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

Even though participants in the economy are motivated by self-interest, the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being.

Figure 7-7 -Refer to Figure 7-7. What is the consumer surplus if the price is $100?

Figure 7-20 -Refer to Figure 7-20. For quantities less than M, the value to the marginal buyer is

Table 7-9 The only four consumers in a market have the following willingness to pay for a good: -Refer to Table 7-9. If there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the good will sell for

Welfare economics is the study of

Another way to think of the marginal seller is the seller who

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the government removed the price ceiling, by how much would total producer surplus increase for those producers entering the market after the price ceiling is removed?

Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15. Chuck values the dog show at

Tomato sauce and spaghetti noodles are complementary goods. A decrease in the price of tomatoes will

Figure 7-3 -Refer to Figure 7-3. When the price is P2, consumer surplus is

Figure 7-15 -Refer to Figure 7-15. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

Chad is willing to pay $5.00 to get his first cup of morning latté. He buys a cup from a vendor selling latté for $3.75 per cup. Chad's consumer surplus is

Figure 7-4 -Refer to Figure 7-4. Which area represents the increase in consumer surplus when the price falls from P1 to P2?

Figure 7-21 -Refer to Figure 7-21. When the price is P1, area B represents

Suppose your own demand curve for tomatoes slopes downward. Suppose also that, for the last tomato you bought this week, you paid a price exactly equal to your willingness to pay. Then

Figure 7-16 -Refer to Figure 7-16. If the price of the good is $500, then producer surplus amounts to

Figure 7-12 -Refer to Figure 7-12. If the equilibrium price rises from $200 to $350, what is the additional producer surplus to initial producers?

The area below the price and above the supply curve measures the producer surplus in a market.

Figure 7-22 -Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus to producers already in the market would be

Table 7-1 -Refer to Table 7-1. If the price of the product is $122, then the total consumer surplus is