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

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Question 21

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Table 7-9 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. $\begin{array} { | c | c | } \hline \text { Sallar } & \text { Cast } \\\hline \text { Marcia } & \$ 200 \\\hline \text { Jan } & \$ 250 \\\hline \text { Cindy } & \$ 350 \\\hline \text { Grea } & \$ 400 \\\hline \text { Peter } & \$ 700 \\\hline \text { Babby } & \$ 800 \\\hline\end{array}$ -Refer to Table 7-9. The equilibrium market price for 10 piano lessons is $300. What is the total producer surplus in the market?

A) $50
B) $150
C) $1,050
D) $1,500

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

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Question 22

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Figure 7-8 -Refer to Figure 7-8. Which area represents the increase in producer surplus when the price rises from P1 to P2?

A) BCG
B) ACH
C) ABGD
D) AHGB

E) A) and C)
F) C) and D)

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Question 23

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

Table 7-10 $\begin{array} { | l | r | } \hline \text { Seller } & \text { Cost } \\\hline \text { Lepran } & \$ 700 \\\hline \text { Kabe } & \$ 600 \\\hline \text { Kevin } & \$ 450 \\\hline \text { Steve } & \$ 400 \\\hline\end{array}$ -Refer to Table 7-10. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. You take bids from the sellers. Who offers the winning bid, and what does he offer to charge for the photography session?

Figure 7-6 -Refer to Figure 7-6. What is the consumer surplus if the price is $100?

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is least likely to occur?

Producer surplus measures the

Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets.

Efficiency in a market is achieved when

Figure 7-1 -Refer to Figure 7-1. If the price of the good is $150, then consumer surplus amounts to

Table 7-9 The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. $\begin{array} { | c | c | } \hline \text { Sallar } & \text { Cast } \\\hline \text { Marcia } & \$ 200 \\\hline \text { Jan } & \$ 250 \\\hline \text { Cindy } & \$ 350 \\\hline \text { Grea } & \$ 400 \\\hline \text { Peter } & \$ 700 \\\hline \text { Babby } & \$ 800 \\\hline\end{array}$ -Refer to Table 7-9. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept?

Figure 7-18 -Refer to Figure 7-18. Assume demand increases and as a result, equilibrium price increases to $22 and equilibrium quantity increases to 110. The increase in producer surplus would be

Table 7-2 This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. $\begin{array} { | l | l | } \hline \text { Buyer } & \text { Willinenes Ta Raz } \\\hline \text { David } & \$ 8.50 \\\hline \text { Laura } & \$ 7.00 \\\hline \text { Mepan } & \$ 5.50 \\\hline \text { Mallary } & \$ 4.00 \\\hline \text { Audrey } & \$ 3.50 \\\hline\end{array}$ -Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be

Figure 7-20 -Refer to Figure 7-20. The equilibrium allocation of resources is

The area below the demand curve and above the supply curve measures the producer surplus in a market.

The French expression used by free-market advocates, which literally translates as "allow them to do," is

Figure 7-17 -Refer to Figure 7-17. When the price is P1, area B+C represents

Figure 7-20 -Refer to Figure 7-20. If 6 units of the good are produced and sold, then

Producer surplus measures the benefit to sellers from receiving a price above their costs.

Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called