Chapter 7 - Macro Economics

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Refer to Figure 7-25. Suppose the government imposes a price floor of $28 in this market. If the sellers with the lowest cost are the ones who sell the good and the government does not purchase any excess units produced, then total surplus will be

$1, 120

Refer to Figure 7-12. If the equilibrium price is $350, what is the producer surplus?

$30,000

Refer to Figure 7-9. If the price of the good is $9.50, then producer surplus is

$8.50

Which of the following will cause an increase in consumer surplus?

a technological improvement in the production of the good

Refer to Figure 7-28. At the quantity Q3,

the marginal value to buyers is less than the marginal cost to sellers

Consumer surplus is equal to the

value to buyers - amount paid by buyers

Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the producer surplus will be

$50 or slightly less

Refer to Figure 7-12. If the equilibrium price is $200, what is the producer surplus

$7,500

Refer to Table 7-1. If the market price is $105,

Sam's consumer surplus is $30 and total consumer surplus is $90

The study of how the allocation of resources affects economic well-being is called

welfare economics

Market power refers to the

ability of market participants to influence price

The maximum price that a buyer will pay for a good is called

willingness to pay

Consumer surplus

is measured using the demand curve for a product

Welfare economics is the study of how

the allocation of resources affects economic well-being

Refer to Figure 7-25. At the equilibrium price, total surplus is

$1, 152

Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the producer surplus to new producers?

$3,750

Total surplus in a market will increase when the government

Answer: Neither a nor b is correct Choices: -Imposes a binding price floor or a binding price ceiling on that market -Imposes a tax on that market

A seller's willingness to sell is

Answer: All of the above Choices: -Measured by the seller's cost of production -Related to her supply curve, just as a buyer's willingess to buy is related to his demand curve -Less than the price received if producer surplus is a positive number

Total surplus

Answer: All of the above are correct Choices: -Can be used to measure a market's efficiency -Is the sum of consumer and producer surplus -Is the value to buyers minus the cost to sellers

Refer to Table 7-1. If the price of the product is $130, then who would be willing to purchase the product?

Calvin and Sam

Refer to Table 7-1. IF the price of the product is $110, then who would be willing to purchase the product?

Calving, Sam, and Andrew

Total surplus measures the

buyers' willingness to pay less the sellers' cost

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

maximizes the combined welfare of buyers and sellers

Producer surplus measures the

benefits to sellers of participating in a market

If a consumer places 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

Externalities are

side effects passed on to a party other than the buyers and sellers in the market

Total surplus is

the total value of the good to buyers minus the cost to sellers of providing the good

Refer to Figure 7-25. Suppose the government imposes a price ceiling of $16 in this market. If the buyers with the highest willingness to pay purchase the good, then total surplus will be

$1,024

Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for

$100 or slightly less

Refer to Figure 7-9. If producer surplus is $19, then the price of the good is

$13.50

Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is

$14

Refer to Table 7-1. If price of the product is $135, then the total consumer surplus is

$15

Refer to Figure 7-12. If the equilibrium price rises form $200 to $350, what is the additional producer surplus to initial producers?

$15,000

Refer to Figure 7-9. If the price of the good is $14, then producer surplus is

$20.50

Refer to Table 7-11. If Evan, Selena, and Angie sell the good, and the resulting producer surplus is $300, then the price must have been

$200

Refer to Figure 7-11. If Evan, Selena, and Kris sell the good, and the resulting producer surplus is $700, then the price must have been

$300

Refer to Table 7-1. If the price of the product is $122, then the toatl consumer surplus is

$41

When a buyer's willingness ot pay for a good is equal to the price of the good, the

buyer is indifferent between buying the good and not buying it

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

consumer does not purchase the good

A consumer's willingness to pay directly measures

how much a buyer values a good

Refer to Figure 7-28. At the quantitiy Q2, the marginal value to buyers

is P2, and the marginal cost to sellers is P3

Market power and externalities are examples of

market failure

Consumer surplus

measures the benefit buyers receive from participating in a market

A seller's opportunity cost measures the

value of everything she must give up to produce a good

Total surplus is equal to

value to buyers - cost to sellers


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