Consumers, Producers, and the Efficiency of Markets - Produc

A seller’s opportunity cost measures the

• value of everything she must give up to produce a good.

• amount she is paid for a good minus her cost of providing it.

• consumer surplus.

• out of pocket expenses to produce a good but not the value of her time.

Cost is a measure of the

• seller's willingness to sell.

• seller's producer surplus.

• producer shortage.

• seller's willingness to buy.

Ally mows lawns for a living. Ally’s out-of-pocket expenses (for equipment, gasoline, and so on) plus the value that she places on her own time amount to her

• producer surplus.

• producer deficit.

• cost of mowing lawns.

• profit

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

• seller’s producer surplus.

• sellers’s cost of production.

• seller’s profit.

• average willingness to pay of buyers of the product.

Producer surplus is

• measured using the demand curve for a good.

• always a negative number for sellers in a competitive market.

• the amount a seller is paid minus the cost of production.

• the opportunity cost of production minus the cost of producing goods that go unsold.

Karen sharpens knives in her spare time for extra income. Buyers of her service are willing to pay $2.50 per knife for as many knives as Karen is willing to sharpen. On a particular day, she is willing to sharpen the first knife for $1.75, the second knife for $2.25, the third knife for $2.75, and the fourth knife for $3.25. Assume Karen is rational in deciding how many knives to sharpen. Her producer surplus is

• $0.25.

• $0.50.

• $1.00.

• $1.75.

Ivana produces cookies. Her production cost is $6 per dozen. She sells the cookies for $8 per dozen. Her producer surplus per dozen cookies is

• $2.

• $6.

• $8

• $14.

If Roberta sells a shirt for $30, and her producer surplus from the sale is $23, her cost must have been

• $53.

• $30.

• $7.

• We would have to know the consumer surplus in order to make this determination.

If the market price is $1,000, the producer surplus in the market is

• $700.

• $750.

• $2,250.

• $3,700.

If the market price is $1,100, the combined total cost of all participating sellers is

• $3,700.

• $2,700.

• $2,250.

• $1,250.