CHAPTER 07 - Chapter7...

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Chapter 7 Consumers, Producers, and the Efficiency of  Markets 1. Which of the following best explains the source of consumer surplus for good A? a. Many consumers would be willing to pay more than the market price for good A. b. Many consumers pay prices that are greater than the equilibrium price of good A. c. Many consumers think the market price of good A is greater than its cost. d. Many consumers think the price elasticity of demand for good A is unit elastic. ANSWER: a Many consumers would be willing to pay more than the market price for good A. SECTION: 1 OBJECTIVE: 1 2. If you had been willing to pay $2.19 for the gallon of milk purchased at the supermarket but were required to  pay only $1.89, you have gained a. a refund of $.30 from the clerk. b. a consumer surplus amounting to $.30. c. excess marginal benefit of $2.19. d. producer surplus of $.30. ANSWER: b a consumer surplus amounting to $.30. SECTION: 1 OBJECTIVE: 1 3. The demand curve shows the a. highest price buyers actually pay for each unit of a good and the amount they would buy. b. highest price buyers would be willing and able to pay for each unit of the good or the amount purchased at  each price. c. consumer surplus buyers gain from each unit of the good if they were to purchase it. d. enjoyment consumers get from each unit of the good if they were to purchase it. ANSWER: b the highest price buyers would be willing and able to pay for each unit of the good or the amount  purchased at each price. SECTION: 1 OBJECTIVE: 1 4. If demand increases when supply is perfectly elastic, then a. consumer surplus will remain the same. b. consumer surplus will increase. c. it is not possible to predict the change in consumer surplus. d. consumer surplus will decrease with the increase in price. ANSWER: b consumer surplus will increase. SECTION: 1 OBJECTIVE: 1 39
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40    Chapter 7/Consumers, Producers, and the Efficiency of Markets 5. Consumer surplus tends to be small when a. demand is elastic. b.
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This note was uploaded on 10/22/2010 for the course BUSINESS BAIU09 taught by Professor Mr.ken during the Spring '10 term at American InterContinental University Dunwoody.

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CHAPTER 07 - Chapter7...

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