Question 1

What was the 'invisible hand' doctrine that Adam Smith discussed in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations?

Accepted Answer

The answer of What was the 'invisible hand' doctrine that...

Question 2

Many countries allow people to visit national parks, lakes or rivers for free. If a good is free in the sense of having zero market price, does this mean that the consumer surplus is also zero?

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The answer of Many countries allow people to visit national...

Question 3

Table 7-7
  Antonio's Pizza
 
-Refer to Table 7-7. Is the pizza market described in the above tables efficient? Explain. Is it equitable? Explain.

Accepted Answer

The answer of Table 7-7
  Antonio's Pizza
 
-Refer to...

Question 4

Would a market that was characterised by unregulated pollution be classed as efficient? Why or why not?

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The answer of Would a market that was characterised by...

Question 5

Table C
 
-Use the information in Table C to graph a supply curve for this product.

Accepted Answer

The answer of Table C
 
-Use the information in Table...

Question 6

Table 7-7
  Antonio's Pizza
 
-Based on Table 7-7, if Fred and Frieda are the only buyers in the pizza market, and Antonio's is the only seller, what is the:
a. market equilibrium price?
b. market equilibrium quantity?
c. total consumer surplus at the market equilibrium?
d. total producer surplus at the market equilibrium?
e. total benefit to society of this market?

Accepted Answer

The answer of Table 7-7
  Antonio's Pizza
 
-Based on...

Question 7

In what way(s) are free-market outcomes, where supply equals demand, beneficial to society?

Accepted Answer

The answer of In what way(s) are free-market outcomes, where...

Question 8

Graph 7-7
 
-Refer to Graph 7-7. Explain why this graph verifies the fact that the market equilibrium (quantity) maximises the sum of producer and consumer surplus.

Accepted Answer

The answer of Graph 7-7
 
-Refer to Graph 7-7. Explain...

Question 9

Using a demand-supply diagram, completing the labels, identify the following areas:
a. consumer surplus.
b. producer surplus.
c. total surplus.

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The answer of Using a demand-supply diagram, completing the labels,...

Question 10

What are the economic arguments in favour of allowing ticket scalping?

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Question 11

Australian parrots are smuggled to overseas markets where they can command very high prices. An important innovation for smugglers was the egg vest. This meant that more parrots could be smuggled with higher survival rates and less risk of detection. If this lowered the price of black market Australian parrots, does the increase in consumer surplus necessarily represent a welfare improvement to society?

Accepted Answer

The answer of Australian parrots are smuggled to overseas markets...

Question 12

Table C
 
-Use the information in the Table C to fill in the blanks of TableD.
Table D

Accepted Answer

The answer of Table C
 
-Use the information in the...

Question 13

Given the following equations, show how equation 1 can be used to derive equation 2:
1. Total surplus = Consumer surplus + Producer surplus
2. Total surplus = Value to buyers - Cost to sellers

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The answer of Given the following equations, show how equation...

Question 14

What is the total surplus in a market, and why might it be a good measure of economic wellbeing? Using a demand-supply diagram, show the areas representing total surplus.

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Question 15

Suppose there is a price decrease. Assuming that nothing else changes, explain what happens to producer surplus and illustrate your answer using a supply curve.

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Question 16

Does a zero market price mean there is no benefit to society from providing or maintaining these natural areas?
The existence of consumer surplus means that there will be a benefit to society from these areas.

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The answer of Does a zero market price mean there...

Question 17

Antonio's Pizza has the following willingness to sell pizza:
  Determine Antonio's producer surplus at a price of:
a. $10.
b. $8.
c. $6.
d. $4.
e. $2.

Accepted Answer

The answer of Antonio's Pizza has the following willingness to...

Quiz 7: Consumers, Producers and the Efficiency of Markets

What was the 'invisible hand' doctrine that Adam Smith discussed in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations?

Many countries allow people to visit national parks, lakes or rivers for free. If a good is free in the sense of having zero market price, does this mean that the consumer surplus is also zero?

Table 7-7 Antonio's Pizza -Refer to Table 7-7. Is the pizza market described in the above tables efficient? Explain. Is it equitable? Explain.

Would a market that was characterised by unregulated pollution be classed as efficient? Why or why not?

Table C -Use the information in Table C to graph a supply curve for this product.

In what way(s) are free-market outcomes, where supply equals demand, beneficial to society?

Graph 7-7 -Refer to Graph 7-7. Explain why this graph verifies the fact that the market equilibrium (quantity) maximises the sum of producer and consumer surplus.

Using a demand-supply diagram, completing the labels, identify the following areas: a. consumer surplus. b. producer surplus. c. total surplus.

What are the economic arguments in favour of allowing ticket scalping?

Table C -Use the information in the Table C to fill in the blanks of TableD. Table D

Given the following equations, show how equation 1 can be used to derive equation 2: 1. Total surplus = Consumer surplus + Producer surplus 2. Total surplus = Value to buyers - Cost to sellers

What is the total surplus in a market, and why might it be a good measure of economic wellbeing? Using a demand-supply diagram, show the areas representing total surplus.

Suppose there is a price decrease. Assuming that nothing else changes, explain what happens to producer surplus and illustrate your answer using a supply curve.

Does a zero market price mean there is no benefit to society from providing or maintaining these natural areas? The existence of consumer surplus means that there will be a benefit to society from these areas.

Antonio's Pizza has the following willingness to sell pizza: Determine Antonio's producer surplus at a price of: a. $10. b. $8. c. $6. d. $4. e. $2.