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

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Question 21

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Efficiency in a market is achieved when

A) a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs.
B) the sum of producer surplus and consumer surplus is maximized.
C) all firms are producing the good at the same low cost per unit.
D) no buyer is willing to pay more than the equilibrium price for any unit of the good.

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

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Question 22

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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) B) and C)
F) C) and D)

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Question 23

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Figure 7-16 -Refer to Figure 7-16.The efficient price-quantity combination is

Ronnie operates a lawn-care service.On each day,the cost of mowing the first lawn is $10,the cost of mowing the second lawn is $12,and the cost of mowing the third lawn is $15.His producer surplus on the first three lawns of the day is $53.If Ronnie charges all customers the same price for lawn mowing,that price is

Suppose that the equilibrium price in the market for widgets is $5.If a law increased the minimum legal price for widgets to $6,producer surplus

For any given quantity,the price on a demand curve represents the marginal buyer's willingness to pay.

Jeff decides that he would pay as much as $3,000 for a new laptop computer.He buys the computer and realizes consumer surplus of $700.How much did Jeff pay for his computer?

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 Alex,Barb,and Carlos 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,the market quantity of oranges demanded per day is

Suppose your own demand curve for tomatoes slopes downward.Suppose also that,for the last tomato you bought this week,you paid a price exactly equal to your willingness to pay.Then

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

Figure 7-12 -Refer to Figure 7-12.If the government imposes a price ceiling of $120 in this market,then total surplus will be

Ray buys a new tractor for $118,000.He receives consumer surplus of $13,000 on his purchase.Ray's willingness to pay is

Table 7-9 -Refer to Table 7-9.The equilibrium price is

Figure 7-2 -Refer to Figure 7-2.Which area represents consumer surplus at a price of P1?

Table 7-9 -Refer to Table 7-9.Both the demand curve and the supply curve are straight lines.At equilibrium,total surplus is

Figure 7-16 -Refer to Figure 7-16.At equilibrium,producer surplus is represented by the area

Producer surplus is the area

Moving production from a high-cost producer to a low-cost producer will

Suppose there is an early freeze in California that reduces the size of the lemon crop.What happens to consumer surplus in the market for lemons?

If the government imposes a binding price floor in a market,then the consumer surplus in that market will increase.