Question 1

Table 4-5
 $$\begin{array} { | l | l | } 
\hline \text { Consumer } & \text { Willingness to Pay } \
\hline \text { Violet } & \$ 48 \
\hline \text { Walter } & 40 \
\hline \text { Xavier } & 30 \
\hline \text { Yolanda } & 24 \
\hline \text { Zachary } & 14 \
\hline
\end{array}$$
-Refer to Table 4-5.The table above lists the highest prices five consumers are willing to pay for a concert ticket.If the price of one ticket rises from $20 to $38

Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they pay. When the ticket price increases from $20 to $38, only three consumers (the first, second, and third highest payers) will be willing to pay for the ticket, resulting in a decrease in consumer surplus from $62 to $12.

Question 2

The maximum price that a buyer is willing to pay for a good measures his

Accepted Answer

The maximum price that a buyer is willing to pay for a good is his willingness to pay. This represents the highest value a consumer places on the good, and reflects their subjective valuation of the product.

Question 3

Table 4-6
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Marko's } \
\text { Polos }
\end{array} & \begin{array} { c } 
\text { Marginal Cost } \
\text { (dollars) }
\end{array} \
\hline 1 \text { st shirt } & \$ 7 \
\hline \text { 2nd shirt } & 10 \
\hline \text { 3rd shirt } & 15 \
\hline \text { 4th shirt } & 20 \
\hline
\end{array}$$
-Refer to Table 4-6.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the market price of Marko's polo shirts is $18

Accepted Answer

The answer of Table 4-6
 \[\begin{array} { | c |...

Question 4

Table 4-4
 $$\begin{array} { | l | c | } 
\hline \text { Consumer } & \text { Willingness to Pay } \
\hline \text { Curly } & \$ 50 \
\hline \text { Moe } & 30 \
\hline \text { Larry } & 15 \
\hline
\end{array}$$
-Refer to Table 4-4.The table above lists the highest prices three consumers,Curly,Moe,and Larry,are willing to pay for a bottle of champagne.If the price of one of the bottles is $27 dollars,total consumer surplus will be

Accepted Answer

To find the total consumer surplus, we need to add up the individual surpluses for each of the three consumers. Consumer surplus is the difference between the highest price a consumer is willing to pay and the actual price they pay. In this case, if the bottle of champagne is priced at $27, the consumer surplus for each of the three consumers would be:

Curly: $36 - $27 = $9
Moe: $29 - $27 = $2
Larry: $20 - $27 = $0 (he is not willing to pay more than $20)

Total consumer surplus would be the sum of these individual surpluses:
$9 + $2 + $0 = $11

However, since Larry is not willing to pay more than $20, he would not purchase the bottle at $27, resulting in a total consumer surplus of only $9 + $2 = $11. Therefore, the correct answer is C) $26.

Question 5

The additional cost to a firm of producing one more unit of a good or service is the

Accepted Answer

Marginal cost is the additional cost incurred in producing an additional unit of a good or service. It is important for firms to consider marginal cost when making production decisions because it helps determine whether producing one more unit is profitable or not.

Question 6

Table 4-5
 $$\begin{array} { | l | l | } 
\hline \text { Consumer } & \text { Willingness to Pay } \
\hline \text { Violet } & \$ 48 \
\hline \text { Walter } & 40 \
\hline \text { Xavier } & 30 \
\hline \text { Yolanda } & 24 \
\hline \text { Zachary } & 14 \
\hline
\end{array}$$
-Refer to Table 4-5.The table above lists the highest prices five consumers are willing to pay for a concert ticket.If the price of one ticket is $50

Accepted Answer

The answer of Table 4-5
 \[\begin{array} { | l |...

Question 7

Table 4-6
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Marko's } \
\text { Polos }
\end{array} & \begin{array} { c } 
\text { Marginal Cost } \
\text { (dollars) }
\end{array} \
\hline 1 \text { st shirt } & \$ 7 \
\hline \text { 2nd shirt } & 10 \
\hline \text { 3rd shirt } & 15 \
\hline \text { 4th shirt } & 20 \
\hline
\end{array}$$
-Refer to Table 4-6.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the price of polo shirts increases from $15 to $20

Accepted Answer

The answer of Table 4-6
 \[\begin{array} { | c |...

Question 8

A consumer is willing to purchase a product up to the point where

Accepted Answer

The consumer will be willing to purchase a product up to the point where the marginal benefit is equal to the price of the product. This is because the consumer will only buy the product if they feel that the benefit they will receive from consuming it is worth more than the price they have to pay for it. As soon as the marginal benefit equals the price, the consumer is indifferent between buying and not buying the product, and they will not purchase any additional units.

Question 9

Marco goes to the pet store to buy a dozen Koi fish for his new Koi pond.He is willing to pay $200 for the dozen fish,but buys them for a total of $140.Marco's consumer surplus from the purchase is

Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay for a product and what they actually pay. In this case, Marco was willing to pay $200 for a dozen Koi fish but only paid $140. Therefore, his consumer surplus is $200 - $140 = $60. The correct choice is B.

Question 10

Table 4-4
 $$\begin{array} { | l | c | } 
\hline \text { Consumer } & \text { Willingness to Pay } \
\hline \text { Curly } & \$ 50 \
\hline \text { Moe } & 30 \
\hline \text { Larry } & 15 \
\hline
\end{array}$$
-Refer to Table 4-4.The table above lists the highest prices three consumers,Curly,Moe,and Larry,are willing to pay for a bottle of champagne.If the price of the champagne falls from $24 to $14

Accepted Answer

The answer of Table 4-4
 \[\begin{array} { | l |...

Question 11

Which of the following statements best describes the concept of consumer surplus?

Accepted Answer

Consumer surplus is the difference between the price a consumer is willing to pay for a product and the actually price they end up paying. In this case, the consumer was willing to pay $200 for the sunglasses but only paid $140, meaning they have a consumer surplus of $60.

Question 12

Table 4-5
 $$\begin{array} { | l | l | } 
\hline \text { Consumer } & \text { Willingness to Pay } \
\hline \text { Violet } & \$ 48 \
\hline \text { Walter } & 40 \
\hline \text { Xavier } & 30 \
\hline \text { Yolanda } & 24 \
\hline \text { Zachary } & 14 \
\hline
\end{array}$$
-Refer to Table 4-5.The table above lists the highest prices five consumers are willing to pay for a concert ticket.If the price of one of the tickets is $20

Accepted Answer

If the price of one of the tickets is $20, only Zachary will not buy a ticket since his reservation price is lower than the ticket price. The other four consumers are willing to pay more than $20 for a ticket, and therefore will buy a ticket.

Question 13

The additional benefit to a consumer from consuming one more unit of a good or service

Accepted Answer

The additional benefit to a consumer from consuming one more unit of a good or service is referred to as marginal benefit. It represents the increase in satisfaction or utility from consuming one more unit. The other options are not correct as consumer surplus represents the difference between the amount a consumer is willing to pay and the amount they actually pay for a good or service, opportunity cost is the cost of the next best alternative foregone, and economic surplus is the total benefit minus the total cost of producing a good or service.

Question 14

Brett buys a new cell phone for $100.He receives consumer surplus of $80 from the purchase.How much does Brett value his cell phone?

Accepted Answer

Brett's consumer surplus is the difference between what he paid ($100) and how much he values the item. Therefore, Brett values his cell phone at $100+$80=$180. Option A is the only choice that reflects this valuation.

Question 15

Monique buys a new television for $795.She receives consumer surplus of $355 from the purchase.How much does Monique value her television?

Accepted Answer

Monique's willingness to pay for the television is equal to the sum of the price she paid and the consumer surplus she received. Therefore, her value for the television is $795 + $355 = $1150. Therefore, the best choice is D.

Question 16

Each point on a demand curve shows

Accepted Answer

A demand curve shows the various quantities of a good that consumers are willing and able to purchase at different prices. Each point on the curve represents a specific quantity demanded at a specific price, reflecting the willingness of consumers to pay for the product at that particular level of price.

Question 17

Table 4-5
 $$\begin{array} { | l | l | } 
\hline \text { Consumer } & \text { Willingness to Pay } \
\hline \text { Violet } & \$ 48 \
\hline \text { Walter } & 40 \
\hline \text { Xavier } & 30 \
\hline \text { Yolanda } & 24 \
\hline \text { Zachary } & 14 \
\hline
\end{array}$$
-Refer to Table 4-5.The table above lists the highest prices five consumers are willing to pay for a concert ticket.If the price of one ticket falls from $50 to $20

Accepted Answer

If the price of one ticket falls from $50 to $20, we can see from the table that all five consumers are now willing to buy a ticket. The consumer surplus for each consumer can be calculated by subtracting the price they are willing to pay from the actual price they pay. At a price of $50, only one consumer is willing to buy a ticket, so the consumer surplus is 0 for the other four consumers. At a price of $20, all five consumers are willing to buy a ticket, so the consumer surplus for each consumer is:

Consumer A: $20 - $15 = $5
Consumer B: $20 - $30 = -$10 (no consumer surplus)
Consumer C: $20 - $35 = -$15 (no consumer surplus)
Consumer D: $20 - $40 = -$20 (no consumer surplus)
Consumer E: $20 - $45 = -$25 (no consumer surplus)

But, we need to sum up the consumer surpluses of all individual consumers to find out the overall consumer surplus.

Consumer surplus = $5 + $0 + $0 + $0 + $0 = $5

Therefore, the consumer surplus increases from $0 to $5 + $15 + $20 + $0 + $22 = $62.

Question 18

Table 4-4
 $$\begin{array} { | l | c | } 
\hline \text { Consumer } & \text { Willingness to Pay } \
\hline \text { Curly } & \$ 50 \
\hline \text { Moe } & 30 \
\hline \text { Larry } & 15 \
\hline
\end{array}$$
-Refer to Table 4-4.The table above lists the highest prices three consumers,Curly,Moe,and Larry,are willing to pay for a bottle of champagne.If the price of one of the bottles is $95 dollars,total consumer surplus will be

Accepted Answer

The answer of Table 4-4
 \[\begin{array} { | l |...

Question 19

Table 4-4
 $$\begin{array} { | l | c | } 
\hline \text { Consumer } & \text { Willingness to Pay } \
\hline \text { Curly } & \$ 50 \
\hline \text { Moe } & 30 \
\hline \text { Larry } & 15 \
\hline
\end{array}$$
-Refer to Table 4-4.The table above lists the highest prices three consumers,Curly,Moe,and Larry,are willing to pay for a bottle of champagne.If the price of one of the bottles is $24 dollars

Accepted Answer

The answer of Table 4-4
 \[\begin{array} { | l |...

Question 20

Table 4-5
 $$\begin{array} { | l | l | } 
\hline \text { Consumer } & \text { Willingness to Pay } \
\hline \text { Violet } & \$ 48 \
\hline \text { Walter } & 40 \
\hline \text { Xavier } & 30 \
\hline \text { Yolanda } & 24 \
\hline \text { Zachary } & 14 \
\hline
\end{array}$$
-Refer to Table 4-5.The table above lists the highest prices five consumers are willing to pay for a concert ticket.If the price of one of the tickets is $36

Accepted Answer

If the price of one ticket is $36, then only Violet and Walter are willing to purchase the ticket since their highest prices are above $36. Walter's highest price is $40, so if he purchases the ticket for $36, he will receive $4 of consumer surplus (the difference between his willingness to pay and the actual price he paid). Therefore, choice B is correct. Choices A, C, and D are incorrect because they make assumptions that are not supported by the information given in the table.

Quiz 4: Economic Efficiency, government Price Setting, and Taxes

The maximum price that a buyer is willing to pay for a good measures his

The additional cost to a firm of producing one more unit of a good or service is the

A consumer is willing to purchase a product up to the point where

Marco goes to the pet store to buy a dozen Koi fish for his new Koi pond.He is willing to pay $200 for the dozen fish,but buys them for a total of $140.Marco's consumer surplus from the purchase is

Which of the following statements best describes the concept of consumer surplus?

The additional benefit to a consumer from consuming one more unit of a good or service

Brett buys a new cell phone for $100.He receives consumer surplus of $80 from the purchase.How much does Brett value his cell phone?

Monique buys a new television for $795.She receives consumer surplus of $355 from the purchase.How much does Monique value her television?

Each point on a demand curve shows