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

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Question 231

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Caroline sharpens knives in her spare time for extra income. Buyers of her service are willing to pay $2.95 per knife for as many knives as Caroline is willing to sharpen. On a particular day, she is willing to sharpen the first knife for $2.00, the second knife for $2.25, the third knife for $2.75, and the fourth knife for $3.50. Assume Caroline is rational in deciding how many knives to sharpen. Her producer surplus is

A) $0.95.
B) $1.15.
C) $1.30.
D) $1.85.

E) B) and C)
F) C) and D)

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Question 232

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Figure 7-2 -Refer to Figure 7-2. If the price of the good is $80, then consumer surplus amounts to

A) $110.
B) $135.
C) $160 .
D) $185.

E) A) and B)
F) All of the above

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Question 233

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If the government allowed a free market for transplant organs such as kidneys to exist, the

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $50, then consumer surplus amounts to

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?

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window- cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $100.

An example of normative analysis is studying

Refer to Figure 7-12. If the equilibrium price is $350, what is the producer surplus?

All else equal, an increase in demand will cause an increase in producer surplus.

A supply curve can be used to measure producer surplus because it reflects

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. If the price is $1,l50, who would be willing to supply the product?

Figure 7-27 -Refer to Figure 7-27. If the government mandated a price increase from P1 to a higher price, then

Table 7-17 -Refer to Table 7-17. Both the demand curve and the supply curve are straight lines. At equilibrium, consumer surplus is

PlayStations and PlayStation games are complementary goods. A technological advance in the production of PlayStations will

Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinal's baseball game at Wrigley Field. -Refer to Table 7-4. If tickets sell for $25 each, then what is the total consumer surplus in the market?

Figure 7-24 -Refer to Figure 7-24. At equilibrium, total surplus is

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. -Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be

Table 7-11 The following table represents the costs of five possible sellers. -Refer to Table 7-11. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 4 if the price is

Figure 7-34 -Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this market. With the price floor, how much is total consumer surplus?

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. If the market price of an orange increases from $0.70 to $1.40, then consumer surplus