Quiz 2

Choose right definition of WILLINGNESS TO PAY.

• the minimum amount that a buyer will pay for a good

• the maximum amount that a buyer will pay for a good

• the normal amount that a buyer will pay for a good

• the budget amount that a buyer will pay for a good

Choose right answer. What is consumer surplus?

• Consumer surplus=Value to buyers +Amount paid by buyers

• Consumer surplus = Amount received by sellers - Cost to sellers

• Consumer surplus =Amount received by sellers +Cost to sellers

• Consumer surplus=Value to buyers - Amount paid by buyers

Jen values her time at $60 an hour. She spends 2 hours giving Colleen a math class. Colleen was willing to pay as much at $300 for the math class, but they negotiate a price of $200. In this transaction,

• consumer surplus is $20 larger than producer surplus.

• consumer surplus is $40 larger than producer surplus

• producer surplus is $20 larger than consumer surplus

• producer surplus is $40 larger than consumer surplus

The demand curve for cookies is downward-sloping. When the price of cookies is $2, the quantity demanded is 100. If the price rises to $3, what happens to consumer surplus?

• It falls by more than $100

• It rises by less than $100

• It falls by less than $100

• It rises by more than $100

What is the producer surplus?

• Producer surplus = Amount received by sellers - Cost to sellers

• Producer surplus = Amount received by sellers +Cost to sellers

• Consumer surplus =Amount received by sellers + Cost to sellers

• Producer surplus = Amount received by sellers - Amount paid by buyers

Find the consumer surplus triangle from the graph.

• BDC

• ABCD

• ACD

• ABD

Find the producer surplus triangle from the graph.

• ABD

• BCD

• ACD

• ABCD

An efficient allocation of resources maximizes............

• consumer surplus

• producer surplus

• consumer surplus plus producer surplus

• consumer surplus minus producer surplus

When a market is in equilibrium, the buyers are those with the ________ willingness to pay and the sellers are those with the ________ costs.

• highest, highest

• highest, lowest

• lowest, highest

• lowest, lowest

John has been working as a tutor for $300 a semester. When the university raises the price it pays tutors to $400, Jasmine enters the market and begins tutoring as well. How much does producer surplus rise as a result of this price increase?

• by less than $100

• between $200 and $300

• between $100 and $200

• by more than $300