micro chapter 7

Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product? -Calvin -Calvin and Sam -Calvin, Sam, and Andrew -Calvin, Sam, Andrew, and Sasha

Calvin, Sam, and Andrew

A simultaneous increase in both the demand for tablets and the supply of tablets would imply that -:both the value of tablets to consumers and the cost of producing tablets has increased. -both the value of tablets to consumers and the cost of producing tablets has decreased. -the value of tablets to consumers has decreased, and the cost of producing tablets has increased -.the value of tablets to consumers has increased, and the cost of producing tablets has decreased.

the value of tablets to consumers has increased, and the cost of producing tablets has decreased.

Refer to Table 7-9. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market? -$0 -$300 -$400 -$700

$400

Which area represents producer surplus when the price is P2? -ACH -BCG -ABGD -DGH

ACH

Cost is a measure of the -seller's willingness to sell. -seller's producer surplus. -producer shortage. -seller's willingness to buy.

seller's willingness to sell.

The maximum price that a buyer will pay for a good is called -consumer surplus. producer surplus. -efficiency. -willingness to pay.

willingness to pay

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume 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 game? -:$0 -$10 -$40 -$50

$10

fer to Table 7-11. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, producer surplus will be -$16. -$18. -$24. -$26.

$18

Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. At equilibrium, consumer surplus is -$24. -$36. -$42. -$48.

$48

Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $425. Billie Jo's willingness to pay for the dishwasher is -$150. -$425. -$500. -$850.

$500

Refer to Figure 7-2. If the government imposes a price floor of $110 in this market, then consumer surplus will decrease by -:$800. -$200. -$600. -$400.

$600

Refer to Table 7-7. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 2 if the price is -$1,150. -$1,400. -$700. -$950.

$950

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it -maximizes both the total revenue for firms and the quantity supplied of the product. -maximizes the combined welfare of buyers and sellers. -minimizes costs and maximizes output. -minimizes the level of welfare payments.

maximizes the combined welfare of buyers and sellers.

As a result of a decrease in price, -new buyers enter the market, increasing consumer surplus. -new buyers enter the market, decreasing consumer surplus. -existing buyers exit the market, increasing consumer surplus. -existing buyers exit the market, decreasing consumer surplus.

new buyers enter the market, increasing consumer surplus.

Evan purchases a wall calendar for $9, and his consumer surplus is $1. How much is Evan willing to pay for the wall calendar? -:$9 -$5 -$10 -$8

$10

Refer to Figure 7-9. At equilibrium, consumer surplus is represented by the area -A. -A+B+C. -D+H+F. -A+B+C+D+H+F.

A+B+C.

Refer to Figure 7-6. When the price falls from P2 to P1, producer surplus -0:decreases by an amount equal to C. -decreases by an amount equal to A+B. -decreases by an amount equal to A+C. -increases by an amount equal to A+B.

decreases by an amount equal to A+B.

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market -decreases. -is unchanged. -increases. -may increase, decrease, or remain unchanged.

may increase, decrease, or remain unchanged