micro ch. 7 quiz

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Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

50

Refer to Figure 7-9. At equilibrium, total surplus is represented by the area

A+B+C+D+H+F

True or false: Efficiency refers to whether a market outcome is fair, while equality refers to whether the maximum amount of output was produced from a given number of inputs.

False

True or false: Producing a soccer ball costs Jake $35. Darby values the soccer ball at $50. For this transaction, the total surplus in the market is $40.

False

True or false: The area below the demand curve and above the supply curve measures the producer surplus in the market.

False

True or false: Consumer surplus measures the benefit to buyers of participating in a market.

True

True or false: If a market is in equilibrium, then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good.

True

True or false: Suppose that you sell a kayak for $600, but you were willing to sell it for $450. The buyer was willing to pay $650. The total surplus is $200.

True

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound,

both Janine and Henry experience an increase in consumer surplus.

Which tools allow economics to determine if the allocation of resources determined by free markets is desirable?

consumer and producer surplus.

If a consumer places a value of $15 in a particular good and if the price of the good is $17, then the

consumer does not purchase the good.

Refer to 7-3. If you have a ticket that you sell to the group in an auction, what will be the selling price?

slightly more than $50.

Refer to table 7-11. At a price of $2.00, total surplus is

smaller than it would be at the equilibrium price.

Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then

the marginal buyer's willingness to pay for the 100th unit of the good is $25.

If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

zero.

Refer to Table 7-2. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the good will sell for

$35 or slightly more.

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

$8

Refer to Figure 7-9. If the price were P3, consumer surplus would be represented by the area

A.

True or false: An increase in price increases consumer surplus.

false

As a result of a decrease in price,

new buyers enter the market, increasing consumer surplus.


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