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

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Question 141

Multiple Choice

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When there is a technological advance in the pork industry, consumer surplus in that market will

A) increase.
B) decrease.
C) not change, since technology affects producers and not consumers.
D) not change, since consumers' willingness to pay is unaffected by the technological advance.

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

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Question 142

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Figure 7-9 -Refer to Figure 7-9. If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?

A) $625
B) $1,250
C) $2,500
D) $5,000

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

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Question 143

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Market power and externalities are examples of market failures.

Producer surplus directly measures

Total surplus in a market will increase when the government

Welfare economics is the study of the welfare system.

Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is

The welfare of sellers is measured by

Table 7-10 $\begin{array} { | l | r | } \hline \text { Seller } & \text { Cost } \\\hline \text { Lepran } & \$ 700 \\\hline \text { Kabe } & \$ 600 \\\hline \text { Kevin } & \$ 450 \\\hline \text { Steve } & \$ 400 \\\hline\end{array}$ -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 agree to offer $500 for each session. Who accepts the offer, and what is the total producer surplus in the market?

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

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. $\begin{array} { | l | c | c | c | } \hline & \text { First Orangp } & \text { Second Orange } & \text { Third Orange } \\\hline \text { Alliton } & \$ 2.00 & \$ 1.50 & \$ 0.75 \\\hline \text { Bob } & \$ 1.50 & \$ 1.00 & \$ 0.80 \\\hline \text { Chariste } & \$ 0.75 & \$ 0.25 & \$ 0 \\\hline\end{array}$ -Refer to Table 7-5. Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40?

Figure 7-19 -Refer to Figure 7-19. At equilibrium, total surplus is represented by the area

Table 7-7 The following table represents the costs of five possible sellers. $\begin{array} { | l | l | } \hline \text { Seller } & \text { Cost } \\\hline \text { Abby } & \$ 1,500 \\\hline \text { Babby } & \$ 1,200 \\\hline \text { Carlos } & \$ 1,000 \\\hline \text { Dianne } & \$ 750 \\\hline \text { Evalina } & \$ 500 \\\hline\end{array}$ -Refer to Table 7-7. If the market price is $900, the combined total cost of all participating sellers is

Figure 7-13 -Refer to Figure 7-13. If the price of the good is $300, then producer surplus amounts to

Figure 7-9 -Refer to Figure 7-9. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?

Table 7-11 $\begin{array} { | c | c | c } \hline \text { Price } & \begin{array} { c } \text { Quantity } \\\text { Demanded }\end{array} & \begin{array} { c } \text { Quantity } \\\text { Supplied }\end{array} \\\hline \$ 12.00 & 0 & 36 \\\hline \$ 10.00 & 3 & 30 \\\hline \$ 8.00 & 6 & 24 \\\hline \$ 6.00 & 9 & 18 \\\hline \$ 4.00 & 12 & 12 \\\hline \$ 2.00 & 15 & 6 \\\hline \$ 0.00 & 18 & 0 \\\hline\end{array}$ -Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, total surplus will be

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

One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of

Figure 7-19 -Refer to Figure 7-19. At equilibrium, consumer surplus is represented by the area