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

If the demand for leather decreases, producer surplus in the leather market

Consumer surplus is equal to the

Table 7-6 For each of three potential buyers of apples, the table displays the willingness to pay for the first three apples of the day. Assume Xavier, Yadier, and Zavi are the only three buyers of apples, and only three apples can be supplied per day. -Refer to Table 7-6. If the market price of an apple increases from $1.40 to $1.60, then consumer surplus

Figure 7-10 -Refer to Figure 7-10. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Table 7-10 The following table represents the costs of five possible sellers. -Refer to Table 7-10. If the market price is $1,400, the combined total cost of all participating sellers is

Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is pleased since she paid $8,000 for the car but would have been willing to pay $11,000 for the car. Susie's consumer surplus is $2,000.

All else equal, an increase in demand will cause an increase in producer surplus.

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Figure 7-21 -Refer to Figure 7-21. Which area represents total surplus in the market when the price is P1?

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

Figure 7-26 -Refer to Figure 7-26. If the government imposes a price floor of $90 in this market, then consumer surplus will be

Answer each of the following questions about demand and consumer surplus. a.What is consumer surplus, and how is it measured? b.What is the relationship between the demand curve and the willingness to pay? c.Other things equal, what happens to consumer surplus if the price of a good falls? Why? Illustrate using a demand curve. d.In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand curve, what else must be considered to determine consumer surplus?

Figure 7-17 -Refer to Figure 7-17. If the supply curve is S and the demand curve is D, what is total producer surplus at the equilibrium price?

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

Suppose the market demand curve for a good passes through the point (quantity demanded = 100, price = $25). If there are five buyers in the market, then

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

Figure 7-24 -Refer to Figure 7-24. At equilibrium, consumer surplus is measured by the area

Table 7-11 The only four producers in a market have the following costs: -Refer to Table 7-11. If the sellers bid against each other for the right to sell the good to a consumer, then the producer surplus will be

Consumer surplus is the amount a buyer actually has to pay for a good minus the amount the buyer is willing to pay for it.

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