MicroEcon 102 Ch. 4

B. increase consumer surplus and total surplus.

(Figure: Consumer and Producer Surplus) Look at the figure Consumer and Producer Surplus. An increase in supply will: A. increase total surplus. B. increase consumer surplus and total surplus. C. increase consumer surplus. D. decrease producer surplus.

B. consumer surplus; BCD

(Figure: Market Demand) Look at the figure Market Demand. The amount by which the total benefits to consumers exceed their total expenditure is called _____, and if the price is B, is depicted by the area _____. A. producer surplus; BCD B. consumer surplus; BCD C. consumer surplus; 0CDE D. net benefit; 0BDE

A. $50

(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Irvine, Kentucky. If the price of burgers falls from $1.50 to $1.00, there is a loss in producer surplus. How much of the loss accrues because of the change in the quantity supplied? A. $50 B. $45 C. $75 D. $90

B. $225.

(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Tuscaloosa. If the price of a burger is $2, consumer surplus will equal: A. $650. B. $225. C. $400. D. $450.

D. $379.

(Table: Producer Surplus and Phantom Tickets) The table Producer Surplus and Phantom Tickets shows the minimum price at which each of the students is willing to sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to sell. If the price for Phantom tickets is $140 and there is no other market for tickets, total producer surplus for these five students is: A. $139. B. $110. C. $40. D. $379.

C. $10.

(Table: Pumpkin Market) There are two consumers, Andy and Ben, in the market for pumpkins. Their willingness to pay for each pumpkin is shown in the table Pumpkin Market. There are two producers of pumpkins, Cindy and Diane, and their costs are also shown. The equilibrium price for pumpkins is $8 and the equilibrium quantity is 5. At the equilibrium price and quantity, total consumer surplus is: A. $8. B. $0. C. $10. D. $6.

A. none

(Table: Willingness to Pay for Basketball Sneakers) The table Willingness to Pay for Basketball Sneakers shows each player's willingness to pay for basketball sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the price of basketball sneakers is $180, how many pairs will be purchased? A. none B. one C. three D. two

To show the increase in demand, use the copy tool to draw a new demand curve that lies above and to the right of the original curve. The increase in producer surplus that results from the increase in demand is a quadrilateral that starts on the vertical axis at the height of the new equilibrium price, continues horizontally to the point where the new demand curve intersects the original supply curve, follows the supply curve down to the original equilibrium point, and then continues horizontally from the original equilibrium point over to the vertical axis. For further review, read Chapter 4; Section: Producer Surplus and the Supply Curve.

Suppose the diagram below illustrates the market for pizza in a college town. Part 1: Use the copy tool to illustrate an increase in demand for pizza in this market. Label the new demand curve D2. Part 2: Use the quadrilateral tool to indicate the increase in producer surplus in this market as a result of the change in demand. Label this area PS-Increase.

B. the sum of consumer surplus and producer surplus.

4. The total surplus in a market is: A. the net benefit to consumers, defined as the excess of consumer surplus over producer surplus. B. the sum of consumer surplus and producer surplus. C. the excess supply due to a price above the equilibrium price. D. the surplus that accrues when a good is not scarce, defined as the total amount (if any) by which quantity supplied exceeds quantity demanded at a zero price.

B. increase; supply

An increase in the consumer surplus in the market for milkshakes may result from a(n) _____ in the _____ of milkshakes. A. increase; price B. increase; supply C. decrease; demand D. decrease; supply

C. increases

Assume that the supply curve for corn is upward-sloping. In the market for corn, a primary input in the production of ethanol, total surplus _____ when the price of ethanol increases. A. decreases B. The answer cannot be determined without information about the supply curve. C. increases D. does not change

B. will decrease.

Coffee and tea are substitutes in consumption. If there is an increase in the price of coffee, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus in the tea market: A. may change, but we cannot determine the change without more information. B. will decrease. C. will increase. D. will not change.

The supply curve is a vertical line at the quantity of 80,000 seats. No matter what the price is, those are all the seats available. The demand curve intersects the vertical axis at a price of $300 and intersects the supply curve at the price of $40. Consumer surplus is the triangular area under the demand curve and above the price of $40. If you have trouble with these concepts, go back to the text chapter 4; Section: Consumer Surplus and the Demand Curve.

Goliath State University (GSU) has a football stadium that seats a maximum of 80,000 fans and is sold out for every home game. The price of a ticket to attend a GSU football game is $40 and the most that anyone would ever pay for a ticket is $300. Assume that tickets are priced at market equilibrium. Part 1: Use the infinite line drawing tool to draw the supply and demand curves for GSU football games. Label each curve accordingly. Part 2: Use the triangle tool to indicate the amount of consumer surplus and label the area CS.

D. a decrease

If the supply curve of ice cream is upward-sloping and demand for it decreases, there will be _____ in producer surplus. A. an increase B. no change C. It's impossible to tell what will happen to producer surplus. D. a decrease

B. will decrease.

If there is a decrease in demand, assuming a positively sloped supply curve and a negatively sloped demand curve, total surplus: A. may change, but we can't tell how. B. will decrease. C. will remain the same. D. will increase.

A. $240.

Luis is willing to sell his pool table for no less than $600, but if he gets $840, the producer surplus Luis receives is: A. $240. B. $600. C. $840. D. $1,440.

B. $45

Mark and Rasheed are at the bookstore buying new calculators for the semester. Mark is willing to pay $75 and Rasheed is willing to pay $100 for a graphing calculator. The price for a calculator at the bookstore is $65. How much is their total consumer surplus? A. $60 B. $45 C. $10 D. $35

D. the sum of the individual producer surpluses for all buyers of X.

We can measure total producer surplus for good X as: A. the area bounded by the supply curve for X and the two axes. B. the area below the supply curve for X and above the price of X. C. the area between the demand curve for X and the supply curve for X. D. the sum of the individual producer surpluses for all buyers of X.

C. no mutually beneficial trades are missed.

When a market is in equilibrium and there is no outside intervention to change the equilibrium price: A. some mutually beneficial trades may be missed. B. inefficiency is maximized. C. no mutually beneficial trades are missed. D. total surplus is minimized.

A. your right to use and dispose of your private property as you see fit

Which of the following is a key factor in the effectiveness of well-functioning markets? A. your right to use and dispose of your private property as you see fit B. a significant degree of government intervention to maximize efficiency C. outcomes that are equitable for consumers and producers D. the role of the government to deliver economic signals to consumers and producers