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

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?

Figure 7-1 -Refer to Figure 7-1. The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

Figure 7-32 -Refer to Figure 7-32. At what price will total surplus be maximized in this market?

At present, the maximum legal price for a human kidney is $0. The price of $0 maximizes

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. -Refer to Table 7-5. The market quantity of oranges demanded per day is exactly 7 if the price of an orange, P, satisfies

David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is

Free markets allocate a) the supply of goods to the buyers who value them most highly and b) the demand for goods to the sellers who can produce them at least cost.

Figure 7-4 -Refer to Figure 7-4. Which area represents consumer surplus at a price of P1?

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then

The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium price of chocolate

Figure 7-31 -Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the producer surplus for the producers entering the market after the price increase?

If the United States legally allowed for a market in transplant organs, it is estimated that one kidney would sell for at least $100,000.

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is least likely to occur?

Figure 7-34 -Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the government removed the price floor, by how much would total consumer surplus increase for those consumers who were purchasing the good when the price floor was in place?

Which of the following is correct?

Table 7-10 The only four consumers in a market have the following willingness to pay for a good: Buyer Willingness to Pay -Refer to Table 7-10. If the market price for the good is $20, who will purchase the good?

All else equal, what happens to consumer surplus if the price of a good decreases?

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

Figure 7-7 -Refer to Figure 7-7. What happens to the consumer surplus if the price rises from $100 to $150?

Figure 7-22 -Refer to Figure 7-22. If 40 units of the good are bought and sold, then