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

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Question 191

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At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

A) $2.00 each.
B) $0.50 each.
C) $3.50 each.
D) $5.00 each.

E) C) and D)
F) A) and B)

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Question 192

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Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor. On a particular day, he is willing to tutor the first hour for $10, the second hour for $18, the third hour for $28, and the fourth hour for $40. Assume Allen is rational in deciding how many hours to tutor. His producer surplus is

A) $40.
B) $64.
C) $12.
D) $56.

E) A) and B)
F) All of the above

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Question 193

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Figure 7-9 -Refer to Figure 7-9. If the price of the good is $14, then producer surplus is

Table 7-18 The following table shows the willingness to pay for a good for the only four consumers in a market. -Refer to Table 7-18. If the price of the good is $20, how many units will be demanded?

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. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

At the equilibrium price of a good, the good will be purchased by those buyers who

Suppose that the equilibrium price in the market for tomatoes is $3 per pound. If a law reduced the maximum legal price for tomatoes to $2 per pound,

In order to conclude that markets are efficient, we assume that they are perfectly competitive.

At Nick's Bakery, the cost to make homemade chocolate cake is $4 per cake. As a result of selling five cakes, Nick experiences a producer surplus in the amount of $17.50. Nick must be selling his cakes for

At any quantity, the price given by the supply curve shows the cost of the lowest-cost seller.

Table 7-15 -Refer to Table 7-15. You want to hire a professional photographer to take pictures of your family. The table shows the costs of the four potential sellers in the local photography market. Which of the following graphs represents the market supply curve?

Ronnie operates a lawn-care service. On each day, the cost of mowing the first lawn is $15, the cost of mowing the second lawn is $25, and the cost of mowing the third lawn is $40. His producer surplus on the first three lawns of the day is $100. If Ronnie charges all customers the same price for lawn mowing, that price is

Which of the following is correct?

Figure 7-20 -Refer to Figure 7-20. Total surplus can be measured as the area

Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to

Let P represent price; let QS represent quantity supplied; and assume the equation of the supply curve is If 90 units of the good are produced and sold, then producer surplus amounts to $1,350.

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $90.

Figure 7-7 -Refer to Figure 7-7. What is the consumer surplus if the price is $100?

Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15. Chuck values the dog show at

Figure 7-32 -Refer to Figure 7-32. At what price will total surplus be maximized in this market?