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6) If Niki is willing to pay up to $5 for an ice-cream bar but she actually pays $2 for it.  The consumer surplus of the ice-cream bar for Niki

A) is $2.

B) is $3.

C) is $7.

D) cannot be determined without information about the market structure.

 

1) Producer surplus is

A) the total difference between the total amount that producers actually receive for an item and the total amount that they would have been willing to accept.

B) the total difference between the total costs firms incur in producing an item and the utility consumers derive from purchasing the item.

C) the total difference between the total amount that consumers are willing to pay for an item and the total amount that producers would like to receive.

D) the total difference between the utility consumers derive from purchasing an item and the total costs firms incur in producing the item.

2) When producers would have been willing to accept lower prices at various quantities produced than the market clearing price, the differences are called

A) producer surplus.

B) monopoly profits.

C) opportunity cost.

D) deadweight loss.

3) Total producer surplus in a market is measured as the

A) area bounded above the market clearing price and beneath the market demand curve.

B) area bounded below the market clearing price and above the market supply curve.

C) vertical distance from the horizontal (quantity) axis to the market clearing price.

D) horizontal distance from the vertical (price) axis to the equilibrium quantity.

4) For a given market demand curve, if the market clearing price increases, then the amount of producer surplus will

A) decrease.

B) increase.

C) become negative.

D) none of the above due to insufficient information

5) The difference between the total amount that producers would have been willing to accept for the total quantity produced in a market and what they actually received at the market clearing price is called

A) production excess.

B) excess demand.

C) market surplus.

D) producer surplus.

6) If a producer is willing to receive at least $5 for a pen that she manufactures but she actually receives $7 for it.  The producer surplus of the pen for that producer is

A) $5.

B) $2.

C) $7.

D) -$5.

 

1) The gains from trade within a price system is

A) the sum of consumer surplus and producer surplus.

B) consumer surplus less producer surplus.

C) consumer surplus divided by producer surplus.

D) consumer surplus multiplied by producer surplus.

2) The gains from consumer surplus and producer surplus occur when

A) both consumers and producers engage in voluntary exchange.

B) consumers are willing to buy a good but producers are not willing to provide it.

C) producers are willing to provide a good but consumers are not willing to pay for it.

D) the government supplies the good instead of firms.

3) The total gains from trade within a price system is

A) the area beneath the market demand curve and above the market clearing price plus the area above the market supply curve and beneath the market clearing price.

B) the area beneath the market supply curve and above the market clearing price plus the area above the market demand curve and beneath the market clearing price.

C) the area beneath the market demand curve and above the market clearing price minus the area beneath the market supply curve and beneath the market clearing price.

D) always equal to zero.

 

1) If the government imposes a price ceiling that is lower than the market clearing price, then

A) consumer surplus will increase while producer surplus will decrease.

B) consumer surplus will decrease while producer surplus will increase.

C) both consumer surplus and producer surplus will decrease.

D) both consumer surplus and producer surplus will increase.

2) If the government imposes a price floor that is higher than the market clearing price, then

A) consumer surplus will increase while producer surplus will decrease.

B) consumer surplus will decrease while producer surplus will increase.

C) both consumer surplus and producer surplus will decrease.

D) both consumer surplus and producer surplus will increase.

3) The total amount of consumer surplus and producer surplus is at its maximum when

A) consumers and producers are allowed to trade at the market clearing price.

B) the government imposes a price floor that is higher than the market clearing price.

C) the government imposes a price ceiling that is lower than the market clearing price.

D) free market exchanges do not exist.

4) As compared to the market clearing price, the total amount of consumer surplus and producer surplus is

A) greater for a government-imposed price floor that is higher than that market clearing price.

B) greater for a government-imposed price ceiling that is lower than that market clearing price.

C) the same as a government-imposed price floor that is higher than that market clearing price.

D) smaller for a government-imposed price ceiling that is lower than that market clearing price.

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