Exam 4: Coordinating Smart Choices: Demand and Supply

Falling prices for a service

At an efficient market outcome,

The concept of producer surplus is easiest to see by reading the supply curve as a marginal cost curve instead of as a supply curve.

Figure 4.5.2 -Figure 4.5.2 shows marginal costs for Betsy's Butter business. If Betsy sells the 1st unit of butter for $6, what is her producer surplus on that unit?

At the market-clearing price, everyone who makes a voluntary exchange is better off.

In a voluntary exchange, the price must be more than the opportunity cost of the seller.

Prices fall if supply decreases.

The price of a product rises if

Consumer surplus is the difference between the amount a consumer is willing and able to pay, and the amount actually paid.

When demand decreases, price falls to eliminate the shortage.

There is a shortage when quantity demanded exceeds quantity supplied.

Deadweight loss is zero at an efficient market outcome.

Rising prices for automobiles decrease the demand for

When demand decreases, price falls and quantity supplied decreases.

Figure 4.2.1 Market Demand and Supply for Pet Rocks -In Figure 4.2.1, the equilibrium price is

If we observe a fall in the equilibrium price of product A, we know that either the demand for A has

A market is defined as

Figure 4.5.3. -Look at Figure 4.5.3. If If quantity is 200, deadweight loss is area

The miracle of markets is that

Total surplus is at a maximum when deadweight loss is zero.