ECON4346 Midterm
Refer to Table 7-13. If the sellers bid against each other for the right to sell the good to a single consumer, then the producer surplus will be Abbey - $30 Bev - $40 Carl - $55 Dale - $65
$10 or slightly less
Which of the following equations is not valid?
Total surplus = Value to sellers - Cost to sellers
Refer to Figure 7-28. At the quantity Q2, the marginal value to buyers
is P2, and the marginal cost to sellers is P3.
Refer to Figure 7-26. If the government imposes a price floor of $90 in this market, then consumer surplus will be
$225.
Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?
50.
Refer to Figure 7-21. Which area represents producer surplus when the price is P1?
C
Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software?
$350.
Refer to Figure 7-1. If the price of the good is $250, then consumer surplus amounts to
$50.
Many economists believe that restrictions against ticket scalping result in each of the following except
shorter lines at cultural and sporting events.
One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of
welfare economics.
An example of normative analysis is studying
whether equilibrium outcomes are socially desirable.
Refer to Table 7-4. If you have a ticket that you sell to the group in an auction, what will be the selling price? Jennifer - $10 Bryce - $15 Dan - $20 David - $25 Ken - $50
slightly more than $50
Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is
$24
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.
Refer to Table 7-4. If tickets sell for $25 each, then what is the total consumer surplus in the market?
$60.
Refer to Figure 7-10. Which area represents producer surplus when the price is P1?
BCG
Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?
Firm A produces a monitor that David buys.
Refer to Figure 7-20. For quantities greater than M, the value to the marginal buyer is
less than the cost to the marginal seller, so decreasing the quantity increases total surplus.
Inefficiency can be caused in a market by the presence of
market power; externalities; imperfectly competitive markets.
When the demand for a good increases and the supply of the good remains unchanged, consumer surplus
may increase, decrease, or remain unchanged
Total surplus in a market is equal to
consumer surplus + producer surplus.
Chad is willing to pay $5.00 to get his first cup of morning latté; he is willing to pay $4.50 for a second cup. He buys his first cup from a vendor selling latté for $3.75 per cup. He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup. Chad buys a second cup. Which of the following statements is correct?
Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté.
Which of the following is correct?
Efficiency deals with the size of the economic pie, and equality deals with how fairly the pie is sliced.
Suppose the demand for peaches decreases. What will happen to producer surplus in the market for peaches?
It decreases.
Efficiency in a market is achieved when
the sum of producer surplus and consumer surplus is maximized.
Total surplus is
the total value of the good to buyers minus the cost to sellers of providing the good.
Tomato sauce and spaghetti noodles are complementary goods. A decrease in the price of tomatoes will
increase consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles.
Externalities are
side effects passed on to a party other than the buyers and sellers in the market.
Total surplus is
equal to the total value to buyers minus the total cost to sellers.
Refer to Table 7-15. If each producer has one unit available for sale, and if the market equilibrium price is $70, how much is the combined total cost of all participating sellers in the market?
$100.
Refer to Table 7-15. If each producer has one unit available for sale, and if the market equilibrium price is $80 per unit, how much is the total producer surplus in this market?
$140.
Firm A produces a monitor that David buys. Calvin - $150 Sam - $135 Andrew $120 Lori - $100
$15.
Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is
$150
Refer to Figure 7-24. At equilibrium, producer surplus is
$36.
Refer to Table 7-6. If the market price of an apple is $1.40, then the market quantity of apples demanded per day is
3.
Refer to Figure 7-10. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?
ABGD
If the United States changed its laws to allow for the legal sale of a kidney, which of the following is least likely to occur?
The allocation of kidneys would be fair.
Laissez-faire is a French expression which literally means
allow them to do.
