Econ-Chapter 7 Practice Quiz

A seller's opportunity cost measures the

value of everything she must give up to produce a good.

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

seller's cost of production.

Cost is a measure of the

seller's willingness to sell.

A supply curve can be used to measure producer surplus because it reflects

sellers' costs.

In a market, the marginal buyer is the buyer

who would be the first to leave the market if the price were any higher.

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called

willingness to pay.

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

willingness to pay.

Producer surplus is

the amount a seller is paid minus the cost of production.

A consumer's willingness to pay directly measures

how much a buyer values a good.

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.

Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor. On a particular day, he is willing to tutor

$64.

Tom tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $155 per tuning. One particular week, Tom is willing to tune the first piano for $120, the second piano for $125, the third piano for $140, and the fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. His producer surplus is

$80.

In which of the following circumstances would a buyer be indifferent about buying a good?

The amount of consumer surplus the buyer would experience as a result of buying the good is zero. The price of the good is equal to the buyer's willingness to pay for the good. The price of the good is equal to the value the buyer places on the good. All of the above are correct.

Consumer surplus is equal to the

Value to buyers - Amount paid by buyers.

Consumer surplus

is measured using the demand curve for a product.

Consumer surplus is

a concept that helps us make normative statements about the desirability of market outcomes. represented on a graph by the area below the demand curve and above the price. a good measure of economic welfare if buyers' preferences are the primary concern. All of the above are correct.

Consumer surplus in a market can be represented by the

area below the demand curve and above the price.

On a graph, consumer surplus is represented by the area

below the demand curve and above price.

Producer surplus measures the

benefits to sellers of participating in a market.

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

buyer is indifferent between buying the good and not buying it.

A seller's willingness to sell is

measured by the seller's cost of production. related to her supply curve, just as a buyer's willingness to buy is related to his demand curve. less than the price received if producer surplus is a positive number. All of the above are correct.

Willingness to pay

measures the value that a buyer places on a good.

On a graph, the area below a demand curve and above the price measures

consumer surplus.

Justin builds fences for a living. Justin's out-of-pocket expenses (for wood, paint, etc.) plus the value that he places on his own time amount to his

cost of building fences.