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

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Question 91

Multiple Choice

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Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market

A) decreases.
B) is unchanged.
C) increases.
D) may increase, decrease, or remain unchanged.

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

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Question 92

Multiple Choice

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Producer surplus equals

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

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

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Question 93

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Figure 7-25 -Refer to Figure 7-25. At the equilibrium price, total surplus is

Consumer surplus

The French expression used by free-market advocates, which literally translates as "allow them to do," is

Total surplus in a market will increase when the government

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 producer surplus increase as a result of this supply shift?

Suppose the demand for peaches decreases. What will happen to producer surplus in the market for peaches?

Producer surplus measures the benefit to sellers from receiving a price above their costs.

Figure 7-23 -Refer to Figure 7-23. The equilibrium price is

Scenario 7-1 Suppose market demand is given by the equation -Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, what is the change in total consumer surplus in the market?

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 due to new producers entering the market would be

Figure 7-18 -Refer to Figure 7-18. Total surplus amounts to $500 if consumer surplus amounts to

Refer to Figure 7-11. If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the market price is $1,100, the combined total cost of all participating sellers is

Table 7-13 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-13. You wish to purchase 10 piano lessons for yourself and for your brother, so you take bids from each of the sellers. You will take lessons at the same time, so one teacher cannot provide lessons to both of you. You must pay the same price for both sets of lessons, and 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?

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 is $0.70, then the market quantity of oranges demanded per day is

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.

Figure 7-16 -Refer to Figure 7-16. Sellers will be unwilling to sell more than

Figure 7-23 -Refer to Figure 7-23. At equilibrium, consumer surplus is represented by the area