ECON 2000 Chapter 5: Chapter 5 ECON 2000.docx

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cyanfish91

23 Apr 2012

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The relationship between the price of a good and the quantity demanded: By one person is the individual demand. By all buyers is the market demand. Resources are allocated efficiently when they are used in ways that people value most highly. Value what consumers willing to pay; what we get. Consumer surplus = value of a good price. Triangular area under the demand curve but above the market price. First come, first serve: people who have the greatest foresight and get their names on a list first. Personal characteristics or discrimination allocates based on the views and self interest of the landlord. Opportunity cost what producers pay or give up. Triangular area above the supply curve and under the market price. Consumers expenditures = producers revenue in an efficient market. Sum of consumer surplus and producer surplus maximized. Deadweight loss total social loss of consumer and producer surplus below efficient levels.

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.

1. Consumer surplus is equal to the difference between

a. the maximum price a buyer is willing to pay and the market price.

b. the minimum price a buyer is willing to pay and the market price.

c. the maximum price a setter is willing to accept and the market price.

d. the minimum price a seller is willing to accept and the market price.

2. Consumer surplus is shown graphically as the area

a. under the demand curve and above market price.

b. above the supply curve and above the market price.

c. above the supply curve and below the market price.

d. under the demand curve and below the market price.

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11. If resources are allocated efficiently A) consumer surplus exceeds producer surplus. B) producer surplus exceeds consumer surplus. the sum of consumer surplus and producer surplus is maximized. marginal benefit is maximized. marginal cost is minimized.

ECON 2000 Chapter 5: Chapter 5 ECON 2000.docx

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