Question 1

Let P represent price; let Q^Srepresent quantity supplied; and assume the equation of the supply curve is $$P = 15 + ( 1 / 3 ) Q ^ { S }$$ . If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

Accepted Answer

To find the producer surplus, we need to find the area above the supply curve and below the market price. We know that the quantity supplied at a price of $15 is:

QS1 = (90 - 15) / (1/3) = 225

So, the supply curve intersects the horizontal axis at a quantity of 225. We can use this to find the equilibrium price:

90 = 15 + (1/3)Q

Q = 225

P = 15 + (1/3)*(225) = $90

So, producer surplus is:

PS = (1/2)*(90 - 15)*(90 - 15 - 225)/(1/3) = $1,350

Therefore, the statement is true: if 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

Question 2

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 the market price and the cost of production. If Connie can clean windows at a cost of $1 per window and the market price is $3 per window, her producer surplus per window is $2. Therefore, if she cleans 100 windows, her total producer surplus would be $200, not $100.

Question 3

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 4

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 5

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 producer receives for a good and the cost of producing it. In this case, Jake's producer surplus is $40 (selling price) - $5 (production cost) = $35.

Question 6

Total surplus = Value to buyers - Costs to sellers.

Accepted Answer

Total surplus is the difference between the value that buyers place on a good or service and the cost that sellers incur in producing and providing it.

Question 7

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

Accepted Answer

If the government removes a binding price ceiling in a market, then the market price can increase, allowing producers to receive a higher price for their goods or services. This results in an increase in producer surplus.

Question 8

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 9

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 the maximum amount of output was produced from a given number of inputs, while equality refers to whether a market outcome is fair and just in terms of distribution of resources and income.

Question 10

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 11

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

Accepted Answer

Producer surplus is the difference between the price received by the producer and the cost of production. When the price is lowered, the producer surplus decreases because the producer is receiving less revenue for each unit produced.

Question 12

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

Accepted Answer

This is true as the area between the equilibrium price and the supply curve represents the minimum price at which producers are willing to sell their goods. Any amount received above and beyond this minimum price is considered producer surplus. Therefore, the area below the price and above the supply curve is the measure of 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 $200.

Accepted Answer

Producer surplus is the difference between the price a producer receives for their product and the cost to produce it. In this case, Connie's cost to clean 100 windows is $100 (100 windows x $1 per window), and she receives $300 (100 windows x $3 per window) from the market price. Therefore, her producer surplus is $200 ($300 - $100).

Question 14

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

Accepted Answer

This is the definition of producer surplus. It is the difference between the price a seller receives and their cost of production, and represents the benefit or profit they gain from selling their product.

Question 15

Let P represent price; let Q^Srepresent quantity supplied; and assume the equation of the supply curve is $$P = 10 + ( 1 / 4 ) Q ^ { S }$$ . If 80 units of the good are produced and sold, then producer surplus amounts to $1,200.

Accepted Answer

Producer surplus is calculated as the area above the supply curve and below the price level. With 80 units, the price is $30, and the producer surplus is the area of the triangle with base 80 and height 20, which is $800, not $1,200.

Question 16

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

Accepted Answer

The equilibrium price and quantity that results from the intersection of supply and demand represents the point where buyers and sellers are willing to engage in voluntary transactions that they perceive to be in their best interest, resulting in the maximization of total benefits to both groups.

Question 17

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 how well resources are allocated to produce goods and services, which affects the size of the economic pie. Equality, on the other hand, refers to how the benefits of the economic pie are distributed among different individuals or groups. The two concepts are related but distinct.

Question 18

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

As demand increases and market price increases, existing sellers are able to charge higher prices and earn a higher producer surplus. Additionally, new sellers may enter the market to take advantage of the higher prices, further increasing the overall producer surplus in the market.

Question 19

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

Accepted Answer

When a price ceiling is imposed, it puts a limit on the price that producers can charge for their goods or services. This results in a decrease in producer surplus as they are unable to charge the market price that would maximize their profits. Instead, they have to accept a lower price and hence, their surplus decreases.

Question 20

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....

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

Let P represent price; let Q^Srepresent quantity supplied; and assume the equation of the supply curve is $P = 15 + ( 1 / 3 ) Q ^ { S }$ . If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

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.

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

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

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

Total surplus = Value to buyers - Costs to sellers.

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

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.

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.

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

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

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

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.

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

Let P represent price; let Q^Srepresent quantity supplied; and assume the equation of the supply curve is $P = 10 + ( 1 / 4 ) Q ^ { S }$ . If 80 units of the good are produced and sold, then producer surplus amounts to $1,200.

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

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

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.

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

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.

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 P=15+(1/3)QSP = 15 + ( 1 / 3 ) Q ^ { S }P=15+(1/3)QS . If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

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.

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

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

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

Total surplus = Value to buyers - Costs to sellers.

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

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.

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.

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

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

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

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.

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

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is P=10+(1/4)QSP = 10 + ( 1 / 4 ) Q ^ { S }P=10+(1/4)QS . If 80 units of the good are produced and sold, then producer surplus amounts to $1,200.

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

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

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.

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

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.

Let P represent price; let Q^Srepresent quantity supplied; and assume the equation of the supply curve is $P = 15 + ( 1 / 3 ) Q ^ { S }$ . If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

Let P represent price; let Q^Srepresent quantity supplied; and assume the equation of the supply curve is $P = 10 + ( 1 / 4 ) Q ^ { S }$ . If 80 units of the good are produced and sold, then producer surplus amounts to $1,200.