practice problems and questions for chapters 6 and 7

practice problems and questions for chapters 6 and 7 - ECON...

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ECON 2106 Practice Questions for Chapters 6 and 7 Name: __________________________ Date: _____________ 1. Along a given demand curve, an increase in the price of a good will: A) increase consumer surplus. B) decrease consumer surplus. C) have no effect on consumer surplus. D) decrease producer surplus. Use the following to answer questions 2-3: Table: Producer Surplus and Phantom Tickets Student Willingness to sell Tim \$1 Laura 30 Whitney 0 Ralph 100 Rick 150 2. (Table: Producer Surplus and Phantom Tickets) Given the information in the accompanying table, if these students can sell their Phantom tickets for only \$5, then: A) Tim will be the only student to sell his ticket. B) Laura, Whitney, Ralph, and Rick will not sell their tickets. C) the total producer surplus for the five students will be \$4. D) a, b, and c would be correct. 3. (Table: Producer Surplus and Phantom Tickets) Given the information in the accompanying table, if the box-office price for Phantom tickets is \$140, and there is no other market for tickets, total producer surplus for these five students is: A) \$139. B) \$110. Page 1

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C) \$40. D) \$379. Use the following to answer question 4: Figure: Market for Hamburgers 4. (Figure: Market for Hamburgers) The accompanying figure shows the weekly market for hamburgers at the Tasty Burger Palace. If the Palace lowers the price of a burger from \$2 to \$1.50, the gain in consumer surplus to consumers who are persuaded to buy by the lower price (and who were not buying when the price was \$2) is equal to: A) \$100. B) \$75. C) \$50. D) \$25. 5. Peanut butter and jelly are complements. If there is a decrease in the price of jelly, producer surplus in the peanut butter market: A) will increase. B) will decrease. C) will not change. D) may change, but it is impossible to tell if it will increase or decrease. Page 2
Use the following to answer question 6: Figure: Consumer Surplus 6. (Figure: Consumer Surplus) In the accompanying figure, total consumer surplus is ______ when the price is \$10. A) \$50 B) \$59 C) \$124 D) \$144 Page 3

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Use the following to answer question 7: Figure: Consumer and Producer Surplus 7. (Figure: Consumer and Producer Surplus) In the accompanying figure, if an effective price ceiling exists in this market, then producer surplus ______, and total surplus ______. A) decreases; decreases B) increases; stays the same C) increases; stays the same D) increases; decreases 8. If more agricultural land is devoted to producing peanuts, total surplus in the peanut butter market: A) will increase. B) will decrease. C) will not change. D) may change but we cannot determine the change without more information. Use the following to answer question 9: Figure: Market for Hamburgers Page 4
for hamburgers at the Tasty Burger Palace. If the market is originally in equilibrium and the government then imposes an excise tax of \$0.80 per unit of the good sold, the government's revenue from the tax will be: A) \$175. B)

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practice problems and questions for chapters 6 and 7 - ECON...

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