Exam 7: Consumers, Producers and the Efficiency of Markets

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 price is $11 who will be willing to supply the product?

How does consumer surplus differ from the market price?

The less elastic demand is, the higher the consumer surplus ceteris paribus.

Graph 7-7 -Refer to Graph 7-7.Explain why this graph verifies the fact that the market equilibrium (quantity) maximises the sum of producer and consumer surplus.

At the equilibrium of supply and demand in a market:

Cameron visits a sporting goods store to buy a new set of golf clubs.He has willing to pay $950 for the clubs but buys them on sale for $425.Cameron's consumer surplus from the purchase is:

Lucy often buys fish and is able to buy it for less than she is willing-to-pay.She later learns that fish has more health benefits than she realised.She now values fish even more than before.If the market price of fish does not change then:

A perfectly competitive free market will maximise total surplus.

The highest price a buyer is prepared to spend on a good, is that buyer's willingness to pay.

Graph 7-1 -Refer to Graph 7-1.What area represents consumer surplus when the price is P₁?

Antonio's Pizza has the following willingness to sell: Price Quantity supplied \ 15 28 \ 14 24 \ 13 20 \ 12 16 \ 11 12 \ 10 8 \ 9 4 <\ 9 0 Determine Antonio's producer surplus at a price of: a.$10 b.$12 c.$15 d.$9 e.$7