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Exam 7: Consumers, Producers and the Efficiency of Markets

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Question 41

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To measure the total consumer surplus in a market, the area above the demand curve is added to the area below the price.

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Question 42

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Graph 7-4 -In Graph 7-4, at the market-clearing equilibrium, total consumer surplus is represented by the area:

A) A
B) A + B + C
C) D + E + F
D) A + B + C + D + E + F

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Question 43

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Table 7-1 This table refers to five possible buyers' willingness to pay for good Z. $\begin{array}{|c|c|}\hline \text { Buyer } & \text { Willingness to pay ( } \$ \text { ) } \\\hline \text { Cassie } & 15.00 \\\hline \text { Jamie } & 11.00 \\\hline \text { John } & 9.50 \\\hline \text { Jeremy } & 6.00 \\\hline \text { Sarah } & 4.50 \\\hline\end{array}$ -Refer to Table 7-1.If the price of good Z is $9.99, who will not purchase the good?

When a good is purchased, the difference between what a consumer is willing to pay and what they actually have to pay is consumer surplus.

Costa and Soula sell lemonade on the corner for $0.20 per glass.Their producer surplus is $0.18 per glass.Their willingness to sell is:

According to many economists, government restrictions on ticket scalping do all of the following EXCEPT:

Ticket scalping leads to a reduction in economic efficiency and therefore to a reduction in economic wellbeing.

Producer surplus is the area:

If the cost of producing automobiles increases, consumer surplus will:

If all sellers in the market have an identical willingness to sell, then producer surplus will be zero.

Suppose a market clears and this generates an equilibrium price and quantity.An important outcome of this equilibrium is that it maximises the total benefits to both buyers and sellers.

Table 7-1 This table refers to five possible buyers' willingness to pay for good Z. $\begin{array}{|c|c|}\hline \text { Buyer } & \text { Willingness to pay ( } \$ \text { ) } \\\hline \text { Cassie } & 15.00 \\\hline \text { Jamie } & 11.00 \\\hline \text { John } & 9.50 \\\hline \text { Jeremy } & 6.00 \\\hline \text { Sarah } & 4.50 \\\hline\end{array}$ -Refer to Table 7-1.Which of the following is NOT true?

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

We can say that the allocation of resources is efficient if:

Welfare economics is the study of:

Producer surplus measures all of the following EXCEPT the:

Graph 7-1 -Refer to Graph 7-1.What area represents producer surplus when the price is P₁?

A demand curve reflects each of the following EXCEPT the:

Table 7-3 Market supply and demand for good X $\begin{array}{|c|c|c|}\hline \text { Price (\$) } & \text { Quantity demanded } & \text { Quantity supplied } \\\hline 12.00 & 0 & 36 \\\hline 10.00 & 12 & 30 \\\hline 8.00 & 24 & 24 \\\hline 6.00 & 36 & 18 \\\hline 4.00 & 48 & 12 \\\hline 2.00 & 60 & 6 \\\hline 0.00 & 72 & 0 \\\hline\end{array}$ -Refer to Table 7-3.At a price of $6.00, total surplus would be:

Producer surplus equals: