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

Figure 7-4 -Refer to Figure 7-4.Which area represents the increase in producer surplus when the price rises from P₁ to P₂ due to new producers entering the market?

Which of the Ten Principles of Economics does welfare economics explain more fully?

The French expression used by free-market advocates,which literally translates as "allow them to do," is

Figure 7-6 -Refer to Figure 7-6.When the price falls from P₂ to P₁,which of the following would not be true?

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.

The willingness to pay is the maximum amount that a buyer will pay for a good and measures how much the buyer values the good.

Figure 7-11. On the graph below, Q represents the quantity of the good and P represents the good's price. -Refer to Figure 7-11.The equilibrium allocation of resources is

Ally mows lawns for a living.Ally's out-of-pocket expenses (for equipment,gasoline,and so on)plus the value that she places on her own time amount to her

Figure 7-9 -Refer to Figure 7-9.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.The increase in producer surplus is equal to

Which of the following statements is not correct?

Figure 7-9 -Refer to Figure 7-9.Assume demand increases and as a result,equilibrium price increases to $22 and equilibrium quantity increases to 110.The increase in producer surplus to producers already in the market would be equal to

Suppose Bart,Benjamin,and Brent each purchase a particular type of electric pencil sharpener at a price of $20.Bart's willingness to pay was $22,Benjamin's willingness to pay was $25,and Brent's willingness to pay was $30.Which of the following statements is correct?

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

Producer surplus is the

When the demand for a good increases and the supply of the good remains unchanged,consumer surplus

Suppose that the equilibrium price in the market for widgets is $5.If a law increased the minimum legal price for widgets to $6,

Which of the following events would increase producer surplus?

Table 7-3 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-3.Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40?

The "invisible hand" refers to

Total surplus in a market is represented by the total area