Chapter 7(sample exercise)

Chapter 7(sample exercise) - Chapter 7Consumers, Producers,...

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1. Welfare economics is the study of a. the well-being of less fortunate people. b. welfare programs in Canada. c. the effect of income redistribution on work effort. d. how the allocation of resources affects economic well-being. 2. A consumer's willingness to pay measures a. the cost of a good to the buyer. b. how much a buyer values a good. c. how much a buyer has to pay to receive a good. d. how much a seller receives from the sale of a good. 3. Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise a. buys the dishwasher and receives a consumer surplus of $150. b. buys the dishwasher and receives a consumer surplus of $500. c. does not buy the dishwasher because her willingness to pay is greater than the price. d. does not buy the dishwasher because her willingness to pay is less than the price. 4. Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer? a. $700 b. $2,300 c. $3,000 d. $3,700 5. Suppose there is an early freeze in California that ruins the lemon crop. What happens to consumer surplus in the market for lemons? a. It increases. b. It decreases. c. It is not affected by this change in market forces. d. It increases very briefly then decreases. Table 7-2 BUYER WILLINGNESS TO PAY DAVID $8.50 LAURA $7.00 MEGAN $5.50 MALLORY $4.00 AUDREY $3.50 6. Refer to Table 7-2 . If the market price is $5.50, the consumer surplus in the market will be a. $3.00. b.
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This note was uploaded on 01/07/2010 for the course ECO eco1104 taught by Professor Davidgray during the Fall '09 term at University of Ottawa.

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Chapter 7(sample exercise) - Chapter 7Consumers, Producers,...

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