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Exam 7: Consumers, Producers, and the Efficiency of Markets

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Question 61

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Table 7-2 ​ ​ $\begin{array} { | c | c | } \hline \text { Buyer } & \begin{array} { c } \text { Willingness to Pay } \\\text { (Dollars) }\end{array} \\\hline \text { Carlos } & 20 \\\hline \text { Keira } & 24 \\\hline \text { Ava } & 28 \\\hline \text { Biyu } & 36 \\\hline\end{array}$ -Refer to Table 7-2. If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the good will sell for

A) $20 or slightly less.
B) $24 or slightly more.
C) $28 or slightly more.
D) $36 or slightly less.

E) All of the above
F) A) and D)

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Question 62

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A buyer is willing to buy a product at a price greater than or equal to his willingness to pay, but would refuse to buy a product at a price less than his willingness to pay.

A) True
B) False

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Question 63

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Table 7-11 ​ ​ $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Price } \\\text { (Dollars per unit) }\end{array} & \begin{array} { c } \text { Quantity Demanded } \\\text { (Units) }\end{array} & \begin{array} { c } \text { Quantity Supplied } \\\text { (Units) }\end{array} \\\hline 12.00 & 0 & 36 \\\hline 10.00 & 3 & 30 \\\hline 8.00 & 6 & 24 \\\hline 6.00 & 9 & 18 \\\hline 4.00 & 12 & 12 \\\hline 2.00 & 15 & 6 \\\hline 0.00 & 18 & 0 \\\hline\end{array}$ ​ -Refer to Table 7-11. The equilibrium price is

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Figure 7-9 -Refer to Figure 7-9. The equilibrium price is

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?

A maximum amount that people have in mind while bidding in an auction is called

The lower the price, the lower the producer surplus, all else equal.

Table 7-2 ​ ​ $\begin{array} { | c | c | } \hline \text { Buyer } & \begin{array} { c } \text { Willingness to Pay } \\\text { (Dollars) }\end{array} \\\hline \text { Carlos } & 20 \\\hline \text { Keira } & 24 \\\hline \text { Ava } & 28 \\\hline \text { Biyu } & 36 \\\hline\end{array}$ -Refer to Table 7-2. If the price is $22, then consumer surplus in the market is

At Mike's Bakery, the cost of making one croissant is $1.50. If Mike sells 20 croissants and gains producer surplus of $40.00, then Mike must be selling his croissants for

Figure 7-10 ​ -Refer to Figure 7-10. If the market equilibrium price falls from $120 to $80, how much consumer surplus do consumers entering the market after the price drop receive?

Table 7-13 The following table shows the cost of producing a good for the only four producers in a market. $\begin{array} { | l | l | } \hline \text { Producer } & \text { Cost } \\\hline W & \$ 40 \\\hline X & \$ 30 \\\hline Y & \$ 20 \\\hline Z & \$ 10 \\\hline\end{array}$ -Refer to Table 7-13. If these four producers bid in an auction to supply one unit to a consumer, at what price will the good be sold?

Figure 7-14 ​ -Refer to Figure 7-14. Suppose there is initially a price ceiling set at $4 in this market. How much is total producer surplus with the price ceiling in place?

Table 7-4 For each of the three potential buyers of apples, the table displays the willingness to pay for Bob, Sasha, and Eric, who are the only three buyers of apples. Assume that only three apples can be supplied per day. ​ ​ $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text {Willingness to Pay}$ $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text {(Dollars) }$ $\begin{array}{|c|c|c|c|} \hline& \text { First Apple } & \text { Second Apple } & \text { Third Apple } \\\hline \text { Bob } & 2.00 & 1.50 & 0.75 \\\hline \text { Sasha } & 1.50 & 1.00 & 0.60 \\\hline \text { Eric } & 0.75 & 0.25 & 0.00 \\\hline\end{array}$ -Refer to Table 7-4. Which of the following statements is correct?

What do economists call the highest amount a consumer will pay to purchase a good?

Figure 7-5 -Refer to Figure 7-5. If the demand curve is D and the supply curve shifts from S' to S, what is the change in producer surplus?

If the United States legally allowed for a market in transplant organs, it is estimated that one kidney would sell for at least $100,000.

If John's willingness to pay for a good is $20 and the price of the good is $15, how much is John's consumer surplus from purchasing the good?

If the government imposes a binding price floor in a market, then the consumer surplus in that market will increase.

Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window-cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $100.