FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Consumers, Producers and the Efficiency of Markets

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

Consumer surplus tends to be small when

A) demand is price elastic.
B) supply is price elastic.
C) demand is price inelastic.
D) supply is price inelastic.

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

Correct Answer

verified

Show Answer

Question 22

True/False

Review LaterAdd Note

Review Later

The major advantage of allowing free markets to allocate resources is that the outcome of the allocation is efficient when particular assumptions hold true.

A) True
B) False

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

If it costs Wilfred the window cleaner €9.60 to clean the windows in a house but he is paid €15.00 for doing the job

A buyer's willingness to pay is that buyer's

Suppose that the price of a new bicycle is €300. Natalie values a new bicycle at €400. It costs €200 for the seller to produce the new bicycle. What is the value of total surplus if Natalie buys a new bike?

Tammy loves croissants. The table shown reflects the value Tammy places on each croissants she eats: ​ $\begin{array}{|l|l|}\hline \text { Value of first croissant } & € 0.60 \\\hline \text { Value of second croissant } & € 0.50 \\\hline \text { Value of third croissant } & € 0.40 \\\hline \text { Value of fourth croissant } & € 0.30 \\\hline \text { Value of fifth croissant } & € 0.20 \\\hline \text { Value of sixth croissant } & € 0.10 \\\hline\end{array}$ ​ a. Use this information to construct Tammy's demand curve for croissants. b. If the price of croissants is €0.20, how many croissants will Tammy buy? c. Show Tammy's consumer surplus on your graph. How much consumer surplus would she have at a price of €0.20? d. If the price of croissants rose to €0.40, how many croissants would she purchase now? What would happen to Tammy's consumer surplus? Show this change on your graph.

Medical care clearly enhances people's lives. Therefore, we should consume medical care until

What is producer surplus, and how is it measured?

Producer surplus is the area

Refer to the image below. Suppose producer surplus is larger than C but smaller than A+B+C. The price of the good must be ​ ​

Consumer surplus is the area

Producer surplus is a measure of the unsold inventories of suppliers in a market.

What is the relationship between the demand curve and the willingness to pay?

If a benevolent social planner chooses to produce less than the equilibrium quantity of a good, then

An example of positive analysis is studying

A supply curve can be used to measure producer surplus because it reflects

This table refers to five possible buyers' willingness to pay for a take-away meal. ? $\begin{array}{|l|l|}\hline \text { Buyer } & \begin{array}{l}\text { Willingness To } \\\text { Pay }\end{array} \\\hline \text { David } & € 8.50 \\\hline \text { Laura } & € 7.00 \\\hline \text { Megan } & € 5.50 \\\hline \text { Mallory } & € 4.00 \\\hline \text { Audrey } & € 3.50 \\\hline\end{array}$ ? Refer to the table above. If the market price is €5.50, the consumer surplus in the market will be ?

What is consumer surplus, and how is it measured?

If the demand curve in a market is stationary, consumer surplus decreases when the price in that market increases.

Total surplus is the seller's cost minus the buyer's willingness to pay.