Exam 4: Consumer and Producer Surplus

Suppose the United States removes the current sugar quotas and the market price of sugar drops.In the candy bar market, we would expect: A.the consumer surplus to increase. B.the consumer surplus to decrease. C.the consumer surplus to be unchanged. D.the deadweight loss to increase.

Figure: Producer Surplus III (Figure: Producer Surplus III) Look at the figure Producer Surplus III.If the price of the good decreases from $2 to $1, producer surplus will decrease by: A.$5. B.$15. C.$25. D.$35.

Figure: Consumer and Producer Surplus (Figure: Consumer and Producer Surplus) Look at the figure Consumer and Producer Surplus.In the accompanying figure, an increase in supply will: A.increase consumer surplus. B.decrease producer surplus. C.increase total surplus. D.increase consumer surplus and total surplus.

(Table: Willingness to Pay for Basketball Sneakers) If the price of basketball sneakers is $100, how many pairs will be purchased? A.1 B.2 C.3 D.4

Figure: The Market for Books (Figure: Market for Books) Look at the figure The Market for Books.Suppose the price is temporarily $18.Do consumers gain or lose from this price, and by how much? Do producers gain or lose from this price control, and by how much? How is total surplus affected?

If the market for grapefruit is in equilibrium without any outside intervention to change the equilibrium price: A.total surplus is minimized. B.there is some deadweight loss. C.a few mutually beneficial trades are missed. D.consumer and producer surplus are maximized.

(Table: Willingness to Pay for Basketball Sneakers) If the price of basketball sneakers is $180, how many pairs will be purchased? A.0 B.1 C.2 D.3

Figure: The Market for Hamburgers (Figure: The Market for Hamburgers) Look at the figure The Market for Hamburgers.The figure shows the weekly market for hamburgers in Tuscaloosa.If the price of a hamburger falls from $2 to $1.50, the gain in consumer surplus to consumers who are persuaded to buy at the lower price (and who were not buying when the price was $2) is equal to:

(Table: Producer Surplus) Look at the table Producer Surplus.If the price of a ticket to see The Nutty Nutcracker is $75, then Caitlin's producer surplus is: A.$0. B.$74. C.$75. D.$100.

Suppose you pay $8 to see Tom Cruise in his next movie.Suppose Mr.Cruise receives $21 million to work in this movie.This means that: A.you would have been better off being more self-reliant in the movie market. B.Tom Cruise received a producer surplus of $21 million. C.you received a consumer surplus of $8. D.you and Tom Cruise benefited from this transaction.

A consumer's willingness to pay reflects A.the maximum price at which he or she would buy the good or service. B.the minimum price at which he or she would buy the good or service. C.the cost of producing the good or service. D.the equilibrium price of the good or service.

Which of the following is a key factor in the effectiveness of well-functioning markets? A.Outcomes that are equitable for consumers and producers B.The role of the government to deliver economic signals to consumers and producers C.A significant degree of government intervention to maximize efficiency D.Your right to use and dispose of your private property as you see fit

When there is a bountiful harvest of grapefruit, total consumer surplus in the grapefruit market: A.will increase. B.will decrease. C.will remain the same. D.may change, but we can't tell how.

(Table: Firm's Willingness) Look at the table Firm's Willingness.If the price of a report is $12, what is the value of producer surplus for the firm? A.$27 B.$21 C.$16 D.$42

Along a given supply curve, a decrease in price will cause producer surplus to:

The number of seats in a football stadium is fixed at 70,000.The team raises the price of a ticket from $30, where 70,000 are sold, to $40, and it sells 60,000 tickets.The price change caused a change in the consumer surplus of _. A.-$10. B.-$50,000 C.-$100,000 D.-$10,000

Figure: Gain in Producer Surplus (Figure: Gain in Producer Surplus) Look at the figure Gain in Producer Surplus.Which of the following area or areas represent producer surplus when the price is equal to P₂? A.D, E, and F B.B and C C.D and E D.A, B, and C

Producer surplus is the amount sellers receive from the sale of a good minus the minimum amount they are willing to accept for supplying the good.

Which of the following statements is true about market failures? I.A seller produces too much of the good at too high a price.II.Information is available to all decision makers.III.External costs are not considered in production decisions by producers.

Well-defined property rights: A.can allow for mutually beneficial trades. B.will result in government regulation. C.often result in more market failures. D.lead to more centralized decision making.