Question 1

Let P represent price; let Qˢ represent quantity supplied; and assume the equation of the supply curve is  .If 80 units of the good are produced and sold,then producer surplus amounts to $1,200.

Accepted Answer

The answer of Let P represent price; let Qˢ represent...

Question 2

Total surplus in a market is consumer surplus minus producer surplus.

Accepted Answer

Total surplus in a market is the sum of consumer surplus and producer surplus.

Question 3

The equilibrium of supply and demand in a market maximizes the total benefits to buyers and sellers of participating in that market.

Accepted Answer

When supply and demand reach equilibrium, the price of the good or service is such that the quantity supplied equals the quantity demanded. This means that all buyers who are willing to pay the equilibrium price are able to purchase the good or service, and all sellers who are willing to sell at that price are able to find buyers. As a result, the market maximizes the total benefits to both buyers and sellers, as all mutually beneficial transactions are able to take place.

Question 4

The cost of production plus producer surplus is the price a seller is paid.

Accepted Answer

The answer of The cost of production plus producer surplus...

Question 5

Producing a soccer ball costs Jake $5.He sells it to Darby for $35.Darby values the soccer ball at $50.For this transaction,the total surplus in the market is $40.

Accepted Answer

The answer of Producing a soccer ball costs Jake $5.He...

Question 6

Total surplus in a market can be measured as the area below the supply curve plus the area above the demand curve,up to the point of equilibrium.

Accepted Answer

Total surplus in a market is measured as the area above the supply curve and below the demand curve, up to the point of equilibrium, representing the sum of consumer and producer surplus.

Question 7

Efficiency refers to whether a market outcome is fair,while equality refers to whether the maximum amount of output was produced from a given number of inputs.

Accepted Answer

Efficiency refers to whether a market outcome is achieved with the least amount of waste or resources. Equality refers to distributing resources or outcomes evenly among people or groups.

Question 8

If the government imposes a binding price ceiling in a market,then the producer surplus in that market will increase.

Accepted Answer

A binding price ceiling will result in a shortage in the market, as the price cannot go above the ceiling. This means that producers will have to supply less than they would at the equilibrium price, and may even exit the market entirely. As a result, producer surplus will decrease, not increase.

Question 9

If producing a soccer ball costs Jake $5,and he sells it for $40,his producer surplus is $35.

Accepted Answer

Producer surplus is the difference between the price a seller receives and the minimum amount they are willing to accept for producing the good. In this scenario, Jake's minimum acceptable price is $5 (the cost to produce the ball) and he sells it for $40, so his producer surplus is $35.

Question 10

The area below the demand curve and above the supply curve measures the producer surplus in a market.

Accepted Answer

The area below the demand curve and above the price level measures consumer surplus, while the area above the supply curve and below the price level measures producer surplus in a market.

Question 11

The area below the price and above the supply curve measures the producer surplus in a market.

Accepted Answer

The producer surplus is the difference between the price at which sellers are willing to sell a good and the minimum price they would have been willing to sell it for. The area below the price and above the supply curve represents the amount of producer surplus in a market.

Question 12

When demand increases so that market price increases,producer surplus increases because (1)producer surplus received by existing sellers increases,and (2)new sellers enter the market.

Accepted Answer

When market price increases, existing sellers receive higher producer surplus as they can sell their products at a higher price. Additionally, new sellers are incentivized to enter the market to take advantage of the higher prices, increasing overall producer surplus.

Question 13

Connie can clean windows in large office buildings at a cost of $1 per window.The market price for window-cleaning services is $3 per window.If Connie cleans 100 windows,her producer surplus is $100.

Accepted Answer

Producer surplus is the difference between what a producer is willing to accept for a good or service versus what they actually receive. If Connie is willing to clean windows at $1 per window but receives $3 per window, her surplus per window is $2. For 100 windows, her producer surplus would be $200, not $100.

Question 14

Connie can clean windows in large office buildings at a cost of $1 per window.The market price for window-cleaning services is $3 per window.If Connie cleans 100 windows,her producer surplus is $200.

Accepted Answer

Producer surplus is the difference between the price at which a producer is willing to sell a good and the market price of that good. In this case, Connie is willing to clean windows for $1 per window and the market price is $3 per window. Therefore, her producer surplus per window is $2 ($3 market price - $1 cost). If she cleans 100 windows, her total producer surplus would be $200 ($2 surplus per window x 100 windows).

Question 15

Total surplus = Value to buyers - Costs to sellers.

Accepted Answer

This is the correct definition of total surplus. It is the difference between the value that buyers place on a good and the cost that sellers incur to produce it.

Question 16

The lower the price,the lower the producer surplus,all else equal.

Accepted Answer

Producer surplus is the difference between the price at which a producer is willing to sell a good or service and the actual price received. If the price is lower, the producer will receive less than they are willing to sell for, leading to a decrease in producer surplus.

Question 17

If the government removes a binding price ceiling in a market,then the producer surplus in that market will increase.

Accepted Answer

When a price ceiling is removed, producers in the market are able to charge higher prices, which increases their profits and therefore their producer surplus.

Question 18

Efficiency is related to the size of the economic pie,whereas equality is related to how the pie gets sliced and distributed.

Accepted Answer

Efficiency refers to the overall productivity and output of the economy, which affects the size of the economic pie. Equality, on the other hand, refers to the distribution of resources and benefits within the society.

Question 19

Let P represent price; let Qˢ represent quantity supplied; and assume the equation of the supply curve is  .If 90 units of the good are produced and sold,then producer surplus amounts to $1,350.

Accepted Answer

Producer surplus is the difference between the price received by a supplier and the marginal cost of production. In this case, we can find the equilibrium price by setting the quantity supplied equal to the quantity demanded:

90 = 11P - 3P^2

Rewriting in standard form:

3P^2 - 11P + 90 = 0

Solving for P using the quadratic formula:

P = (11 ± √(11^2 - 4*3*90)) / (2*3)

P = 7.5 or 4.0

Since the supply curve equation is given as 11 - 3P, we know that the price must be 7.5 to produce 90 units, so we can calculate the producer surplus:

PS = (7.5 - 4.166667) * 90

PS = 1,350

Therefore, the statement is true and the answer is A.

Question 20

Producer surplus measures the benefit to sellers from receiving a price above their costs.

Accepted Answer

This is the correct definition of producer surplus. It represents the difference between the price a seller receives and the minimum price they would be willing to accept to produce and sell a good or service. It is calculated as the area above the supply curve and below the market price.

Quiz 7: Consumers, Producers, and the Efficiency of Markets.

Let P represent price; let Qˢ represent quantity supplied; and assume the equation of the supply curve is .If 80 units of the good are produced and sold,then producer surplus amounts to $1,200.