Question 1

A supply curve can be used to measure producer surplus because it reflects

Accepted Answer

A)   the actions of sellers.
B)   quantity supplied.
C)   sellers' costs.
D)   the amount that will be purchased by consumers in the market.E) A) and C)
F) C) and D)

Question 2

This table refers to five possible buyers' willingness to pay for a take-away meal.
  Buyer Willingness To  Pay  David  R85.00  Laura  R70.00  Megan  R55.00  Mallory  R40.00  Audrey  R35.00 \begin{array}{l}	ext { Buyer Willingness To }\\begin{array} { l l } & 	ext { Pay } \	ext { David } & 	ext { R85.00 } \	ext { Laura } & 	ext { R70.00 } \	ext { Megan } & 	ext { R55.00 } \	ext { Mallory } & 	ext { R40.00 } \	ext { Audrey } & 	ext { R35.00 }\end{array}\end{array} Buyer Willingness To  David  Laura  Megan  Mallory  Audrey ​ Pay  R85.00  R70.00  R55.00  R40.00  R35.00 ​​ 
-Refer to the table above. Which of the following is not true?

Accepted Answer

A)   At a price of R90.00, no buyer is willing to purchase take-away meal.
B)   At a price of R55.00, Megan is indifferent between buying a take-away meal and not buying one.
C)   At a price of R40.00, total consumer surplus in the market will be R90.00.
D)   All of the above are correct. E) All of the above
F) A) and B)

Question 3

A buyer's willingness to pay is that buyer's

Accepted Answer

A)   minimum amount they are willing to pay for a good.
B)   producer surplus.
C)   consumer surplus.
D)   maximum amount they are willing to pay for a good.
E)   estimation of the cost of production.F) A) and D)
G) A) and E)

Question 4

Which of the following best explains the source of consumer surplus for a good?

Accepted Answer

A)   Many consumers would be willing to pay more than the market price for the good.
B)   Many consumers pay prices that are greater than the equilibrium price of the good.
C)   Many consumers think the market price of the good is greater than its cost.
D)   Many consumers think the price elasticity of demand for the good is unit elastic.E) All of the above
F) A) and B)

Question 5

In general, if a benevolent social planner wanted to maximise the total benefits received by buyers and sellers in a market, the planner should

Accepted Answer

A)   choose a price below the market equilibrium price.
B)   allow the market to seek equilibrium on its own.
C)   choose any price the planner wants because the losses to the sellers (buyers)  from any change in price are exactly offset by the gains to the buyers (sellers) .
D)   choose a price above the market equilibrium price.E) A) and B)
F) All of the above

Question 6

Medical care clearly enhances people's lives. Therefore, we should consume medical care until

Accepted Answer

A)   everyone has as much as they would like.
B)   the benefit buyers place on medical care is equal to the cost of producing it.
C)   buyers receive no benefit from another unit of medical care.
D)   we are forced to cut back on the consumption of other goods.E) A) and C)
F) A) and D)

Question 7

If it costs Wilfred the window cleaner R96.00 to clean the windows in a house, but he is paid R150.00 for doing the job:

Accepted Answer

A)   Wilfred's customer receives consumer surplus of R54.00.
B)   Wilfred's customer receives consumer surplus of R150.00.
C)   Wilfred receives producer surplus of R54.00.
D)   Wilfred receives producer surplus of R96.00.E) B) and C)
F) None of the above

Question 8

-Refer to the image above. Suppose the willingness to pay of the marginal buyer of the 3rd unit is R225. Then total surplus is maximised if:

Accepted Answer

A)   1 unit of the good is produced and sold.
B)   2 units of the good are produced and sold.
C)   3 units of the good are produced and sold.
D)   4 units of the good are produced and sold.E) A) and D)
F) A) and C)

Question 9

Other things being equal, what happens to producer surplus when the price of a good rises? Illustrate your answer on a supply curve.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> When the price of a good rises, produce...

Question 10

Consumer surplus is a good measure of buyers' benefits if buyers are rational.

Accepted Answer

A) True 
 B)False

Question 11

Other things equal, what happens to consumer surplus if the price of a good falls? Why? Illustrate using a demand curve.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> When the price of a good falls, consume...

Question 12

In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand curve, what else must be considered to determine consumer surplus?

Accepted Answer

Since the demand curve represents the ma...

Question 13

A competitive market outcome

Accepted Answer

A)   maximises total surplus.
B)   generates equality among the members of society.
C)   minimises total surplus.
D)   both maximises total surplus and generates equality among the members of society.E) A) and B)
F) B) and D)

Question 14

-Refer to the image above. When the price is P2, producer surplus is:

Accepted Answer

A)   A.
B)   A+C.
C)   A+B+C.
D)   D+G.E) A) and D)
F) B) and C)

Question 15

If Lihle sells a shirt for R40, and her producer surplus from the sale is R32, her cost must have been

Accepted Answer

A)   R72.
B)   R32.
C)   R8.
D)   We would have to know the consumer surplus in order to make this determination.E) A) and D)
F) B) and D)

Exam 7: Consumers, Producers and the Efficiency of Markets

A supply curve can be used to measure producer surplus because it reflects

Correct Answer
verified

If Lihle sells a shirt for R40, and her producer surplus from the sale is R32, her cost must have been

Correct Answer
verified

-Refer to the image above. Suppose the willingness to pay of the marginal buyer of the 3rd unit is R225. Then total surplus is maximised if:

Correct Answer
verified

In general, if a benevolent social planner wanted to maximise the total benefits received by buyers and sellers in a market, the planner should

Correct Answer
verified

Consumer surplus is a good measure of buyers' benefits if buyers are rational.

Correct Answer
verified

Which of the following best explains the source of consumer surplus for a good?

Correct Answer
verified

A buyer's willingness to pay is that buyer's

Correct Answer
verified

If it costs Wilfred the window cleaner R96.00 to clean the windows in a house, but he is paid R150.00 for doing the job:

Correct Answer
verified

-Refer to the image above. When the price is P2, producer surplus is:

Correct Answer
verified

Other things equal, what happens to consumer surplus if the price of a good falls? Why? Illustrate using a demand curve.

Correct Answer
verified
When the price of a good falls, consume...
View Answer

In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand curve, what else must be considered to determine consumer surplus?

Correct Answer
verified
Since the demand curve represents the ma...
View Answer

Medical care clearly enhances people's lives. Therefore, we should consume medical care until

Correct Answer
verified

A competitive market outcome

Correct Answer
verified

Other things being equal, what happens to producer surplus when the price of a good rises? Illustrate your answer on a supply curve.

Correct Answer
verified
When the price of a good rises, produce...
View Answer

Correct Answer
verified

Exam 7: Consumers, Producers and the Efficiency of Markets

A supply curve can be used to measure producer surplus because it reflects

Correct AnswerverifiedShow Answer

If Lihle sells a shirt for R40, and her producer surplus from the sale is R32, her cost must have been

Correct AnswerverifiedShow Answer

-Refer to the image above. Suppose the willingness to pay of the marginal buyer of the 3rd unit is R225. Then total surplus is maximised if:

Correct AnswerverifiedShow Answer

In general, if a benevolent social planner wanted to maximise the total benefits received by buyers and sellers in a market, the planner should

Correct AnswerverifiedShow Answer

Consumer surplus is a good measure of buyers' benefits if buyers are rational.

Correct AnswerverifiedShow Answer

Which of the following best explains the source of consumer surplus for a good?

Correct AnswerverifiedShow Answer

A buyer's willingness to pay is that buyer's

Correct AnswerverifiedShow Answer

If it costs Wilfred the window cleaner R96.00 to clean the windows in a house, but he is paid R150.00 for doing the job:

Correct AnswerverifiedShow Answer

-Refer to the image above. When the price is P2, producer surplus is:

Correct AnswerverifiedShow Answer

Other things equal, what happens to consumer surplus if the price of a good falls? Why? Illustrate using a demand curve.

Correct Answerverified When the price of a good falls, consume...View AnswerShow Answer

In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand curve, what else must be considered to determine consumer surplus?

Correct AnswerverifiedSince the demand curve represents the ma...View AnswerShow Answer

Medical care clearly enhances people's lives. Therefore, we should consume medical care until

Correct AnswerverifiedShow Answer

A competitive market outcome

Correct AnswerverifiedShow Answer

Other things being equal, what happens to producer surplus when the price of a good rises? Illustrate your answer on a supply curve.

Correct Answerverified When the price of a good rises, produce...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
When the price of a good falls, consume...
View Answer

Correct Answer
verified
Since the demand curve represents the ma...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
When the price of a good rises, produce...
View Answer

Correct Answer
verified