the price consumers are willing to pay and the:

actual price paid

Producer surplus is the:

amount consumers actually pay for a good minus the amount the sellers are willing to sell

Consumer surplus is the:

amount consumers are willing to pay for a good minus the amount the consumers actually pay for it.

Deadweight loss is not the result of:

an efficient market.