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

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Question 121

True/False

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If a market is in equilibrium,then it is impossible for a social planner to raise economic welfare by increasing or decreasing the quantity of the good.

A) True
B) False

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Question 122

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Raisin bran and milk are complements.An increase in the price of raisins will

A) increase consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk.
B) increase consumer surplus in the market for raisin bran and increase producer surplus in the market for milk.
C) decrease consumer surplus in the market for raisin bran and increase producer surplus in the market for milk.
D) decrease consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk.

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

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Question 123

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If the government allowed a free market for transplant organs such as kidneys to exist,critics argue that such a market would

If the United States legally allowed for a market in transplant organs,it is estimated that one kidney would sell for at least $100,000.

Wendy is willing to pay $50 for a concert ticket and Bruce would like to receive $25.If the market price is $40 for this transaction,then the total surplus would be $15.

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?

Chad is willing to pay $5.00 to get his first cup of morning latté; he is willing to pay $4.50 for a second cup.He buys his first cup from a vendor selling latté for $3.75 per cup.He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup.Chad buys a second cup.Which of the following statements is correct?

Figure 7-20 -Refer to Figure 7-20.If 4 units of the good are produced and sold,then

Table 7-9 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-9.The equilibrium market price for 10 piano lessons is $300.What is the total producer surplus in the market?

The lower the price,the lower the producer surplus,all else equal.

Figure 7-6 -Refer to Figure 7-6.What happens to the consumer surplus if the price rises from $100 to $150?

Suppose you buy an iPod for $100.If your consumer surplus is $30,your willingness to pay is $70.

Figure 7-2 -Refer to Figure 7-2.When the price is P1,consumer surplus is

Kelly is willing to pay $68 for a pair of shoes for a wedding.She finds a pair at her favorite outlet shoe store for $58.Kelly's consumer surplus is

Jeff decides that he would pay as much as $2,000 for a new laptop computer.He buys the computer and realizes a consumer surplus of $300.How much did Jeff pay for his computer?

Table 7-9 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-9.The equilibrium market price for 10 piano lessons is $400.What is the total producer surplus in the market?

Suppose there is an increase in supply that reduces market price.Consumer surplus increases because (1)consumer surplus received by existing buyers increases and (2)new buyers enter 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?

Laissez-faire is a French expression which literally means

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