Chapter 3 Econ
Suppose a consumer is willing to pay $20 for one good X, $10 for a second, and $5 for a third, and the market price is $4. What is the consumer surplus?
$23
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?
$29
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
In Exhibit 14, if there is a shortage of video games of 200 units, the current price of video games must be
$40
If Sam is willing to pay $50 for one good X, $30 for a second, $20 for a third, $8 for a fourth, and the market price is $10. What is Sam's consumer surplus?
$70
Suppose each of the seven dwarfs buys four mugs of ginger ale per week from Snow White's café, when the price per mug is $2. If the seven dwarfs are the entire market demand for Snow White's ginger ale, which of the following is the correct value for market quantity demanded of ginger ale per week at a price of $2?
28
Which of the following causes a shortage to become larger?
A decrease in price
With an upward-sloping supply curve, which of the following is true?
A decrease in price results in a decrease in quantity supplied
Which of the following results from an increase in the price of a one-week vacation at beach resorts on the coast of Mexico?
An increase in the demand for vacations at resorts on Caribbean islands
Which of the following would not cause market demand for a normal good to decline?
An increase in the price of a substitute
Which of the following causes the demand for veggie burgers to increase?
An increase in the price of tofu burgers, perceived as a substitute by veggie burger consumers
As shown in Exhibit A-7, if the market is in equilibrium, represents producer surplus
BEF
As shown in Exhibit A-7, if the quantity supplied is 2 million pounds of ground beef per year, the result is a deadweight loss represented by area
CEFD
Deadweight loss is computed as the net of
Consumer surplus plus producer surplus
Which of the following is true in ski towns such as Crested Butte, Colorado, and Whistler, British Columbia during the peak winter ski season as compared to May and June?
Demand for motel rooms is higher
As shown in Exhibit A-7, if the market is in equilibrium, represents consumer surplus
EGH
Which of the following increases the supply of corn?
Farmers who grow soybeans can also grow corn, and the price of soybeans drops by 75 percent
Low-income families consume proportionately more of which of the following kinds of goods?
Inferior goods
If the quantity supplied exceeds the quantity demanded in a market, what is the result?
Overproduction
Which of the following decreases supply in the market for pizza?
Pizza shop employees successfully organize a union and negotiate a pay increase
In moving from a shortage toward the market equilibrium, which of the following is true?
Price rises
Deadweight loss is the result of
Underproduction
Under the law of demand, any increase in price will cause _____________ in quantity demanded
a decrease
An increase demand for any good or services is reflected graphically as
a rightward shift of the demand curve
Deadweight loss results from
a. equilibrium. b. underproduction. c. overproduction. none of the above
Consumer surplus measures the value between the price consumers are willing to pay and the _____
actual price paid
The law of demand is the principle that there is _________________ relationship between the price of a good and the quantity buyers are willing to purchase in a defined time period, ceteris paribus
an inverse
An increase in supply
appears as a rightward shift of the supply curve
In an efficient market, dead weight loss is
constant
As shown in Exhibit A-7, if the quantity supplied is 2 million pounds of ground beef per year, what is the result?
deadweight loss
As shown in Exhibit A-7, if the quantity supplied is 6 million pounds of ground beef per year, what is the result?
deadweight loss
A leftward shift in the demand curve is called a(an)
decrease in demand
The law of supply is the principle that the relationship between the price of a good and the quantity sellers are willing to offer for sale in a defined time period, ceteris paribus, is
direct
Deadweight loss is the net loss of
disequilibrium surplus
In Exhibit 14, if the price of video games was currently $45, there would be an __________ of __________ video games in this market.
excess demand; 100
In Exhibit 14, at any market price of video games below $50, a(n) __________ would result, causing price to __________.
excess demand; rise
Exhibit 14 presents supply and demand data for the video game market. If the price of video games was currently $70, there would be an _________ of ___________ video games in this market.
excess supply; 400
In Exhibit 14, at any market price of video games above $50, a(n) __________ would result, causing price to __________.
excess supply; fall
There is news that the price of Tucker's Root Beer will increase significantly next week. If the demand for Tucker's Root Beer reacts only to this factor and shifts to the right, the position of this demand curve has reacted to a change in
expectations
Some people will pay a higher price for brand-name goods. For example, some people buy Rolls Royce cars and Rolex watches to impress others. True or False: Knowingly paying higher prices for certain items just to be a "snob" violates the law of demand.
false
A rightward shift in the demand curve is called a(an)
increase in demand
If the quantity demanded exceeds the quantity supplied in a market, what is the result?
inefficiency
A curve that is derived by summing horizontally individual demand curves is called
market demand
A curve that is derived by summing horizontally individual supply curves is called
market supply
At the equilibrium price, deadweight loss is
minimized
An increase in demand for a good or service means that consumers will purchase
more at all possible prices
An increase in the quantity demanded for any good or service is reflected graphically as
movement down along the demand curve
A surplus occurs when
price is above the equilibrium
A shortage occurs when
price is below the equilibrium price
Producer surplus measures the value between the actual selling price and the _______
price sellers are willing to sell the product
A change in the quantity demanded for any good or service is caused by a change in
the price of that good or service
Deadweight loss is not the result of
zero producer surplus