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

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Question 141

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The distinction between efficiency and equality can be described as follows:

A) Efficiency refers to maximizing the number of trades among buyers and sellers;equality refers to maximizing the gains from trade among buyers and sellers.
B) Efficiency refers to minimizing the price paid by buyers;equality refers to maximizing the gains from trade among buyers and sellers.
C) Efficiency refers to maximizing the size of the pie;equality refers to producing a pie of a given size at the least possible cost.
D) Efficiency refers to maximizing the size of the pie;equality refers to distributing the pie fairly among members of society.

E) None of the above
F) A) and B)

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Question 142

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Figure 7-1 -Refer to Figure 7-1.If the price of the good is $200,then

A) consumer surplus is $150.
B) consumer surplus is $650.
C) producer surplus is $650.
D) producer surplus is $750.

E) B) and C)
F) None of the above

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Question 143

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Figure 7-7 -Refer to Figure 7-7.If the price of the good is $14,then producer surplus is

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

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

Figure 7-3 -Refer to Figure 7-3.Which area represents consumer surplus at a price of P2?

Figure 7-13 -Refer to Figure 7-13.If the price of the good is $600,then producer surplus amounts to

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 Alex,Barb,and Carlos are the only three buyers of oranges,and only three oranges can be supplied per day. -Refer to Table 7-5.If the market price of an orange increases from $0.60 to $1.05,then consumer surplus

Economists normally assume people's preferences should be

Suppose that Firms A and B each produce high-resolution computer monitors,but Firm A can do so at a lower cost.Cassie and David each want to purchase a high-resolution computer monitor,but David is willing to pay more than Cassie.If Firm A produces a monitor that Cassie buys but David does not,then the market outcome illustrates which of the following principles? (i) Free markets allocate the supply of goods to the buyers who value them most highly,as measured by their willingness to pay. (ii) Free markets allocate the demand for goods to the sellers who can produce them at the least cost.

Figure 7-21 -Refer to Figure 7-21.Sellers whose costs are greater than the equilibrium price are represented by segment

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

Which of the following events would increase producer surplus?

Figure 7-5 -Refer to Figure 7-5.If the market equilibrium price is $25,how much is total producer surplus in this market?

We can say that the allocation of resources is efficient if

Total surplus measures the

If the government removes a binding price ceiling in a market,then the producer surplus in that market will increase.

The cost of production plus producer surplus is the price a seller is paid.

The marginal seller is the seller who

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