Econ Quiz March 7th - Characteristics of a P.C. Market

Competitive markets do NOT

• allocate resources effectively
• create one-way information flows
• allocate goods to the buyers who value them the most highly
• convey to suppliers the value consumers place on the good
• gravitate toward equilibrium quantity and price

What does the price reveal to consumers in competitive markets?

• the minimum willingness to supply by the most efficient producer
• the value placed on the good by the highest bidder
• the opportunity cost of supplying that good
• the monetary costs of the externalities associated with the good
• the importance of the good to society

The competitive market equilibrium maximizes

• deadweight loss
• government revenue
• producer surplus
• total surplus
• consumer surplus

Consumer surplus equals

• opportunity cost minus market price
• equilibrium price minus market price
• market price minus willingness to pay
• market price minus opportunity cost
• willingness to pay minus market price

The market price of Ohio State football tickets is $500. Suppose Jake values the ticket at $600, Yolanda values the ticket at $650, and Emily values the ticket at $400. What is the combined consumer surplus?

• 200
• 100
• 250
• 150
• 350

At any point along a demand curve, the height measures

• sellers’ willingness to supply
• buyers’ willingness to pay
• the opportunity cost of buying the good
• average revenue
• consumer surplus

Where is consumer surplus located on a price-quantity graph?

• below the market price and to the left of the demand curve
• above the market price and to the right of the demand curve
• below the market price and to the right of the demand curve
• all area below the demand curve
• above the market price and below the demand curve

Which of the following situations results in positive producer surplus?

• Quantity supplied exceeds quantity demanded.
• Suppliers’ willingness to supply exceeds buyers’ willingness to pay.
• Marginal cost exceeds market price.
• Market price exceeds opportunity cost.
• Revenue exceeds consumer surplus.

On a price-quantity graph, producer surplus is the area

• below the market price and to the right of the supply curve
• below the market price and above the supply curve
• above the market price and to the left of the supply curve
• below the market price
• above the market price

How do market participants determine the value each consumer places on the good in competitive markets?

• collective altruism
• government intervention
• price signals
• econometric modelling
• field surveys