Question

1. A government-set price floor on a product

B. will drive resources away from the production of the product.

C. will attract more resources towards the production of the product.

D. does not interfere with the rationing function of price in a market system.

F. is intended to benefit the buyers of the product.

2. Graphically, producer surplus is measured as the area

A. above the supply curve and above the actual price.

B. above the supply curve and below the actual price

C. under the demand curve and below the actual price.

D. under the demand curve and above the actual price.

3. When supply shifts from S to S1, consumer surplus

A. increases or decreases

B. decreases

C. stays the same

4. Amanda buys a ruby for $330 for which she was willing to pay $340. The minimum acceptable price to the seller, Tony, was $140. Tony experiences a

A. producer surplus of $200 and Tony experiences a consumer surplus of $10.

B. consumer surplus of $670 and Tony experiences a producer surplus of $200.

C. consumer surplus of $10 and Tony experiences a producer surplus of $190.

D. producer surplus of $10 and Tony experiences a consumer surplus of $190.

5. If the price-elasticity coefficient for a good is -.75, the demand for that good is described as

A. elastic.

B. inferior.

C. inelastic.

D. normal.