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

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Question 221

True/False

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Each seller of a product is willing to sell as long as the price he or she can receive is greater than the opportunity cost of producing the product.

A) True
B) False

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Question 222

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Consumer surplus is equal to the

A) Value to buyers - Amount paid by buyers.
B) Amount paid by buyers - Costs of sellers.
C) Value to buyers - Costs of sellers.
D) Value to buyers - Willingness to pay of buyers.

E) B) and C)
F) A) and C)

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Question 223

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Producer surplus directly measures

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

Ticket scalping can increase total surplus in the market for tickets to sporting events.

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?

In order to calculate consumer surplus in a market, we need to know willingness to pay and price.

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?

Figure 7-23 -Refer to Figure 7-23. The efficient price-quantity combination is

Total surplus in a market can be measured as the area below the supply curve plus the area above the demand curve, up to the point of equilibrium.

Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the additional producer surplus to initial producers?

Figure 7-3 -Refer to Figure 7-3. When the price is P2, consumer surplus is

Figure 7-22 -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus to producers already in the market would be

Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. The equilibrium market price for 10 piano lessons is $300. What is the total producer surplus in the market?

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If you have two essentially) identical tickets that you sell to the group in an auction, what will be the selling price for each ticket?

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

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

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

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

Figure 7-16 -Refer to Figure 7-16. Producer surplus amounts to $300 if the price of the good is