Test3_practicequestions(1)

30100 b 92450 c 122550 d 0 8 sarah and david

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Unformatted text preview: the price were zero, consumer surplus equals A) $301.00. B) $924.50. C) $1,225.50. D) $1,250.00. 7) The above figure shows the market demand curve for telecommunication while driving one’s car (time spent on the car phone). If the price were $2.50, consumer surplus equals A) $301.00. B) $924.50. C) $1,225.50. D ) $0 8). Sarah and David both have linear demand curves for lemonade. Sarah’s demand curve for lemonade intersects David’s demand curve at a price of 50 cents per glass. Sarah’s demand curve is more inelastic than David’s. A change in the price of lemonade from 50 cents to 25 cents per glass will A) decrease Sarah’s consumer surplus more than David’s. B) decrease David’s consumer surplus more than Sarah’s. C) increase Sarah’s consumer surplus more than David’s. D) increase David’s consumer surplus more than Sarah’s. 9). Producer surplus equals A) total revenue minus total variable cost. B) total revenue minus the sum of all marginal cost. C) profit plus fixed cost. D) All of the above. 10. Suppose the market supply curve is p = 5 + Q. At a price of 10, producer surplus equals A) 50. B) 25. C) 12.50. D) 10. 11. In the short run, if a firm operates, it earns a profit of $500. The fixed costs of the firm are $100. This firm has a producer surplus of A) $500. B) $100. C) $400. D) $600. 12. Assume government policy increases the demand for corn. A) The consumer surplus of corn buyers will increase. B) The producer surplus of corn growers will decrease. C) The producer surplus of corn growers will increase. D) The producer surplus of corn growers will not change. 13. If in a market the last unit of output was sold at a price higher than marginal cost A) producer is better off producing less. #$%!!!! &'()*)+,!-./0!12+/0+!/!3+45+!6+07++8!9:;;(<!/84!=+>/84! !?!! .+!0'0/(!7+(@/2+!/,,'*)/0+4!7)0.!/!>/2A+0!0./0!)8*(:4+,!/!5'B+28>+80!,/(+,!0/C!+D:/(,! E?!! '8,:>+2 ,:2;(:,!;(:, of the product is sold. * B) consumers are b!etter off if less!;2'4:*+2!,:2;(:,$! C) social '8,:>+2!,:2;(:,!;(:,!;2'4:*+2!,:2;(:,!>)8:,!5'B+28>+80!0/C!2+B+8:+$! 6?!! welfare is not maximized. * D) the u*'8,:>+2!,:2;(:,rofit. !;2'4:*+2!,:2;(:,!;(:,!5'B+28>+80!0/C!2+B+8:+$! 1?!!nit increased total p !;(:, =?!! .+!5'B+28>+80!0/C!2+B+8:+$! 0 14. If a city decides to restrict the number of pizza parlors E8,7+2F!!! ! 1 A) the price of pizza will increase. !"#$%&!!! "($%$)*!+,-+!./)-+)!-!0)12)! ' B) pizza parlors will make higher profits. ' C) 34)*+$"5!6+-+4*&!!! /)7$"4*!81$+$"5! total welfare will decrease. D) All of the above. G?!! @!/!*)0<!5'B+28>+80!+8/*0,!/!>/C)>:>!;2)*+!'8!2+80! H ! 15. In 2007, the N!,:;;()+4!7)((!4+*2+/,+$! Association put a moratorium on new Football E?!! :/80)0<ational Collegiate Athletic D Bowl 6?!! :/80)0<!4+>/84+4!7)((!)8*2+/,+$! policy will Series (formerly Division IA) teams. This D A) protect the producer surplus o4+B+(';$! football pro...
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This note was uploaded on 09/29/2013 for the course ECON 201 taught by Professor Maxli during the Winter '13 term at Massey Palmerston North.

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