Microeconomics ch 6-7 quiz
George produces cupcakes. His production cost is $10 per dozen. He sells the cupcakes for $16 per dozen. His producer surplus per dozen cupcakes is
$6
Price ceilings and price floors that are binding
Causes surpluses and shortages to persist because price cannot adjust to the market equilibrium price.
Producer surplus is
The amount a seller is paid minus the cost of production
The following table represents the costs of five possible sellers. Seller: Abby, Bobby, Dianne, Evaline, Carlos Cost: $1600, 1300, 1100, 900, 800 If the market price is $1000, the producer surplus in the market is
$300
Table 6-1 Price: $20, 30, 40, 50, 60, 70, 80 Quantity demanded: 2400, 2000, 1600, 1200, 800, 400, 0 Quantity supplied: 0, 200, 400, 600, 800, 1000, 1200 Which of the following price floors would be binding in this market?
$70
The following table represents the costs of five possible sellers. Seller: Abby, Bobby, Dianne, Evaline, Carlos Cost: $1600, 1300, 1100, 900, 800 If the market price is $1200, the producer surplus in the market is
$800
Table 6-1 Price: $20, 30, 40, 50, 60, 70, 80 Quantity demanded: 2400, 2000, 1600, 1200, 800, 400, 0 Quantity supplied: 0, 200, 400, 600, 800, 1000, 1200 Suppose the government imposes a price ceiling of $30 on this market. What will be the size of the surplus in this market?
0 units
Table 6-1 Price: $20, 30, 40, 50, 60, 70, 80 Quantity demanded: 2400, 2000, 1600, 1200, 800, 400, 0 Quantity supplied: 0, 200, 400, 600, 800, 1000, 1200 Suppose the government imposes a price ceiling of $70 on this market. What will be the size of the shortage in this market?
0 units
Table 6-1 Price: $20, 30, 40, 50, 60, 70, 80 Quantity demanded: 2400, 2000, 1600, 1200, 800, 400, 0 Quantity supplied: 0, 200, 400, 600, 800, 1000, 1200 Suppose the government imposes a price floor of $70 on this market. What will be the size of the surplus in this market?
600 units
Alex is willing to pay $10, and Bella is willing to pay $8, for 1 pound of ribeye steak. When the price of ribeye steak increases from $9 to $11,
Alex experiences a decrease in consumer surplus, but Bella does not.
Consumer surplus in a market can be represented by the
Area below the demand curve and above the price
A price ceiling is binding when it is set
Below the equilibrium price, causing a shortage
The following table represents the costs of five possible sellers. Seller: Abby, Bobby, Dianne, Evaline, Carlos Cost: $1600, 1300, 1100, 900, 800 If the price is $1150, who would be willing to supply the production?
Carlos, Dianne, and Evaline
A legal maximum on the price at which a good can be sold is called a price
Ceiling
If a consumer placed a value of $15 on a particular good and if the price of the good is $17, then the
Consumer does not purchase the good
All else equal, what happens to consumer surplus if the price of a good increases?
Consumer surplus decreases
All else equal, what happens to consumer surplus if the price of a good decreases?
Consumer surplus increases
A binding minimum wage tends to a. Cause a labor surplus b. Cause unemployment c. Have the greatest impact in the market for teenage labor d. All of the above are correct
D
A demand curve reflects each of the following except the a. Willingness to pay of all buyers in the market b. Value each buyer in the market places on the good c. Highest Price buyers are willing to pay for each quantity d. Ability of buyers to obtain the quantity they desire
D
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. Buyer: David, Laura, Megan, Mallory, Audrey Willingness to Pay: $8.50, 7, 5.50, 4, 3.50 Which of the following is not true? a. At a price of $9.00, no buyer is willing to purchase Vanilla Coke b. At a price of $5.50, Megan is indifferent between buying a case of Vanilla Coke and not buying one c. At a price of $4.00, total consumer surplus in the market will be $9.00 d. All of the above are correct
D
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. Buyer: David, Laura, Megan, Mallory, Audrey Willingness to Pay: $8.50, 7, 5.50, 4, 3.50 If the price of Vanilla Coke is $6.90, who will purchase the good?
David and Laura
If the demand for leather decreases, producer surplus in the leather market
Decreases
The following table represents the costs of five possible sellers. Seller: Abby, Bobby, Dianne, Evaline, Carlos Cost: $1600, 1300, 1100, 900, 800 Who is a marginal seller when the price is $1100?
Dianne
Chad is willing to pay $5 to get his first cup of morning latté. He buys a cup from a vendor selling latté for $3.75 per cup. Chad's consumer surplus is
$1.25
The following table represents the costs of five possible sellers. Seller: Abby, Bobby, Dianne, Evaline, Carlos Cost: $1600, 1300, 1100, 900, 800 Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 2 if the price is
$1050
The following table represents the costs of five possible sellers. Seller: Abby, Bobby, Dianne, Evaline, Carlos Cost: $1600, 1300, 1100, 900, 800 Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 4 if the price is
$1650
The following table represents the costs of five possible sellers. Seller: Abby, Bobby, Dianne, Evaline, Carlos Cost: $1600, 1300, 1100, 900, 800 If the market price is $1100, the combined total cost of all participating sellers is
$2800
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. Buyer: David, Laura, Megan, Mallory, Audrey Willingness to Pay: $8.50, 7, 5.50, 4, 3.50 If the market price is $5.50, the consumer surplus in the market will be
$4.50
The following table represents the costs of five possible sellers. Seller: Abby, Bobby, Dianne, Evaline, Carlos Cost: $1600, 1300, 1100, 900, 800 If the market price is $1400, the combined total cost of all participating sellers is
$4100
Table 6-1 Price: $20, 30, 40, 50, 60, 70, 80 Quantity demanded: 2400, 2000, 1600, 1200, 800, 400, 0 Quantity supplied: 0, 200, 400, 600, 800, 1000, 1200 Which of the following price ceilings would be binding in this market?
$50
Table 6-1 Price: $20, 30, 40, 50, 60, 70, 80 Quantity demanded: 2400, 2000, 1600, 1200, 800, 400, 0 Quantity supplied: 0, 200, 400, 600, 800, 1000, 1200 Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?
1200 units
The following table represents the costs of five possible sellers. Seller: Abby, Bobby, Dianne, Evaline, Carlos Cost: $1600, 1300, 1100, 900, 800 If the price is $1000,
Evaline's producer surplus is $100
One disadvantage of government subsidies over price controls is that subsidies
Make higher taxes necessary
Consumer surplus
Measures the benefit buyers receive from participating in a market
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. Buyer: David, Laura, Megan, Mallory, Audrey Willingness to Pay: $8.50, 7, 5.50, 4, 3.50 If the market price is $3.80,
Megan's consumer surplus is $1.70 and total consumer surplus for the five individuals is $9.80
In a free, competitive market, what is the rationing mechanism?
Price
The imposition of a binding price ceiling on a market causes
Quantity demanded to be greater than quantity supplied
Rent control policies tend to cause
Relatively smaller shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run
If a price floor is a binding constraint on a market, then
Sellers cannot sell all they want to sell at the price floor
The minimum wage has its greatest impact on the market for
Teenage labor
Producer surplus directly measures
The well-being of sellers
In the short run, rent control causes the quantity supplied
To fall and quantity demanded to rise
An outcome that can result from either a price ceiling or a price floor is
Undesirable rationing mechanisms
The Earned Income Tax Credit is an example of a
Wage subsidy
As rationing mechanisms, prices
are efficient, but long lines are inefficient