ECON 1201 Study Guide - Midterm Guide: Economic Surplus, Marginal Utility, Demand Curve

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ECON 1201 Full Course Notes

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In a competitive market, the price adjusts to ensure that the quantity demanded equals the quantity supplied: government regulation, price floors and ceilings. If the price of a product were 0, the consumer surplus in a market would be all of the area under the demand curve. If the price is not 0, the surplus is the area below the demand curve and above the market price: producer surplus, measures the benefit to producers from participating in a market. The efficiency of competitive markets: a market is efficient in all trades where marginal benefit exceeds marginal cost and no other trade takes place. The economic effect of taxes: per-unit taxes, tax assessed as a particular dollar amount on the sale of a good or service as opposed to percentage tax, ex. If the demand curve is shallower, buyers would change how much they bought a lot in response to a price change.

Related Questions

7) Indicate whether each of the following statements is true or false, and explain why.

A. Producer surplus tends to fall as the supply curve becomes more elastic.

B. Consumer surplus tends to rise as demand becomes more elastic.

C. The market demand curve indicates the minimum price buyers are willing to pay at each level of production.

D. The market supply curve indicates the minimum price required by sellers as a group to bring forth production.

E. Consumer surplus is the amount that consumers are willing to pay for a given good or service above and beyond the amount actually paid.

bronzeoyster264

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. A shift outward of the production possibilities frontier line indicates

a. economic expansion has occurred and more of each good or resource can be produced.

b. a change between two goods produced.

c. less of both goods can be produced.

d. the producer is less efficient and incurring a reduction in economic wealth.

2. If the demand curve and supply curve arrive at an equilibrium price of $5 and quantity of 6, while the height of the consumer surplus triangle is 5, and the height of the producer surplus triangle is 5, it is correct to say

a. consumer surplus equals 30.

b. consumer surplus equals 15.

c. consumer surplus and producer surplus are both the same and equal 3.

d. producer surplus equals 30.

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ECON 1201 Study Guide - Midterm Guide: Economic Surplus, Marginal Utility, Demand Curve

ECON 1201 Full Course Notes

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