mic tut 4-9

The study of how the allocation of resources affects economic well-being is called

• consumer economics.

• macroeconomics.

• willingness-to-pay economics.

• welfare economics.

If the market price of an orange is $1.20, consumer surplus amounts to

• $0.70.

• $1.10.

• $1.40.

• $5.00.

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price

of $80. Katie’s willingness to pay was $100, Kendra’s willingness to pay was $95, and Kristen's

willingness to pay was $80. Which of the following statements is correct?

• For the three individuals together, consumer surplus amounts to $35.

• Having bought the cell phone, Kristen is better off than she would have been had she not bought it.

• The fact that all three individuals paid $80 for the same type of cell phone indicates that each one placed the same value on that cell phone.

If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

• zero.

• negative, and the consumer would not purchase the product.

• positive, and the consumer would purchase the product.

• There is not enough information given to answer this question.

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market

• decreases.

• is unchanged.

• increases.

• may increase, decrease, or remain unchanged.

David tunes pianos in his spare time for extra income. Buyers of his service are

willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the

second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational

in deciding how many pianos to tune. His producer surplus is

• $-15.

• $20.

• $30.

• $75.

If the price of the good is $8.50, then producer surplus is

• $2.50.

• $6.50.

• $8.00.

• $11.00.

Refer to Figure 7-15. Assume demand increases and as a result, equilibrium price increases to $22 and equilibrium quantity increases to 110. The increase in producer surplus due to new producers entering the market would be

• $90.

• $210.

• $360.

• $480.

Without a tax, producer surplus in this market is

• $1,500.

• $2,400.

• $3,000.

• $3,600.

A tax on the sellers of TVs

• leads sellers to supply a smaller quantity at every price.

• leads buyers to demand a smaller quantity at every price.

• leads sellers to supply a larger quantity at every price.

• Both (a) and (b) are correct.