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

If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $45.

Total surplus is

The welfare of sellers is measured by

Figure 7-24 -Refer to Figure 7-24. At equilibrium, consumer surplus is

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?

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

In order to calculate consumer surplus in a market, we need to know willingness to pay and price.

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the

David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is

Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would 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

Scenario 7-2 Suppose market demand and market supply are given by the equations: -Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to By how much does total consumer surplus increase for those consumers who were already willing to purchase the good with the original supply curve?

Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor. On a particular day, he is willing to tutor the first hour for $10, the second hour for $18, the third hour for $28, and the fourth hour for $40. Assume Allen is rational in deciding how many hours to tutor. His producer surplus is

Figure 7-24 -Refer to Figure 7-24. The equilibrium allocation of resources is

Table 7-12 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. -Refer to Table 7-12. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. The bids are required to be rounded to the nearest dollar. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. Your parents have given you $450 to spend on piano lessons. You believe that the sellers with higher opportunity costs offer higher quality lessons. You want the highest quality lessons that you can afford, but you can spend any remaining money on dinner with friends. From whom will you take lessons, and how much money will you spend?

Figure 7-26 -Refer to Figure 7-26. At the equilibrium price, consumer surplus is

Figure 7-22 -Refer to Figure 7-22. At the equilibrium price, producer surplus is

Which of the following will cause an increase in consumer surplus?

Figure 7-23 -Refer to Figure 7-23. If the price were P3, consumer surplus would be represented by the area

Table 7-7 -Refer to Table 7-7. You have an extra ticket to the Midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the ticket. Who makes the winning bid, and what does he offer to pay for the ticket?