Micro Econ Quiz #7: Consumer/producer surplus etc

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

55 cents.

Refer to Figure 7-15. When the price is P2, producer surplus is

A+B+C.

The supply curve for whiskey is the typical upward-sloping straight line, and the demand curve for whiskey is the typical downward-sloping straight line. When whiskey is taxed, the area on the relevant supply-and-demand graph that represents

All of the above are correct.

Total surplus measures the

buyers' willingness to pay less the sellers' costs.

A decrease in the size of a tax is most likely to increase tax revenue in a market with

elastic demand and elastic supply.

Figure 8-2The vertical distance between points A and B represents a tax in the market. Refer to Figure 8-2. The loss of consumer surplus associated with some buyers dropping out of the market as a result of the tax is

$1.50.

Table 7-12 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. Refer to Table 7-12. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept?

$249

Scenario 8-2 Roland mows Karla's lawn for $25. Roland's opportunity cost of mowing Karla's lawn is $20, and Karla's willingness to pay Roland to mow her lawn is $28. Refer to Scenario 8-2. If Karla hires Roland to mow her lawn, Roland's producer surplus is

$5.

Figure 8-8Suppose the government imposes a $10 per unit tax on a good. Refer to Figure 8-8. The tax causes consumer surplus to decrease by the area

B+C.

Which of the following events would increase producer surplus?

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