Consumers, Producers, and the Efficiency of Markets - Consum

Suppose Larry, Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called

• a resistance price.

• willingness to pay.

• consumer surplus.

• producer surplus.

Willingness to pay

• measures the value that a buyer places on a good.

• is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept.

• is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept.

• is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

In which of the following circumstances would a buyer be indifferent about buying a good?

• The amount of consumer surplus the buyer would experience

  as a result of buying the good is zero

• The price of the good is equal to the buyer’s willingness to pay for the good.

• The price of the good is equal to the value the buyer places on the good.

• All of the above are correct.

A demand curve reflects each of the following except the

• willingness to pay of all buyers in the market.

• value each buyer in the market places on the good.

• highest price buyers are willing to pay for each quantity.

• ability of buyers to obtain the quantity they desire.

Consumer surplus is equal to the

• Value to buyers - Amount paid by buyers.

• Amount paid by buyers - Costs of sellers.

• Value to buyers - Costs of sellers.

• Value to buyers - Willingness to pay of buyers.

In a market, the marginal buyer is the buyer

• whose willingness to pay is higher than that of all other buyers and potential buyers.

• whose willingness to pay is lower than that of all other buyers and potential buyers.

• who is willing to buy exactly one unit of the good.

• who would be the first to leave the market if the price were any higher.

If the market price of an orange is $1.20, the market quantity of oranges demanded per day is

• 1

• 2

• 3

• 4

The market quantity of oranges demanded per day is exactly 5 if the price of an orange, P, satisfies

• $1.00 < P < $1.50.

• $0.80 < P < $1.50

• $0.80 < P < $1.00

• $0.75 < P < $0.80.

If the market price of an orange is $0.40,

• 6 oranges are demanded per day, and total consumer surplus amounts to $4.45.

• 6 oranges are demanded per day, and total consumer surplus amounts to $5.10.

• 7 oranges are demanded per day, and total consumer surplus amounts to $5.35

• 7 oranges are demanded per day, and total consumer surplus amounts to $5.50.

If the market price of an orange increases from $0.60 to $1.05, total consumer surplus

• increases by $2.90.

• decreases by $2.25.

• decreases by $2.70.

• decreases by $3.85.