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

Figure 7-20 -Refer to Figure 7-20.The equilibrium allocation of resources is

A) efficient because total surplus is maximized at the equilibrium.
B) efficient because consumer surplus is maximized at the equilibrium.
C) inefficient because consumer surplus is larger than producer surplus at the equilibrium.
D) inefficient because total surplus is maximized when 10 units of output are produced and sold.

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

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Figure 7-22 -Refer to Figure 7-22.At the quantity Q2,the marginal value to buyers

A) and the marginal cost to sellers are both P2.
B) is P2,and the marginal cost to sellers is P3.
C) and the marginal cost to sellers are both P3.
D) is P3,and the marginal cost to sellers is P2.

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

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

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

Motor oil and gasoline are complements.If the price of motor oil increases,consumer surplus in the gasoline market

Figure 7-12 -Refer to Figure 7-12.Area B represents

Consumer surplus can be measured as the area between the demand curve and the equilibrium price.

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

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

At any quantity,the price given by the supply curve shows the cost of the lowest-cost seller.

The maximum price that a buyer will pay for a good is called the

Market power and externalities are examples of market failures.

Figure 7-8 -Refer to Figure 7-8.Which area represents producer surplus when the price is P1?

Figure 7-12 -Refer to Figure 7-12.Suppose producer surplus is larger than C but smaller than A+B+C.The price of the good must be

Figure 7-20 -Refer to Figure 7-20.At equilibrium,total surplus is measured by the area

Total surplus

Welfare economics is the study of how

Which of the following equations is valid?

Let P represent price; let Q^S represent quantity supplied; and assume the equation of the supply curve is $P = 10 + ( 1 / 4 ) Q ^ { S }$ .If 80 units of the good are produced and sold,then producer surplus amounts to $1,200.

Figure 7-12 -Refer to Figure 7-12.When the price is P2,producer surplus is

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