ECON EXAM # 2

ECON EXAM # 2 - Study Guide for Exam 2 ECON 2100 SECTION 04...

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Unformatted text preview: Study Guide for Exam 2 ECON 2100 SECTION 04 FALL 2010 Multiple Choice ____ 1. Welfare economics is the study of a. the well-being of less fortunate people. b. welfare programs in the United States. c. how the allocation of resources affects economic well-being. d. the effect of income redistribution on work effort. ____ 2. On a graph, the area below a demand curve and above the price measures a. producer surplus. b. consumer surplus. c. deadweight loss. d. willingness to pay. Table 7-4 The numbers in Table 7-1 reveal the maximum willingness to pay for a ticket to a Chicago Cubs vs. St. Louis Cardinals baseball game at Wrigley Field. Buyer Willingness to Pay Jennifer $10 Bryce $15 Dan $20 David $25 Ken $50 Lisa $60 ____ 3. Refer to Table 7-4. If tickets sell for $25 each, then what is the total consumer surplus in the market? a. $25 b. $35 c. $60 d. $110 ____ 4. A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes a. increases, and the consumer surplus in the market for red wine increases. b. increases, and the consumer surplus in the market for red wine decreases. c. decreases, and the consumer surplus in the market for red wine increases. d. decreases, and the consumer surplus in the market for red wine decreases. ____ 5. Chad is willing to pay $5.00 to get his first cup of morning latt. He buys a cup from a vendor selling latt for $3.75 per cup. Chad's consumer surplus is a. $8.75. b. $5.00. c. $3.75. d. $1.25. 1 ____ 6. Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then a. Dallas's consumer surplus would be unaffected. b. Dallas's consumer surplus would increase. c. Dallas's consumer surplus would decrease. d. Dallas would be wise to buy fewer strawberries than before. Figure 7-1 P2 P1 Q2 Q1 Demand A B C D F Quantity Price ____ 7. Refer to Figure 7-1 . When the price is P2, consumer surplus is a. A. b. B. c. A+B. d. A+B+C. ____ 8. Refer to Figure 7-1 . Area C represents the a. decrease in consumer surplus that results from a downward-sloping demand curve. b. consumer surplus to new consumers who enter the market when the price falls from P2 to P1. c. increase in producer surplus when quantity sold increases from Q2 to Q1. d. decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2. Figure 7-2 2 Demand P1 P2 Q1 Q2 A B C D F G Quantity Price ____ 9. Refer to Figure 7-2 . When the price falls from P1 to P2, which area represents the increase in consumer surplus to new buyers entering the market?...
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This note was uploaded on 01/20/2012 for the course ECON 2100 taught by Professor Goodwin during the Spring '07 term at Kennesaw.

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ECON EXAM # 2 - Study Guide for Exam 2 ECON 2100 SECTION 04...

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