Exam 7: Consumers, Producers and the Efficiency of Markets

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.

When the market price of a good falls, consumer surplus increases because (1) the consumer surplus received by existing buyers becomes larger and (2) more buyers enter the market at the lower price.

A supply curve provides a graphical measure of a producer's true willingness to sell.

What is the total surplus in a market, and why might it be a good measure of economic wellbeing? Using a demand-supply diagram, show the areas representing total surplus.

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

Antonio's Pizza has the following willingness to sell pizza: Determine Antonio's producer surplus at a price of: a. $10. b. $8. c. $6. d. $4. e. $2.

Table 7-1 This table refers to five possible buyers' willingness to pay for good Z. -Refer to Table 7-1. If the price of good Z is $4.99, who will not purchase the good?

Suppose there is a price decrease. Assuming that nothing else changes, explain what happens to producer surplus and illustrate your answer using a supply curve.

Using a demand-supply diagram, completing the labels, identify the following areas: a. consumer surplus. b. producer surplus. c. total surplus.

If Dale sells a shirt for $40, and his producer surplus from the sale is $23, his cost must have been:

Suppose that the demand for coffee rises. This means that the producer surplus for coffee will:

Suppose hail storms damage vineyards in South Australia. The supply of grapes to local winemakers declines. What happens to consumer surplus in the market for South Australian wine?

Which of the following is NOT correct?

Economists generally agree that the goal in developing the concept of consumer surplus is to:

Producer surplus is the amount a seller is paid minus the cost of production.

Table 7-2 The costs of five possible sellers -Refer to Table 7-2. If the market price is $1000, the total cost in the market will be:

The 'invisible hand' refers to the:

Total surplus in a market is:

Other things being equal, if the price of a good falls, the consumer surplus:

Sharon is bidding on a new camera on an internet auction. She values the camera at $300 and wins the auction with a bid of $300, therefore: