Question 1

Producer surplus directly measures

Accepted Answer

Producer surplus measures the difference between the price a seller receives and the minimum price they would have been willing to accept for a product, thus representing the well-being of sellers. It does not directly measure the well-being of society as a whole or buyers, although it can indirectly impact them. It also represents sellers' willingness to sell at a certain price.

Question 2

Figure 7-9 
-Refer to Figure 7-9.If the equilibrium price rises from $50 to $200,what is the producer surplus to new producers?

Accepted Answer

We can find the producer surplus by calculating the area above the supply curve and below the equilibrium price. Before the price change, the producer surplus was (250-50)*2/2 = $200. After the price change, the producer surplus is (300-200)*4/2 = $400. The difference in surplus is $400 - $200 = $200. However, this change affects only new producers, who are the ones who enter the market in response to the higher price. There are 3 new producers, so the producer surplus per new producer is $200/3 = $66.67.  
Therefore, the producer surplus to new producers is $66.67 per producer * 84 new producers = $5,625 (option C).

Question 3

Producer surplus directly measures

Accepted Answer

Producer surplus is the difference between the market price of a good or service and the minimum price that producers are willing to accept in order to supply that good or service. It directly measures the well-being of sellers, as it represents the extra income/profit they receive from selling the good above and beyond their costs of production. Therefore, options B, C, and D are incorrect.

Question 4

Figure 7-9 
-Refer to Figure 7-9.If the equilibrium price rises from $50 to $200,what is the additional producer surplus to initial producers?

Accepted Answer

The additional producer surplus is the area of the triangle formed between the initial and new equilibrium prices. The base of this triangle is the change in price ($200 - $50 = $150), and the height is the quantity at the initial equilibrium price. Assuming the quantity is 50 (from the context of the problem), the additional producer surplus is 0.5 * base * height = 0.5 * 150 * 50 = $3,750.

Question 5

Figure 7-11 
-Refer to Figure 7-11.Area A represents

Accepted Answer

Area A represents the increase in producer surplus for existing producers when the price rises from P1 to P2, as they receive more for the same quantity they were already willing to supply.

Question 6

Figure 7-10 
-Refer to Figure 7-10.At the equilibrium price,producer surplus is

Accepted Answer

The answer of Figure 7-10 
-Refer to Figure 7-10.At the...

Question 7

Producer surplus equals

Accepted Answer

Producer surplus is the difference between the amount received by sellers and the costs of production. Option A represents consumer surplus, option C combines both consumer and producer surplus, while option D is not correct as it combines both consumer surplus and producer surplus, leading to double counting.

Question 8

Figure 7-11 
-Refer to Figure 7-11.When the price is P2,producer surplus is

Accepted Answer

Producer surplus is the area above the supply curve and below the price level. At price P2, the producer surplus is the area A+B+C.

Question 9

Producer surplus is the area

Accepted Answer

Producer surplus is the area below the price and above the supply curve. So, option C is correct. Option A is the area below the supply curve which is not the producer surplus. Option B is the area between supply and demand curves which is known as consumer surplus. Option D is the area below the demand curve and above the price which is also not considered as producer surplus.

Question 10

Figure 7-10 
-Refer to Figure 7-10.If the government imposes a price ceiling of $70 in this market,then producer surplus will decrease by

Accepted Answer

At the equilibrium price of $80, producer surplus is the area above the supply curve and below $80, which is equal to ($80 - $50) * 20 = $600. If a price ceiling of $70 is imposed, the new quantity demanded will exceed the quantity supplied, creating a shortage of 5 units. This means that producers will only be able to sell 15 units at the price ceiling, and their total revenue will decrease from $1,600 to ($70 * 15) = $1,050. Their new producer surplus will be the area above the supply curve and below $70, which is equal to ($70 - $50) * 15 = $300. Therefore, producer surplus will decrease by $600 - $300 = $300 or $150 per unit sold. Overall, producer surplus will decrease by ($150 * 20) = $3,000. Thus, the correct answer is C.

Question 11

Figure 7-11 
-Refer to Figure 7-11.When the price rises from P1 to P2,which area represents the increase in producer surplus to existing producers?

Accepted Answer

When the price rises from P1 to P2, the increase in producer surplus to existing producers is represented by area A, which is the area between the original price P1 and the new price P2, up to the original quantity supplied.

Question 12

Producer surplus is

Accepted Answer

The answer of Producer surplus is
...

Question 13

Producer surplus is the

Accepted Answer

Producer surplus is the difference between the price a seller receives for a good and the cost of producing that good. It is essentially the profit that a producer earns. Therefore, option B - "amount a seller is paid minus the cost of production" is the correct choice. Option A refers to consumer surplus, option C refers to total surplus, and option D is not a relevant definition for producer surplus.

Question 14

Figure 7-11 
-Refer to Figure 7-11.When the price falls from P2 to P1,producer surplus

Accepted Answer

The answer of Figure 7-11 
-Refer to Figure 7-11.When the...

Question 15

Figure 7-11 
-Refer to Figure 7-6.When the price falls from P2 to P1,which of the following would not be true?

Accepted Answer

When the price falls, it is likely that some sellers will leave the market because they are not willing to sell at the lower price. This means that the sellers who continue to sell the good may be worse off because of the lower price. Producer surplus (the difference between the price and the cost of production) would also fall, as shown by the decrease in area A+B. However, it is not true that the total cost of what is sold by sellers is actually higher than it was before the decrease in price - this would violate the basic economic principle that lower prices lead to greater quantity supplied. Therefore, only C would not be true.

Question 16

Figure 7-11 
-Refer to Figure 7-11.Area B represents

Accepted Answer

The answer of Figure 7-11 
-Refer to Figure 7-11.Area B...

Question 17

Figure 7-11 
-Refer to Figure 7-11.When the price rises from P1 to P2,what area represents the increase in producer surplus?

Accepted Answer

The answer of Figure 7-11 
-Refer to Figure 7-11.When the...

Question 18

Figure 7-10 
-Refer to Figure 7-10.If the government imposes a price ceiling of $70 in this market,then the new producer surplus will be

Accepted Answer

The answer of Figure 7-10 
-Refer to Figure 7-10.If the...

Question 19

Figure 7-11 
-Refer to Figure 7-11.When the price rises from P1 to P2,which area represents the increase in producer surplus due to new producers entering the market?

Accepted Answer

Area B represents the increase in producer surplus due to new producers entering the market when the price rises from P1 to P2. This area is above the supply curve and below the new price level, indicating the surplus gained by producers who were not willing to supply at the lower price P1 but are willing to supply at the higher price P2.

Question 20

Figure 7-11 
-Refer to Figure 7-11.When the price is P1,producer surplus is

Accepted Answer

The answer of Figure 7-11 
-Refer to Figure 7-11.When the...

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

Producer surplus directly measures

Figure 7-9 -Refer to Figure 7-9.If the equilibrium price rises from $50 to $200,what is the producer surplus to new producers?

Producer surplus directly measures

Figure 7-9 -Refer to Figure 7-9.If the equilibrium price rises from $50 to $200,what is the additional producer surplus to initial producers?

Figure 7-11 -Refer to Figure 7-11.Area A represents

Figure 7-10 -Refer to Figure 7-10.At the equilibrium price,producer surplus is

Producer surplus equals

Figure 7-11 -Refer to Figure 7-11.When the price is P2,producer surplus is

Producer surplus is the area

Figure 7-10 -Refer to Figure 7-10.If the government imposes a price ceiling of $70 in this market,then producer surplus will decrease by

Figure 7-11 -Refer to Figure 7-11.When the price rises from P1 to P2,which area represents the increase in producer surplus to existing producers?

Producer surplus is

Producer surplus is the

Figure 7-11 -Refer to Figure 7-11.When the price falls from P2 to P1,producer surplus

Figure 7-11 -Refer to Figure 7-6.When the price falls from P2 to P1,which of the following would not be true?

Figure 7-11 -Refer to Figure 7-11.Area B represents

Figure 7-11 -Refer to Figure 7-11.When the price rises from P1 to P2,what area represents the increase in producer surplus?

Figure 7-10 -Refer to Figure 7-10.If the government imposes a price ceiling of $70 in this market,then the new producer surplus will be

Figure 7-11 -Refer to Figure 7-11.When the price rises from P1 to P2,which area represents the increase in producer surplus due to new producers entering the market?

Figure 7-11 -Refer to Figure 7-11.When the price is P1,producer surplus is