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

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Consumer surplus can be measured as the area between the demand curve and the equilibrium price.

Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. If 6 units are bought and sold, then total surplus is

Unless markets are perfectly competitive, they may fail to maximize the total benefits to buyers and sellers.

Efficiency is related to the size of the economic pie, whereas equality is related to how the pie gets sliced and distributed.

We can say that the allocation of resources is efficient if

Steak and chicken are substitutes. A sharp reduction in the supply of steak would

Figure 7-21 -Refer to Figure 7-21. When the price is P1, area C represents

Figure 7-3 -Refer to Figure 7-3. When the price rises from P1 to P2, which of the following statements is not true?

Figure 7-30 -Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the change in total consumer surplus in the market?

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

Which of the following is not correct?

Figure 7-24 -Refer to Figure 7-24. If the government imposes a price floor at $18, then consumer surplus is

Welfare economics is the study of the welfare system.

On a graph, consumer surplus is represented by the area

The maximum price that a buyer will pay for a good is called

Figure 7-18 -Refer to Figure 7-18. If total surplus is $240 and consumer surplus is

Figure 7-17 -Refer to Figure 7-17. If the demand curve is D and the supply curve shifts left from S to S', what is the change in producer surplus when comparing the new equilibrium with the original equilibrium?

Which of the following will cause no change in producer surplus?

Figure 7-28 -Refer to Figure 7-28. At the quantity Q3,