Question 1

Assume the market depicted in the graph is in equilibrium. Producer surplus is the area:

Accepted Answer

A)  under the demand curve and above the market price.
B)  under the supply curve and above the market price.
C)  above the supply curve and below the market price.
D)  above the demand curve and below the market price.E) B) and D)
F) A) and B)

Question 2

A market has four individuals, each considering buying a grill. Assume that grills come in only one size and model. Martina considers herself a grill-master, and finds a grill a necessity, so she is willing to pay $400 for a grill. Javier is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Kamal wants to impress his friends with his vegetable grilling skills and is willing to pay $320 for a grill. Lina loves grilled shrimp and thinks it might be cheaper in the long run if she grills her own shrimp instead of eating out at a restaurant, so she is willing to pay $200 for a grill.If the market price of grills increases from $300 to $325,:

Accepted Answer

A)  Kamal would drop out of the market.
B)  Kamal's surplus would decrease the most.
C)  Kamal is the only consumer who would be affected in terms of surplus.
D)  Lina's surplus would decrease.E) None of the above
F) B) and D)

Question 3

What is the producer surplus earned by a seller whose willingness to sell is $10 below the market price of a good?

Accepted Answer

A)  $0
B)  $10
C)  (P* − $10) 
D)  None of these are correct.E) All of the above
F) A) and D)

Question 4

Each seller's opportunity costs are:

Accepted Answer

A)  determined monetarily, which is why they can never be zero.
B)  determined by a number of factors, none of which is monetary.
C)  determined by a number of factors, including monetary considerations.
D)  less than the monetary costs of manufacturing the good or service.E) C) and D)
F) B) and D)

Question 5

In a well-functioning competitive market, total surplus:

Accepted Answer

A)  can never be negative.
B)  is always zero if the market is efficient.
C)  can be negative if the market is not in equilibrium.
D)  is greater than the sum of consumer and producer surplus.E) B) and D)
F) A) and C)

Exam 5: Efficiency

In a well-functioning competitive market, total surplus:

Correct Answer
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Each seller's opportunity costs are:

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What is the producer surplus earned by a seller whose willingness to sell is $10 below the market price of a good?

Correct Answer
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Assume the market depicted in the graph is in equilibrium. Producer surplus is the area:

Correct Answer
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Exam 5: Efficiency

In a well-functioning competitive market, total surplus:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Each seller's opportunity costs are:

Correct AnswerverifiedShow Answer

What is the producer surplus earned by a seller whose willingness to sell is $10 below the market price of a good?

Correct AnswerverifiedShow Answer

Assume the market depicted in the graph is in equilibrium. Producer surplus is the area:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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