Economics 1021A/B Lecture Notes - Lecture 5: Over–Under, Externality, Competitive Equilibrium

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ECON 1021A/B Full Course Notes

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Allocative efficiency: marginal social benefit = marginal social cost. Consumer surplus: defined as the excess of the benefit received from a good over the amount paid for it, calculated as the marginal benefit (or value) of a good minus its price, summed over the quantity bought. Supply and marginal cost- marginal cost: firms are in business to make a profit, to make a profit, firms must sell their output for a price that exceeds the cost of production, firms distinguish between cost and price. Producer surplus: define as the excess of the amount received from the sale of a good over the cost of producing it. Paul dimovski: calculated as the price received for a good minus the minimum supply price (marginal cost), summed over the quantity sold. Sources of market failure: externalities, anytime you have two parties being involved in a transaction but some parts are outside.

Related Questions

When a government provides a good with an external benefit, to attain efficiency the price paid by consumers is set equal to the ________.

A. market demand price

B. amount paid by taxpayers

C. marginal private benefit at the efficient level of output

D. marginal private cost at the efficient level of output

Which of the following actions is appropriate in a market with an external benefit?

A. taxes

B. vouchers

C. marketable permits

D. price ceiling

When a person receives a flu vaccination, the ________ is the additional benefit the person receives from getting the shot.

A. marginal private benefit

B. marginal external benefit

C. marginal social benefit

D. marginal social cost

Pell grants given to students attending college are most closely similar to ________.

A. public provision of a good

B. private subsidies are given to producers of a good

C. property rights assigned to consumers of a good

D. vouchers are given to a consumer of a good

Technology that prevents Paul in California from using an email account of Sarah's in Maryland means that email is an example of ________.

A. an excludable good

B. a good that is non-excludable

C. a public good

D. the tragedy of the commons

pucecat409

True or False:

1. Consumer surplus is the buyer's willingness-to-pay minus the seller's opportunity cost of production.

2. If your willingness-to-pay for a hamburger is $3 and you paid $2, then your consumer surplus is $5.00

3. The opportunity cost of production for a seller includes the implicit cost of the seller's time.

4. The height of the supply curve at a selected quantity is the seller's opportunity cost of producing that marginal unit.

5. Total surplus (total well-being) is the seller's cost of production minus the buyer's willingness-to-pay.

6. The competitive market equilibrium outcome is efficient because it allocates the produced output to the buyers who place the highest value on the good

7. Producer surplus is the area above the supply curve and below the price.

8. The competitive market equilibrium outcome maximizes total surplus (total well-being)

9. Producing and consuming more of a good will always increase the total surplus(total well-being).

redelephant805

1. Consumer surplus is not

a. the value of a good minus the price paid for it, summed over the quantity bought.

b. greater on the first unit sold than on the last unit sold.

c. greater on the last unit sold than on the first unit sold.

d. equal to the area below the demand curve and above the market price line.

2. The demand curve for hamburgers is the same as the

a. marginal benefit curve for hamburgers.

b. marginal cost curve of hamburgers.

c. consumer surplus curve of hamburgers.

d. All of the above.

3. A supply curve is

a. the same as a production possibilities frontier.

b. a marginal social benefit curve.

c. a marginal benefit curve.

d. a marginal cost curve.

e. a downward-sloping curve.

4. The opportunity cost of producing one more hot dog is $1.00. The price of a hot dog is $1.50. The producer surplus from selling one more hot dog is

a. $1.00

b. $1.50

c. $0.50

d. zero.

e. $2.50

5. Markets may not achieve an efficient allocation of resources when there are

a. external costs.

b. monopolies.

c. taxes.

d. all of the above.

Economics 1021A/B Lecture Notes - Lecture 5: Over–Under, Externality, Competitive Equilibrium

ECON 1021A/B Full Course Notes

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