Chapter 6 Quizes

(Figure: Demand Curve 3) Use the graph of a demand curve for jars of laundry detergent to answer the question. What is the total consumer surplus if 50 jars are sold at a price of $6? $14 $750 $700 $350

$350

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does Kevin gain when he purchases the latte? $2 $4 $6 $1

$4

Amanda Mendez goes to a local café and orders a sandwich. Her willingness to pay for that sandwich is $10. The price of the sandwich is $4. The cost to the cafe to produce that sandwich is $1. How much economic surplus does Amanda receive when she purchases the sandwich? $6 $4 $10 $3

$6

Which describes the fairness-efficiency trade‑off? There is always a more equitable outcome that is also more efficient. Government intervention can increase efficiency in a market. Actions intended to make economic outcomes fairer can cause efficiency to decrease. The least efficient economic outcome is the fairest outcome.

Actions intended to make economic outcomes fairer can cause efficiency to decrease.

Move the point, E, in the accompanying graph to reflect equilibrium in the competitive market for corn and answer the following questions. Calculate consumer surplus (CS) CS = $ Calculate producer surplus (PS) PS = $

CS = $12500 PS = $7500

Select the best choice that completes each sentence. [...] statements say something about how the world ought to be. [...] statements say something that describes how the world currently is.

Normative Positive

Identify whether each statement is positive or normative. The unemployment rate is 8.2% At 8%, unemployment in the United States is too high The richest 1% should be paying more in taxes The richest 1% of the population earn 24% of the total income.

Postive Normative Normative Positive

Classify each of the statements as an example of positive or normative analysis. The sugar quota in the United States costs consumers $6.08 billion a year. Higher tariffs on imported automobiles would decrease the demand for foreign made cars. International trade should be be limited because it can cause some workers to lose their jobs. International trade makes some people better off and some people worse off. The U.S. should impose import quotas in the market for consumer electronics to help domestic workers. The sugar quota in the U.S. is good public policy and should be made stronger.

Postive Positive Normative Positive Normative Normative

In a market graph, consumer surplus is the area: above the price and below the demand curve above the price below the demand curve between the demand curve and the supply curve

above the price and below the demand curve

People gain consumer surplus when they purchase an item: at an equitable price. at a price below the value of the benefit they receive from the item. with a marginal benefit below the price of the item. at a price above marginal revenue but lower than the cost of production.

at a price below the value of the benefit they receive from the item

Consumer surplus equals: marginal revenue minus price total benefit minus total expenditure total revenue minus consumer expenditure marginal benefit minus price

marginal benefit minus price

Determine if the items represent an example of positive economics or normative economics. The richest 1% of Americans should pay more taxes than the rest of the 99% A decrease in the supply of coconut will increase the price of German chocolate cake, a good which requires coconut shavings as a key ingredient As minimum wage increases, the prices of all goods and services also tends to increase Social welfare spending in Sweden occupies too large a portion of the national budget

normative positive positive normative

a. Consumer surplus is equal to the difference between the maximum price a buyer is willing to pay and the market price. the minimum price a seller is willing to accept and the market price. the maximum price a seller is willing to accept and the market price. the minimum price a buyer is willing to pay and the market price. b. Consumer surplus is shown graphically as the area above the supply curve and below the market price. under the demand curve and above the market price. under the demand curve and below the market price. above the supply curve and above the market price.

the maximum price a buyer is willing to pay and the market price under the demand curve and above the market price

Carlos buys six new plants for his garden. If he has purchased according to the rational rule, his consumer surplus on the sixth plant is equal to: zero total benefit minus price price plus marginal benefit price minus marginal cost

zero