Homework 6

Q9. Bob is willing to pay $400 for a new suit, but he is able to buy the same suit for $250 at Macy's. His consumer surplus is:

$150.

Q22. Refer to Figure 7-26 below. At the equilibrium, total surplus is:

$1800

Q19. The following table represents the costs of five possible sellers. If the market price is $1200, the producer surplus in the market is:

$800.

Q3. Refer to the table below. If the price of the product is $130, then who would be willing to buy this product?

Calvin and Sam

Q20. If a market is allowed to move freely to its equilibrium price and quantity, then an increase in supply will

increase consumer surplus.

Q15. If the Surgeon General announces that eating apples promote healthy teeth. As a result, the equilibrium price of apples:

increases, and producer surplus increases.

Q13. Producer surplus is

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

Q1. Consumer surplus is equal to the:

value to buyers minus the price paid by buyers.

Q7. You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox in the Wrigley Field. Assume that the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the baseball game?

$10

Q24. Refer to Figure 7-26 below. If the government imposes a price floor of $90 in this market, then producer surplus will be:

$1125

Q11. Ryan buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ryan's willingness to pay is:

$131,000.

Q6. Refer to the table below. If the price of the product is $135, then the total consumer surplus is:

$15

Q23. Refer to Figure 7-26 below. If the government imposes a price floor of $90 in this market, then consumer surplus will be:

$225

Q18. The following table represents the costs of five possible sellers. If the market price is $1000, the producer surplus in the market is:

$300.

Q14. If Mike sells a shirt for $40, and his producer surplus from the sale is $8, his cost must have been:

$32.

Q5. Refer to the table below. If the price of the product is $122, then the total consumer surplus is:

$41

Q25. Refer to Figure 7-26 below. If the government imposes a price floor of $90 in this market, then the dead-weight loss will be:

$450

Q21. Refer to Figure 7-26. At the equilibrium, consumer surplus is:

$900

Q2. Refer to the table below. If the price of the product is $110, then who would be willing to buy this product?

Calvin, Sam and Andrew

Q4. Refer to the table below. If the price of the product is $90, then who would be willing to buy this product?

Calvin, Sam, Andrew and Lori

Q16. Which of the following below will cause a decrease in producer surplus?

income increases and buyers consider the good to be inferior.

Q12. Which of the following will cause an increase in consumer surplus?

a technological improvement in the production of the goods.

Q8. When the demand for a good increases and the supply of the good remains unchanged, then the consumer surplus in the market:

may increase, decrease, or remain the unchanged.

Q10. If a consumer places a value of $20 on a particular good and if the price of the good is $25, then

consumer does not buy the good.

Q17. Total surplus in a market is equal to

consumer surplus + producer surplus.