ECON 1000 Chapter Notes - Chapter 5: Demand Curve, Economic Surplus, Marginal Utility

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10 Feb 2016

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Efficiency and equity: evaluate the ability of markets to allocate resources efficiently and fairly. If you pay the market price, you get their source. Allocates resources to those who are first in line. Allocates resources in the way that a majority of voters choose. The benefit a person receives from consuming one more unit of a good. We measure marginal benefit by the maximum price that we are willingly pay for another unit of the good or services. The demand curve is the marginal benefit curve. The value of a good: the maximum price a consumer is wiling to pay for a good. The difference between the amount that buyers would be willing to pay for a good and the actual amount they do pay. The size of consumer surplus is affected by the market price. Individual demand curve: the relationship between the quantity demanded of a good by a single individual and its price.

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.

At the output level defining allocative efficiency:

a. The maximum willingness to pay for the last unit of output equals the minimum acceptable price of that unit of output.

b. The areas of consumer and producer surplus necessarily are equal.

c. Marginal benefit exceeds marginal cost the greatest amount.

d. Consumer surplus exceeds producer surplus by the greatest amount.

redmammoth663

At the output level that maximizes economic surplus

a. the areas of consumer and producer surplus necessarily are equal.

b. marginal benefit exceeds the marginal cost by the greatest amount.

c. consumer surplus exceeds producer surplus by the greatest amount.

d. the maximum willingness to pay for the last unit of output equals the minimum acceptable price of that unit of output.

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ECON 1000 Chapter Notes - Chapter 5: Demand Curve, Economic Surplus, Marginal Utility

ECON 1000 Full Course Notes

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