Homework 6

18. Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is a. $150. b. $200. c. $350. d. $550.

a. $150.

16. If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to a. $4. b. $16. c. $20. d. $36.

a. $4.

11. Which of the following statements is correct? a. Buyers always want to pay less and sellers always want to be paid more. b. Buyers always want to pay less and sellers always want to be paid less. c. Buyers always want to pay more and sellers always want to be paid more. d. Buyers always want to pay more and sellers always want to be paid less.

a. Buyers always want to pay less and sellers always want to be paid more.

20. Which of the following events would increase producer surplus? a. Sellers' costs stay the same and the price of the good increases. b. Sellers' costs increase and the price of the good stays the same. c. Sellers' costs increase and the price of the good decreases. d. All of the above are correct.

a. Sellers' costs stay the same and the price of the good increases.

5. If a nonbinding price floor is imposed on a market, then the a. quantity sold in the market will stay the same. b. quantity sold in the market will decrease. c. price in the market will increase. d. price in the market will decrease.

a. quantity sold in the market will stay the same.

8. If a tax is levied on the sellers of a product, then the supply curve will a. shift up. b. shift down. c. become flatter. d. not shift.

a. shift up.

2. Rent-control laws dictate a. the exact rent that landlords must charge tenants. b. a maximum rent that landlords may charge tenants. c. a minimum rent that landlords may charge tenants. d. both a minimum rent and a maximum rent that landlords may charge tenants.

b. a maximum rent that landlords may charge tenants.

6. A tax on the sellers of coffee mugs a. increases the size of the coffee mug market. b. decreases the size of the coffee mug market. c. has no effect on the size of the coffee mug market. d. may increase, decrease, or have no effect on the size of the coffee mug market.

b. decreases the size of the coffee mug market.

9. A tax on the buyers of sofas a. increases the size of the sofa market. b. decreases the size of the sofa market. c. has no effect on the size of the sofa market. d. may increase, decrease, or have no effect on the size of the sofa market.

b. decreases the size of the sofa market.

10. If a tax is levied on the buyers of a product, then the demand curve will a. not shift. b. shift down. c. shift up. d. become flatter.

b. shift down.

1. Price controls are usually enacted a. as a means of raising revenue for public purposes. b. when policymakers believe that the market price of a good or service is unfair to buyers or sellers. c. when policymakers detect inefficiencies in a market. d. All of the above are correct.

b. when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

12. The maximum price that a buyer will pay for a good is called the a. cost. b. willingness to pay. c. equity. d. efficiency.

b. willingness to pay.

19. If Gina sells a shirt for $40, and her producer surplus from the sale is $32, her cost must have been a. $72. b. $32. c. $8. d. We would have to know the consumer surplus in order to make this determination.

c. $8.

Buyer Willingness To Pay Lori $50.00 Audrey $30.00 Zach $20.00 Calvin $10.00 15. Refer to the Table. If the price of the product is $15, then who would be willing to purchase the product? a. Lori b. Lori and Audrey c. Lori, Audrey, and Zach d. Lori, Audrey, Zach, and Calvin

c. Lori, Audrey, and Zach

3. Minimum-wage laws dictate a. the exact wage that firms must pay workers. b. a maximum wage that firms may pay workers. c. a minimum wage that firms may pay workers. d. both a minimum wage and a maximum wage that firms may pay workers.

c. a minimum wage that firms may pay workers.

13. A consumer's willingness to pay directly measures a. the extent to which advertising and other external forces have influenced the consumer's preferences. b. the cost of a good to the buyer. c. how much a buyer values a good. d. consumer surplus

c. how much a buyer values a good.

14. Consumer surplus a. is closely related to the supply curve for a product. b. is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward-sloping line. c. is measured using the demand curve for a product. d. does not reflect economic well-being in most markets.

c. is measured using the demand curve for a product.

4. If a price ceiling is not binding, then a. the equilibrium price is above the price ceiling. b. it has no legal enforcement mechanism. c. the equilibrium price is below the price ceiling. d. None of the above is correct because all price ceilings must be binding.

c. the equilibrium price is below the price ceiling.

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

d. All of the above are correct.

7. When a tax is placed on the sellers of a product, buyers pay a. more, and sellers receive more than they did before the tax. b. less, and sellers receive more than they did before the tax. c. less, and sellers receive less than they did before the tax. d. more, and sellers receive less than they did before the tax.

d. more, and sellers receive less than they did before the tax.