ECON 201 - QUIZ 7

Refer to Figure 7-8. If the government imposes a price ceiling of $80 in this market, then, assuming those with the highest willingness to pay purchase the good, consumer surplus will be

$1,500.

Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by

$325

Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither. Even though I was willing to pay up to $36 for a jersey sweater, I bought a jersey sweater for only $27.

Consumer Surplus

Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither. I paid $170 for a watch last week. This week, the same store is selling watches for $159.

Neither

Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither. I sold a used laptop for $160, even though I was willing to go as low as $150 in order to sell it.

Producer Surplus

Refer to Figure 7-7. What happens to the consumer surplus if the price rises from $100 to $150?

The new consumer surplus is 25 percent of the original consumer surplus.