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

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Question 161

Multiple Choice

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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.

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

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Question 162

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Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

A) True
B) False

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Question 163

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Figure 7-18 -Refer to Figure 7-18.If 40 units of the good are being bought and sold,then

If Darby values a soccer ball at $50,and she pays $40 for it,her consumer surplus is $90.

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

Sarah buys a new MP3 player for $135.She receives consumer surplus of $25 on her purchase if her willingness to pay is

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Figure 7-16 -Refer to Figure 7-16.Total surplus can be measured as the area

Table 7-9 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-9.You wish to purchase 10 piano lessons,so you take bids from each of the sellers.You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons.What bid will you accept?

When demand increases so that market price increases,producer surplus increases because (1)producer surplus received by existing sellers increases,and (2)new sellers enter the market.

PlayStations and PlayStation games are complementary goods.A technological advance in the production of PlayStations will

Table 7-10 -Refer to Table 7-10.You want to hire a professional photographer to take pictures of your family.The table shows the costs of the four potential sellers in the local photography market.You hire Kevin for a price of $500.What is his producer surplus?

Figure 7-17 -Refer to Figure 7-17.Which area represents producer surplus when the price is P1?

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Answer each of the following questions about supply and producer surplus. a.What is producer surplus,and how is it measured? b.What is the relationship between the cost to sellers and the supply curve? c.Other things equal,what happens to producer surplus when the price of a good rises? Illustrate your answer on a supply curve.

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

Table 7-1 -Refer to Table 7-1.If price of the product is $30,then the total consumer surplus is

Figure 7-9 -Refer to Figure 7-9.If the supply curve is S and the demand curve shifts from D to D',what is the increase in producer surplus due to new producers entering the market?

Another way to think of the marginal seller is the seller who

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