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

Table 7-6 During the last two days, Harry purchased a latte from two different stores. The table below shows Harry's willingness to pay on each day and his consumer surplus from each purchase. ​ ​ Harry's Willingness to Pay (Dollars) Harry's Consumer Surplus (Dollars) First Day 5.50 2.00 Second Day 2.00 0.50 -Refer to Table 7-6. The price that Harry paid for a latte on the first day is

Figure 7-11 ​ -Refer to Figure 7-11. If the market equilibrium price rises from $25 to $35, how much is the increase in producer surplus to the producers supplying units at the initial $25 price?

Scenario 7-2 Suppose market demand and market supply are given by the equations: ​ Q^D = 40 - P Q^S = P - 4 -Refer to Scenario 7-2. How much is total surplus at the equilibrium price in this market?

When markets fail, public policy can potentially remedy the problem and increase economic efficiency.

Moving production from a high-cost producer to a low-cost producer will

A supply curve can be used to measure producer surplus because it reflects

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

Suppose you buy an iPod for $100. If your consumer surplus is $30, your willingness to pay is $70.

Figure 7-9 -Refer to Figure 7-9. At equilibrium, total surplus is represented by the area

Figure 7-9 -Refer to Figure 7-9. At equilibrium, producer surplus is represented by the area

If the government removes a binding price ceiling in a market, then the producer surplus in that market will increase.

Table 7-3 ​ ​ Buyer Willingness to Pay for a Baseball Game Ticket (Dollars) Nancy 10 Tom 15 David 20 Alexa 25 Eric 30 Chen 35 ​ -Refer to Table 7-3. If you have a ticket that you sell to the group in an auction, who will buy the ticket?

Table 7-14 $\begin{array}{l}\begin{array} { | l | l | } \hline \text { Buyer } & \begin{array} { l } \text { Willingness to } \\\text { Pay } ( \$ )\end{array} \\\hline \text { A } & 15 \\\hline B & 30 \\\hline \text { C } & 45 \\\hline \text { D } & 60 \\\hline\end{array}\\\\\begin{array} { | l | l | } \hline \text { Seller } & \text { Cost (\$) } \\\hline W & 10 \\\hline \mathrm { X } & 20 \\\hline \mathrm { Y } & 30 \\\hline \mathrm { Z } & 40 \\\hline\end{array}\end{array}$ -Refer to Table 7-14. How much is total producer surplus at the equilibrium price in this market?

Figure 7-6 -Refer to Figure 7-6. Area A represents

Welfare economics implies that the equilibrium price of a product is considered to be the best price because it

All else equal, an increase in supply will cause an increase in consumer surplus.

If a consumer places a value of $13 on a particular good and if the price of the good is $16, then the

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

Figure 7-1 -Refer to Figure 7-1. When the price falls from P₂ to P₁, consumer surplus

Figure 7-13 ​ -Refer to Figure 7-13. Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total producer surplus in this market at the new equilibrium price?