Question 1

Table 4-1
 
-Refer to Table 4-1.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

B

Question 2

Juanita goes to the Hardware Emporium to buy a new circular saw.She is willing to pay $120 for a new saw,but buys one on sale for $85.Juanita's consumer surplus from the purchase is

Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and the price they actually pay. In this case, Juanita was willing to pay $120 for the circular saw, but she only paid $85, which means her consumer surplus is $35 (120-85 = 35). Therefore, the best choice is A.

Question 3

Table 4-2
 
-Refer to Table 4-2.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

If the price of one ticket rises from $20 to $38, only three tickets will be sold as per the table. Consumer surplus can be calculated by subtracting the price paid by the consumer from their willingness to pay. Therefore, the consumer surplus for each of the five consumers at a price of $20 can be calculated as follows:
Consumer 1: $30 - $20 = $10
Consumer 2: $60 - $20 = $40
Consumer 3: $40 - $20 = $20
Consumer 4: $50 - $20 = $30
Consumer 5: $30 - $20 = $10
The total consumer surplus is $10 + $40 + $20 + $30 + $10 = $110.
At a price of $38, only three consumers are willing to buy a ticket. Therefore, the consumer surplus for these three consumers can be calculated as follows:
Consumer 2: $60 - $38 = $22
Consumer 3: $40 - $38 = $2
Consumer 4: $50 - $38 = $12
The total consumer surplus is $22 + $2 + $12 = $36.
The decrease in consumer surplus from $110 to $36 represents a decrease of $74 or from $62 to $12 individually for each of the five consumers. Therefore, the correct answer is B.

Question 4

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 value for the television is equal to the price she paid plus the consumer surplus she received:
Value = Price + Consumer Surplus = $795 + $355 = $1150. Therefore, Monique values her television at $1150.

Question 5

Table 4-2
 
-Refer to Table 4-2.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 4-2
 
-Refer to Table 4-2.The table...

Question 6

Table 4-2
 
-Refer to Table 4-2.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

The answer of Table 4-2
 
-Refer to Table 4-2.The table...

Question 7

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

Accepted Answer

Consumer surplus is the difference between the price that a consumer is willing and able to pay for a good or service and the actual price that they pay. In this case, the individual was willing to pay $200 for the sunglasses but was able to purchase them for $140, resulting in a consumer surplus of $60.

Question 8

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 known as marginal benefit. It is the extra satisfaction or utility gained from consuming one more unit of a good or service. It is different from consumer surplus, which is the difference between the maximum price a consumer is willing to pay and the actual price they pay for a good or service. Similarly, it is also different from the opportunity cost of consuming the good or service, which is the value of the next best alternative that has to be given up to consume that particular good. Economic surplus, on the other hand, is the total benefit minus the total cost of producing a good or service.

Question 9

Suppose there are two cities that have rent controlled apartments.In one city (Albany)all apartments are subject to rent control;in the other city (Halftrack)one-half of the apartments are rent controlled.Which of the following is most likely to be true?

Accepted Answer

Rent control typically leads to a shortage of available apartments because it caps how much landlords can charge, making it less profitable for them to rent out apartments. This would make it difficult to find a rent-controlled apartment in both cities. In Halftrack, where only half the apartments are rent-controlled, the non-controlled apartments would likely have higher rents due to increased demand from those unable to find or qualify for rent-controlled housing, as well as the reduced overall supply.

Question 10

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

Consumer surplus is the difference between the maximum amount a consumer is willing to pay for a product and the actual price paid. In this case, Brett's consumer surplus is $80, so he must value his new cell phone at $100 + $80 = $180.

Question 11

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

Marco's consumer surplus is the difference between the maximum price he was willing to pay ($200) and the actual price he paid ($140). Therefore, his consumer surplus is $200-$140 = $60. Choice B is the correct answer.

Question 12

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

Accepted Answer

The maximum price a buyer is willing to pay for a good is known as his willingness to pay. This represents the highest price a consumer is willing and able to pay for a good or service. It is an important concept in determining consumer surplus, which is the difference between a buyer's willingness to pay and the actual price paid. Marginal benefit is the additional benefit derived from consuming an additional unit of a good, while producer surplus is the difference between the lowest price a producer is willing to accept and the actual price received.

Question 13

Table 4-2
 
-Refer to Table 4-2.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 one of the tickets is sold at $36, only Walter will buy a ticket as he is willing to pay up to $40. Therefore, Walter will receive $4 of consumer surplus ($40 - $36 = $4). None of the other consumers will buy a ticket as their willingness to pay is lower than the price of the ticket, so choices A, C, and D are incorrect.

Question 14

Each point on a demand curve shows

Accepted Answer

Each point on a demand curve represents the quantity of a product that consumers are willing to purchase at a specific price. This is based on their willingness to pay and their perceived value of the product. As the price decreases, the quantity demanded typically increases due to the law of demand. Therefore, a demand curve shows the relationship between price and quantity demanded.

Question 15

The difference between the ________ for a good and the ________ is called consumer surplus.

Accepted Answer

Consumer surplus is the difference between the highest price a consumer is willing to pay for a good or service and the actual price they pay for it. Therefore, the first option (highest price/lowest price) is on the right track but it is missing the actual price paid by the consumer. The second option (lowest price/price paid) is incorrect because it does not take into account the potential willingness of the consumer to pay more. The fourth option (price paid/actual cost to producer) is not relevant to consumer surplus at all. Therefore, the best choice is C.

Question 16

Table 4-1
 
-Refer to Table 4-1.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 4-1
 
-Refer to Table 4-1.The table...

Question 17

Table 4-1
 
-Refer to Table 4-1.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

Consumer surplus is the difference between what consumers are willing to pay and what they actually pay for a good or service. To calculate the total consumer surplus for a particular price, we need to add up the individual consumer surpluses for each consumer.

For a price of $27, Curly's consumer surplus would be $3 ($30 - $27), Moe's consumer surplus would be $1 ($28 - $27), and Larry's consumer surplus would be $0 ($27 - $27). Adding these up, we get a total consumer surplus of $4. Therefore, the best choice is C, $26.

Question 18

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

Accepted Answer

The term "willing to purchase" implies that the consumer is considering the marginal benefit of the product, which is the additional satisfaction or utility that the consumer derives from consuming an additional unit of the product. The consumer's decision to purchase the product is related to the price of the product, as the consumer is willing to purchase the product up to the point where the marginal benefit is equal to the price. If the price exceeds the marginal benefit, the consumer will not purchase the product. Therefore, option B, “the marginal benefit is equal to the price of the product” is the correct choice.

Question 19

Table 4-1
 
-Refer to Table 4-1.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

To calculate consumer surplus, we need to find the difference between the maximum price each consumer is willing to pay and the actual price they pay.

Before the price drop: 
Curly: $30 - $24 = $6
Moe: $40 - $24 = $16
Larry: $25 - $24 = $1

Total consumer surplus = $6 + $16 + $1 = $23

After the price drop: 
Curly: $30 - $14 = $16
Moe: $40 - $14 = $26
Larry: $25 - $14 = $11

Total consumer surplus = $16 + $26 + $11 = $53

Therefore, the correct answer is A, consumer surplus increases from $32 to $53.

Question 20

In cities with rent control,people have an incentive to list their apartments on sites such as Airbnb at rents ________ the controlled rates,because rent control causes a ________ of apartments.

Accepted Answer

Rent control puts a cap on the rents landlords can charge tenants, leading to a shortage of apartments as landlords are disincentivized to offer their properties for rent. This shortage of rental properties creates an opportunity for landlords to list their apartments on platforms such as Airbnb at rates that are above the controlled rents. Therefore, option B is the correct answer as people have an incentive to list their apartments on Airbnb at rents above the controlled rates due to shortages caused by rent control.

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

Table 4-1 -Refer to Table 4-1.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,

Juanita goes to the Hardware Emporium to buy a new circular saw.She is willing to pay $120 for a new saw,but buys one on sale for $85.Juanita's consumer surplus from the purchase is

Table 4-2 -Refer to Table 4-2.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

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

Table 4-2 -Refer to Table 4-2.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

Table 4-2 -Refer to Table 4-2.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

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

Suppose there are two cities that have rent controlled apartments.In one city (Albany) all apartments are subject to rent control;in the other city (Halftrack) one-half of the apartments are rent controlled.Which of the following is most likely to be true?

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?

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

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

Table 4-2 -Refer to Table 4-2.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

Each point on a demand curve shows

The difference between the for a good and the is called consumer surplus.

Table 4-1 -Refer to Table 4-1.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

Table 4-1 -Refer to Table 4-1.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

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

Table 4-1 -Refer to Table 4-1.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

In cities with rent control,people have an incentive to list their apartments on sites such as Airbnb at rents the controlled rates,because rent control causes a of apartments.