EC120 Chapter Notes - Chapter 7: Economic Surplus, Demand Curve, Invisible Hand

14. Refer to the table below. If the market price is $5.50, the consumer surplus in the market will be a. $15.50. b. $4.50. c. $21.00. d. $3.00. c. None of the above is correct. Five Possible Buyers' Willingness to Pay for Good Z Buyer Willingness to Pay Jane $8.50 James $7.00 Bill $5.50 Jill $4.00 Sarah $3.50

Efficiency in a market is achieved when

a. social planner intervenes and sets the quantity of output after evaluating buyers willingness to pay and sellers' costs

b. the sum of producer surplus and consumer surplus is maximized

c. all firms are producing the good at the same low cost per unit.

d. no buyer is willing to pay more than the equilibrium price for any unit of the good.