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Exam 7: Consumers, Producers, and the Efficiency of Markets

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Question 231

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

A) the imposition of a nonbinding price ceiling in the market
B) buyers expect the price of a good to be higher next month
C) the price of a substitute increases
D) income increases and buyers consider the good to be inferior

E) A) and C)
F) All of the above

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Question 232

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Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. If the market price of an orange increases from $0.70 to $1.40, then consumer surplus

A) increases by $2.60.
B) decreases by $0.70.
C) decreases by $2.50.
D) decreases by $2.60.

E) None of the above
F) A) and B)

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Question 233

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Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price is $10, how much is total consumer surplus in this market?

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Consumer surplus is a good measure of economic welfare if policymakers want to

Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price is $25, how much is total producer surplus in this market?

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Consumer surplus measures the benefit to buyers of participating in a market.

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. Who is a marginal seller when the price is $1,100?

All else equal, an increase in demand will cause an increase in producer surplus.

Figure 7-23 -Refer to Figure 7-23. If the price were P1, producer surplus would be represented by the area

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

Steak and chicken are substitutes. A sharp reduction in the supply of steak would

Suppose you sell a kayak for $600, but you were willing to sell it for $450. The buyer was willing to pay $650. The total surplus is $200.

Efficiency in a market is achieved when

Economists generally believe that, although there may be advantages to society from ticket-scalping, the costs to society of this activity outweigh the benefits.

Table 7-15 -Refer to Table 7-15. You and your best friend want to hire a professional photographer to take pictures of your two families. The table shows the costs of the four potential sellers in the local photography market. You and your friend agree to offer $500 for each session. Who accepts the offer, and what is the total producer surplus in the market?

Figure 7-11 -Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D', what is the change in producer surplus?

Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to By how much does total consumer surplus increase for those consumers who were already willing to purchase the good with the original supply curve?