Question 1

Kristi and Rebecca sell lemonade on the corner.It costs them 7 cents to make each cup.On a certain day,they sell 40 cups,and their producer surplus for that day amounts to $15.20.Kristi and Rebecca sold each cup for

Accepted Answer

Producer surplus is the difference between what producers are willing to accept for a good versus what they actually receive. Here, the cost to make each cup is 7 cents, and the total producer surplus is $15.20 for 40 cups. The surplus per cup is $15.20 / 40 = $0.38. Adding this to the cost per cup gives $0.07 + $0.38 = $0.45, so they sold each cup for 45 cents.

Question 2

David tunes pianos in his spare time for extra income.Buyers of his service are willing to pay $135 per tuning.One particular week,David is willing to tune the first piano for $115,the second piano for $125,the third piano for $140,and the fourth piano for $175.Assume David is rational in deciding how many pianos to tune.His producer surplus is

Accepted Answer

David's producer surplus is the difference between the price he is willing to sell his service for and the cost of providing that service. Since David's cost of providing each piano tuning is not given, we cannot calculate producer surplus directly. However, we can determine which pianos David should tune to maximize his producer surplus.

David should tune pianos as long as the revenue he receives from tuning each additional piano is greater than or equal to the cost of tuning that piano. We can represent this decision rule using the following inequality:

Price per tuning >= Cost per tuning

For David to be willing to tune a piano, he must receive at least $135 in revenue (the price buyers are willing to pay). If David's cost of tuning a piano is less than or equal to $135, then he will choose to tune the piano.

We can apply this decision rule to each of the four pianos:

- The first piano pays $115, which is less than the minimum revenue David requires. He will not tune this piano. 
- The second piano pays $125, which is greater than or equal to the minimum revenue David requires. If his cost of tuning this piano is less than or equal to $125, he will choose to tune it. 
- The third piano pays $140, which is greater than or equal to the minimum revenue David requires. If his cost of tuning this piano is less than or equal to $140, he will choose to tune it. 
- The fourth piano pays $175, which is greater than or equal to the minimum revenue David requires. If his cost of tuning this piano is less than or equal to $175, he will choose to tune it.

Based on this decision rule, David will choose to tune pianos 2, 3, and 4. His total revenue will be $440, and his total cost will depend on his actual cost of providing each tuning. If David's actual cost of providing each tuning is less than his revenue from that tuning, his producer surplus will be positive.

Therefore, the best choice for David is to tune the second, third, and fourth pianos. His producer surplus is $440 - (cost of providing three tunings). We cannot determine his exact producer surplus without additional information about his costs.

Question 3

If Roberta sells a shirt for $30,and her producer surplus from the sale is $23,her cost must have been

Accepted Answer

Producer surplus is the difference between the selling price and the cost of production. Therefore, Roberta's cost must have been $30 - $23 = $7.

Question 4

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

Accepted Answer

Producer surplus is the difference between the price a producer sells their product for and the cost to produce it. In this case, Donald sells the nails for $350 per ton and it costs him $200 per ton to produce them. Therefore, his producer surplus per ton is $350 - $200 = $150.

Question 5

Table 7-6
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-6.If the price is $775,who would be willing to supply the product?

Accepted Answer

The answer of Table 7-6
The following table represents the costs...

Question 6

Table 7-7
The only four producers in a market have the following cost:
 
-Refer to Table 7-7.If the sellers bid against each other for the right to sell the good to a consumer,then the producer surplus will be

Accepted Answer

The answer of Table 7-7
The only four producers in a...

Question 7

Table 7-7
The only four producers in a market have the following cost:
 
-Refer to Table 7-7.If Charlie,Quinn,Wrex,and Maxine sell the good,and the resulting producer surplus is $700,then the price must have been

Accepted Answer

The producer surplus is the difference between what producers are willing to accept and what they actually receive. If the total producer surplus is $700, and assuming each seller has a different cost, the price must be $300 to result in that total surplus when considering the individual costs of Charlie, Quinn, Wrex, and Maxine.

Question 8

Table 7-6
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-6.Who is a marginal seller when the price is $1,200?

Accepted Answer

Bobby is the marginal seller because his willingness to sell is exactly $1,200, which is the market price.

Question 9

Table 7-6
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-6.If the market price is $900,the producer surplus in the market is

Accepted Answer

The producer surplus is the difference between the market price and the seller's cost. For Seller A, the cost is $500, so the producer surplus is $900 - $500 = $400. For Seller B, the cost is $600, so the producer surplus is $900 - $600 = $300. For Seller C, the cost is $700, so the producer surplus is $900 - $700 = $200. For Seller D, the cost is $800, so the producer surplus is $900 - $800 = $100. For Seller E, the cost is $1,000, so there is no producer surplus. The highest producer surplus is for Seller A, but they are not an option. The next highest is for Seller B, who has a producer surplus of $300. Therefore, the best choice is Seller B.

Question 10

At Nick's Bakery,the cost to make homemade chocolate cake is $3 per cake.As a result of selling three cakes,Nick experiences a producer surplus in the amount of $19.50.Nick must be selling his cakes for

Accepted Answer

To solve this problem, we need to use the concept of producer surplus, which is the difference between the price a seller receives and the cost to produce. In this case, we know that the cost to produce one chocolate cake is $3.

Let's assume that Nick sells each cake for $x. Then, his total revenue from selling three cakes is 3x.

From the problem statement, we know that Nick experiences a producer surplus of $19.50. This means that his total revenue exceeds his total cost of production by $19.50.

Using this information, we can set up an equation:

3x - 3(3) = 19.50

Simplifying, we get:

3x - 9 = 19.50

Adding 9 to both sides:

3x = 28.50

Dividing by 3:

x = 9.50

Therefore, Nick must be selling his cakes for $9.50 each to achieve a producer surplus of $19.50 after selling three cakes.

Question 11

Table 7-6
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-6.Suppose each of the five sellers can supply at most one unit of the good.The market quantity supplied is exactly 4 if the price is

Accepted Answer

The answer of Table 7-6
The following table represents the costs...

Question 12

Table 7-6
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-6.Suppose each of the five sellers can supply at most one unit of the good.The market quantity supplied is exactly 3 if the price is

Accepted Answer

The answer of Table 7-6
The following table represents the costs...

Question 13

Table 7-7
The only four producers in a market have the following cost:
 
-Refer to Table 7-7.If the sellers bid against each other for the right to sell the good to a consumer,then the good will sell for

Accepted Answer

The answer of Table 7-7
The only four producers in a...

Question 14

Table 7-6
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-6.If the market price is $900,the combined total cost of all participating sellers is

Accepted Answer

The answer of Table 7-6
The following table represents the costs...

Question 15

Ronnie operates a lawn-care service.On each day,the cost of mowing the first lawn is $10,the cost of mowing the second lawn is $12,and the cost of mowing the third lawn is $15.His producer surplus on the first three lawns of the day is $53.If Ronnie charges all customers the same price for lawn mowing,that price is

Accepted Answer

The producer surplus is the difference between the price Ronnie charges and the cost of mowing the lawns. Let's call the price Ronnie charges P.

For the first lawn, Ronnie's producer surplus is P - $10. 
For the second lawn, Ronnie's producer surplus is P - $12. 
For the third lawn, Ronnie's producer surplus is P - $15.

So Ronnie's total producer surplus for the first three lawns is (P - $10) + (P - $12) + (P - $15) = 3P - $37.

We know that this is equal to $53, so:

3P - $37 = $53

3P = $90

P = $30

Therefore, Ronnie charges $30 per lawn mowing.

Question 16

Table 7-6
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-6.If the market price is $1,100,the combined total cost of all participating sellers is

Accepted Answer

To find the combined total cost of all participating sellers, we need to sum the costs of all sellers whose prices are less than or equal to the market price. In this case, sellers 1, 2, and 4 all have prices that are less than or equal to $1,100, so we sum their costs:

$1,000 + $700 + $550 = $2,250

Therefore, the combined total cost of all participating sellers is $2,250. Choice C is the correct answer.

Question 17

Table 7-6
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-6.If the price is $1,000,

Accepted Answer

The answer of Table 7-6
The following table represents the costs...

Question 18

Table 7-7
The only four producers in a market have the following cost:
 
-Refer to Table 7-7.If Charlie,Quinn,and Wrex sell the good,and the resulting producer surplus is $300,then the price must have been

Accepted Answer

The producer surplus is the difference between what producers are willing to accept and what they actually receive. If Charlie, Quinn, and Wrex sell the good and the total producer surplus is $300, the price must have been $200, as this would allow for a surplus of $300 when considering their respective costs.

Question 19

Table 7-6
The following table represents the costs of five possible sellers.
 
-Refer to Table 7-6.If the market price is $1,000,the producer surplus in the market is

Accepted Answer

To determine producer surplus, we need to find the difference between the market price ($1,000) and the seller's cost. The seller with the lowest cost is willing to sell their product for $700, so their producer surplus is $300 ($1,000 - $700). The next seller is willing to sell their product for $750, so their producer surplus is $250 ($1,000 - $750). The other sellers are not willing to sell at the market price, so they have no producer surplus. To find the total producer surplus in the market, we add up the individual producer surpluses, which gives us $300 + $250 = $550. Therefore, the best choice is B, with a producer surplus of $550.

Question 20

Ivana produces cookies.Her production cost is $6 per dozen.She sells the cookies for $8 per dozen.Her producer surplus per dozen cookies is

Accepted Answer

Producer surplus is the difference between the price at which a producer is willing to sell a good and the actual selling price. 
In this case, Ivana's cost of production is $6 per dozen and she sells them for $8 per dozen, so her producer surplus per dozen is $8 - $6 = $2.
Therefore, the best choice is A) $2.

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

Kristi and Rebecca sell lemonade on the corner.It costs them 7 cents to make each cup.On a certain day,they sell 40 cups,and their producer surplus for that day amounts to $15.20.Kristi and Rebecca sold each cup for

If Roberta sells a shirt for $30,and her producer surplus from the sale is $23,her cost must have been

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

Table 7-6 The following table represents the costs of five possible sellers. -Refer to Table 7-6.If the price is $775,who would be willing to supply the product?

Table 7-7 The only four producers in a market have the following cost: -Refer to Table 7-7.If the sellers bid against each other for the right to sell the good to a consumer,then the producer surplus will be

Table 7-7 The only four producers in a market have the following cost: -Refer to Table 7-7.If Charlie,Quinn,Wrex,and Maxine sell the good,and the resulting producer surplus is $700,then the price must have been

Table 7-6 The following table represents the costs of five possible sellers. -Refer to Table 7-6.Who is a marginal seller when the price is $1,200?

Table 7-6 The following table represents the costs of five possible sellers. -Refer to Table 7-6.If the market price is $900,the producer surplus in the market is

At Nick's Bakery,the cost to make homemade chocolate cake is $3 per cake.As a result of selling three cakes,Nick experiences a producer surplus in the amount of $19.50.Nick must be selling his cakes for

Table 7-6 The following table represents the costs of five possible sellers. -Refer to Table 7-6.Suppose each of the five sellers can supply at most one unit of the good.The market quantity supplied is exactly 4 if the price is

Table 7-6 The following table represents the costs of five possible sellers. -Refer to Table 7-6.Suppose each of the five sellers can supply at most one unit of the good.The market quantity supplied is exactly 3 if the price is

Table 7-7 The only four producers in a market have the following cost: -Refer to Table 7-7.If the sellers bid against each other for the right to sell the good to a consumer,then the good will sell for

Table 7-6 The following table represents the costs of five possible sellers. -Refer to Table 7-6.If the market price is $900,the combined total cost of all participating sellers is

Table 7-6 The following table represents the costs of five possible sellers. -Refer to Table 7-6.If the market price is $1,100,the combined total cost of all participating sellers is

Table 7-6 The following table represents the costs of five possible sellers. -Refer to Table 7-6.If the price is $1,000,

Table 7-7 The only four producers in a market have the following cost: -Refer to Table 7-7.If Charlie,Quinn,and Wrex sell the good,and the resulting producer surplus is $300,then the price must have been

Table 7-6 The following table represents the costs of five possible sellers. -Refer to Table 7-6.If the market price is $1,000,the producer surplus in the market is

Ivana produces cookies.Her production cost is $6 per dozen.She sells the cookies for $8 per dozen.Her producer surplus per dozen cookies is