ECON 1000 Lecture Notes - Lecture 5: Externality, Transaction Cost, Competitive Equilibrium

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Relationship between the price of a good and the quantity demanded by one person. Relationship between the price of a good and the quantity demanded by all buyers in the market. If person a demands 10 shirts at . 00, and person b demands 15 shirts at . 00, the market demand curve will show a demand of 25 shirts at . 00. The excess of the benefit received from a good over the amount paid for it consumer surplus = marginal. Marginal benefit: maximum price that a person is willing to pay. Marginal cost: minimum price that a firm is willing to accept. The excess of the amount received from the sale of a good over the cost of producing the good producer. Surplus = price received for good minimum-supply price. Less than equilibrium quantity, marginal social benefit > marginal social cost. Greater than equilibrium quantity, marginal social benefit < marginal social cost.

Related Questions

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.

The market demand curve

a. slopes upward.

b. is found by vertically adding the individual demand curves.

c. represents the sum of the quantities demanded by all the buyers at each price of the good.

d. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good.

When we move along a given demand curve,

all nonprice determinants of demand are held constant.

only price is held constant.

all determinants of quantity demanded are held constant.

d. income and price are held constant.

When the price of a good or service changes,

	a.	there is a movement along a given demand curve.
	b.	the demand curve shifts in the opposite direction.
	c.	the supply curve shifts in the opposite direction.
	d.	the demand curve shifts in the same direction.

B) difference between the market price and the maximum amount each individual is willing to pay for a good. C) sum of the prices that each individual is willing to pay for each quantity demanded. D) difference between the maximum amount each individual is willing to pay for a good and the market price. E) sum of the quantity demanded by each individual at each price. 1............... . 5) Market demand is the A) sum of the consumer surplus of each individual.

ECON 1000 Lecture Notes - Lecture 5: Externality, Transaction Cost, Competitive Equilibrium

ECON 1000 Full Course Notes

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