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

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.The market quantity of oranges demanded per day is exactly 5 if the price of an orange,P,satisfies

Tammy loves donuts.The table shown reflects the value Tammy places on each donut she eats: a.Use this information to construct Tammy's demand curve for donuts. b.If the price of donuts is $0.20, how many donuts will Tammy buy? c.Show Tammy's consumer surplus on your graph.How much consumer surplus would she have at a price of $0.20? d.If the price of donuts rose to $0.40, how many donuts would she purchase now? What would happen to Tammy's consumer surplus? Show this change on your graph.

If an allocation of resources is efficient,then

Producer surplus directly measures

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.If the market price of an orange is $0.70,the market quantity of oranges demanded per day is

Producer surplus is the area

Figure 7-9 -Refer to Figure 7-9.If the price decreases from $22 to $16,consumer surplus increases by

Answer each of the following questions about demand and consumer surplus. a.What is consumer surplus, and how is it measured? b.What is the relationship between the demand curve and the willingness to pay? c.Other things equal, what happens to consumer surplus if the price of a good falls? Why? Illustrate using a demand curve. d.In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand curve, what else must be considered to determine consumer surplus?

Positive analysis refers to what

Market Supply and Demand for Pepperoni Pizza Table 7-5 -Refer to Table 7-5.As the table suggests,the demand curve is a straight line and so is the supply curve.Take this into account and suppose the price is $8,with only 4 pizzas being bought and sold.Total surplus amounts to

Total surplus in a market is

A buyer is willing to buy a product at a price greater than or equal to his willingness to pay,but would refuse to buy a product at a price less than his willingness to pay.

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

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

Figure 7-1 -Refer to Figure 7-1.Area C represents

In a market,the marginal buyer is the buyer

Producer surplus measures

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.At the equilibrium,total surplus amounts to

At any quantity,the price given by the supply curve shows the cost of the lowest-cost seller.

Which of the following is correct?