Deck 7: Essay

Question 1

Scenario 7-1
Suppose market demand is given by the equation
Refer to Scenario 7-1.If the market equilibrium price falls from $10 to $5,what is the change in total consumer surplus in the market?

Answer 1

Consumer surplus increases by $125.

Question 2

Figure 7-31
Refer to Figure 7-31.If the market equilibrium price is $35,how much is total producer surplus in this market?

Answer 2

Total producer surplus is $55.

Question 3

Figure 7-31
Refer to Figure 7-31.If the market equilibrium price is $25,how much is total producer surplus in this market?

Answer 3

Total producer surplus is $30.

Question 4

Figure 7-30
Refer to Figure 7-30.If the market equilibrium price falls from $120 to $80,how much consumer surplus do consumers entering the market after the price drop receive?

Question 5

Figure 7-32
Refer to Figure 7-32.If the government imposed a price floor at $35 in this market,how much is consumer surplus?

Question 6

Suppose John's cost for performing some carpentry work is $120.If John is paid $200 for the carpentry work,what is his producer surplus?

Question 7

If John's willingness to pay for a good is $20 and the price of the good is $15,how much is John's consumer surplus from purchasing the good?

Question 8

Figure 7-30
Refer to Figure 7-30.If the market equilibrium price falls from $120 to $80,how much is the change in total consumer surplus in the market?

Question 9

Scenario 7-1
Suppose market demand is given by the equation
Refer to Scenario 7-1.If the market equilibrium price falls from $10 to $5,how much consumer surplus do consumers entering the market after the price drop receive?

Question 10

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

Question 11

What do economists call the highest amount a consumer will pay to purchase a good?

Question 12

Figure 7-32
Refer to Figure 7-32.If the government imposed a price ceiling at $20 in this market,how much are consumer surplus,producer surplus,and total surplus?

Question 13

Scenario 7-1
Suppose market demand is given by the equation
Refer to Scenario 7-1.If the market equilibrium price rises from $10 to $15,what is the change in total consumer surplus in the market?

Question 14

Figure 7-30
Refer to Figure 7-30.If the market equilibrium price falls from $120 to $80,how much is the increase in consumer surplus to the consumers who were initially in the market at the $120 price?

Question 15

Scenario 7-1
Suppose market demand is given by the equation
Refer to Scenario 7-1.If the market equilibrium price falls from $10 to $5,how much additional consumer surplus do consumers initially in the market at the $10 price receive?

Question 16

Scenario 7-1
Suppose market demand is given by the equation
Refer to Scenario 7-1.If the market equilibrium price is $10,how much is total consumer surplus in this market?

Question 17

Figure 7-31
Refer to Figure 7-31.If the market equilibrium price rises from $25 to $35,how much is the increase in producer surplus to the producers supplying units at the initial $25 price?

Question 18

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?

Question 19

Figure 7-30
Refer to Figure 7-30.If the market equilibrium price is $120,how much is total consumer surplus?

Question 20

Figure 7-32
Refer to Figure 7-32.How much are consumer surplus,producer surplus,and total surplus at the market equilibrium price?

Question 21

Figure 7-33
Refer to Figure 7-33.Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price.How much is total surplus in this market at the new equilibrium price?

Question 22

Figure 7-34
Refer to Figure 7-34.Suppose there is initially a price ceiling set at $4 in this market.If the government removed the price ceiling,by how much would total producer surplus change?

Question 23

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 producer surplus change,assuming the producers with the lowest cost were the ones supplying the market when the price floor was in place?

Question 24

Figure 7-33
Refer to Figure 7-33.How much is total consumer surplus in this market at the equilibrium price?

Question 25

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?

Question 26

Scenario 7-2
Suppose market demand and market supply are given by the equations:
Refer to Scenario 7-2.Suppose a reduction in input prices shifts the market supply curve to
By how much does total consumer surplus increase for those consumers who were already willing to purchase the good with the original supply curve?

Question 27

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?

Question 28

Figure 7-34
Refer to Figure 7-34.Suppose there is initially a price ceiling set at $4 in this market.How much is total producer surplus with the price ceiling in place?

Question 29

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 enter the market after the price floor is removed?

Question 30

Figure 7-33
Refer to Figure 7-33.How much is total surplus in this market at the equilibrium price?

Question 31

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?

Question 32

Figure 7-33
Refer to Figure 7-33.How much is total producer surplus in this market at the equilibrium price?

Question 33

Scenario 7-2
Suppose market demand and market supply are given by the equations:
Refer to Scenario 7-2.How much is total consumer surplus at the equilibrium price in this market?

Question 34

Figure 7-33
Refer to Figure 7-33.Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price.How much is total consumer surplus in this market at the new equilibrium price?

Question 35

Figure 7-34
Refer to Figure 7-34.Suppose there is initially a price ceiling set at $4 in this market.If the government removed the price ceiling,by how much would total producer surplus increase for those producers entering the market after the price ceiling is removed?

Question 36

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 producer surplus assuming those producers with the lowest cost are the ones who supply the market?

Question 37

Scenario 7-2
Suppose market demand and market supply are given by the equations:
Refer to Scenario 7-2.How much is total producer surplus at the equilibrium price in this market?

Question 38

Scenario 7-2
Suppose market demand and market supply are given by the equations:
Refer to Scenario 7-2.How much is total surplus at the equilibrium price in this market?

Question 39

Scenario 7-2
Suppose market demand and market supply are given by the equations:
Refer to Scenario 7-2.Suppose a reduction in input prices shifts the market supply curve to
By how much does total consumer surplus increase as a result of this supply shift?

Question 40

Figure 7-33
Refer to Figure 7-33.Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price.How much is total producer surplus in this market at the new equilibrium price?

Question 41

Given the following two equations:
1)
Total Surplus = Consumer Surplus + Producer Surplus
2)
Total Surplus = Value to Buyers - Cost to Sellers
Show how equation (1)can be used to derive equation (2).

Question 42

Tammy loves donuts.The table shown reflects the value Tammy places on each donut she eats:
Value of first donut
$0.60
Value of second donut
$0.50
Value of third donut
$0.40
Value of fourth donut
$0.30
Value of fifth donut
$0.20
Value of sixth donut
$0.10
a.Use this information to construct Tammy's demand curve for donuts.
b.If the price of donuts is $0.20,how many donuts will Tammy buy?
c.Show Tammy's consumer surplus on your graph.How much consumer surplus would she have at a price of $0.20?
d.If the price of donuts rose to $0.40,how many donuts would she purchase now? What would happen to Tammy's consumer surplus? Show this change on your graph.

Question 43

Scenario 7-2
Suppose market demand and market supply are given by the equations:
Refer to Scenario 7-2.Suppose a reduction in input prices shifts the market supply curve to
By how much does total producer surplus increase as a result of this supply shift?

Question 44

Answer each of the following questions about demand and consumer surplus.
a.What is consumer surplus,and how is it measured?
b.What is the relationship between the demand curve and the willingness to pay?
c.Other things equal,what happens to consumer surplus if the price of a good falls? Why? Illustrate using a demand curve.
d.In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand curve,what else must be considered to determine consumer surplus?

Question 45

Scenario 7-2
Suppose market demand and market supply are given by the equations:
Refer to Scenario 7-2.Suppose a reduction in input prices shifts the market supply curve to
How much total consumer surplus goes to new consumers who enter the market after the supply curve shifts?

Question 46

Answer each of the following questions about supply and producer surplus.
a.What is producer surplus,and how is it measured?
b.What is the relationship between the cost to sellers and the supply curve?
c.Other things equal,what happens to producer surplus when the price of a good rises? Illustrate your answer on a supply curve.