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

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Question 61

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Figure 7-12 -Refer to Figure 7-12.When the price falls from P2 to P1,which of the following would not be true?

A) The sellers who still sell the good are worse off because they now receive less.
B) Some sellers leave the market because they are not willing to sell the good at the lower price.
C) The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price.
D) Producer surplus would fall by area A + B.

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Question 62

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A seller is willing to sell a product only if the seller receives a price that is at least as great as the

A) seller's producer surplus.
B) seller's cost of production.
C) seller's profit.
D) average willingness to pay of buyers of the product.

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Question 63

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If a consumer places a value of $15 on a particular good and if the price of the good is $17,then the

Laissez-faire is a French expression which literally means

If a market is allowed to move freely to its equilibrium price and quantity,then an increase in supply will

Figure 7-18 -Refer to Figure 7-18.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.The increase in producer surplus to producers already in the market would be

Tammy loves donuts.The table shown reflects the value Tammy places on each donut she eats: a.Use this information to construct Tammy's demand curve for donuts. b.If the price of donuts 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 donuts rose to $0.40,how many donuts would she purchase now? What would happen to Tammy's consumer surplus? Show this change on your graph.

At Nick's Bakery,the cost to make homemade chocolate cake is $4 per cake.As a result of selling five cakes,Nick experiences a producer surplus in the amount of $17.50.Nick must be selling his cakes for

Figure 7-5 -Refer to Figure 7-5.At the equilibrium price,consumer surplus is

Table 7-8 The only four producers in a market have the following costs: -Refer to Table 7-8.If Evan,Selena,Angie,and Kris sell the good,and the resulting producer surplus is $700,then the price must have been

Market power and externalities are examples of

Figure 7-10 -Refer to Figure 7-10.If the equilibrium price rises from $50 to $200,what is the producer surplus to new producers?

Figure 7-2 -Refer to Figure 7-2.When the price is P2,consumer surplus is

Table 7-10 -Refer to Table 7-10.You and your best friend want to hire a professional photographer to take pictures of your two families.The table shows the costs of the four potential sellers in the local photography market.You and your friend take bids from the sellers.Who offers the two winning bids,and what do they offer to charge for the photography sessions?

Figure 7-8 -Refer to Figure 7-8.Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

Josh is willing to pay $40 for a haircut,but he is able to pay $25 at the local salon.His consumer surplus is

Bill created a new software program he is willing to sell for $200.He sells his first copy and enjoys a producer surplus of $150.What is the price paid for the software?

Suppose Larry,Moe,and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

If the government allowed a free market in organs for transplant there would be

Market power and externalities are examples of market failures.