Exam 7: Consumers, Producers and the Efficiency of Markets

Suppose Jess can sell fruit smoothies for $5.The market price of fruit smoothies is $4.50.If Jess decided to produce 100 smoothies, her producer surplus would be positive $50.

The area below a demand curve and above the price measures:

Suppose the price of good X increases.Assume that nothing else changes.Explain what will happen to the consumer surplus in this case and use a demand-curve to illustrate your answer.

Table 7-5 Price of pizza Quantity of pizza demanded Fred Frieda >\ 15 0 0 \ 14-14.99 1 0 \ 13-13.99 4 1 \ 12-12.99 7 3 \ 11-11.99 10 5 \ 10-10.99 13 7 \ 9-9.99 14 9 -Refer to Table 7-5.Given the information about Fred and Frieda's willingness to pay for pizza, calculate the consumer surplus for Fred and for Frieda if the price of pizza is: a.$16 b.$15 c.$13.50 d.$12 e.$5

Table 7-2 The costs of five possible sellers $\begin{array} { | c | c | } \hline \text { Seller } & \text { Cast(\$) } \\\hline \text { Kyle } & 18 \\\hline \text { Nathen } & 15 \\\hline \text { Chelsea } & 10 \\\hline \text { Hillary } & 7.50 \\\hline \text { Landon } & 5 \\\hline\end{array}$ -Refer to Table 7-2.If the market price is $10, the producer surplus in the market will be:

Suppose the price of music downloads falls.Which statement is not true?

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it maximises:

Total surplus in a market is:

Positive analysis refers to what:

Suppose consumer income increases.If wine is a normal good, what will happen to the equilibrium price and producer surplus?

Willingness to pay measures the:

Amy buys a new dog for $1500.She receives consumer surplus of $300 on her purchase.Her willingness to pay is:

Efficiency refers to whether a market outcome is fair, while equity refers to whether the maximum amount of output was produced from a given number of inputs.

Many countries allow people to visit national parks, lakes or rivers for free.If a good is free in the sense of having zero market price, does this mean that the consumer surplus is also zero?

Graph 7-3 -According to Graph 7-3, when the price is P₂, producer surplus is:

The economic meaning of cost is:

In most markets consumer surplus:

Khan is a financial analyst and provides a consultancy service.He charges clients $4000 per day.His producer surplus is $800.Khan's willingness to sell is:

If Brock is willing to pay $800 for a new suit but is able to buy the suit for $450, his consumer surplus is:

When markets fail, public policy can: