Chapter 4 - Summative Quiz - 1 If the price in a market is...

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1. If the price in a market is above the equilibrium price, then the market is experiencing: a. a shortage. b. a surplus. c. an equilibrium. d. Any of these is possible. 2. When the market price of a good is above the equilibrium price, what does greed (in other words, self- interest) on the part of sellers tend to do to the price? 3. Jon is on eBay bidding for a first edition of the influential Frank Miller graphic novel Batman: The Dark Knight Returns . In this market, with whom is Jon competing? 4. Bill is in Japan, trying to get a job as a full-time translator; he wants to translate English TV shows into Japanese and vice versa. He notices that the wage for translators is very low. Who is the competition that is pushing the wage down? a. businesses that hire translators b. other translators c. both businesses that hire translators and other translators d. Japanese businesses that do not hire translators. 5. Jules wants to purchase a Burger Royale with cheese from Vincent. Vincent is willing to offer this tasty burger for $3. The most that Jules is willing to pay for the tasty burger is $8 (after all, his girlfriend is a vegetarian, so he doesn't get many opportunities for tasty burgers). How large are the potential gains from trade if Jules and Vincent agree to make this trade? In other words, what is the sum of producer and consumer surplus if the trade happens?
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6. Jules wants to purchase a Burger Royale with cheese from Vincent. Vincent is willing to offer this tasty burger for $3. The most that Jules is willing to pay for the tasty burger is $8 (after all, his girlfriend is a vegetarian, so he doesn't get many opportunities for tasty burgers). If the trade takes place at $4, how much producer surplus goes to Vincent? a. $1 b. $3 c. $4 d. $8 7. Jules wants to purchase a Burger Royale with cheese from Vincent. Vincent is willing to offer this tasty burger for $3. The most that Jules is willing to pay for the tasty burger is $8 (after all, his girlfriend is a vegetarian, so he doesn't get many opportunities for tasty burgers). If the trade takes place at $4, how much consumer surplus goes to Jules?
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