spring 2008 exam 2

# Total surplus is a measured as the area between the

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16. Total surplus is: A) measured as the area between the supply and demand curves up to the traded quantity. B) the total net gain to consumers and producers from trading in the market. C) the sum of consumer and producer surplus. D) all of the above. 17. Joan loves to eat sushi. Her first piece of sushi normally yields a marginal benefit of \$5. Each additional piece creates a declining marginal benefit by \$0.25 per piece. If her favorite sushi bar charges \$2.75 per piece of sushi, how many pieces should she eat? 18. Consider the market for milkshakes. An increase in the consumer surplus may result from:

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ECON 2106 Shelby Frost Exam 2 11:00am TR Spring 2008 Version A Page 8 Use the following to answer question 19: Figure: Cost Curve and Profits 19. (Figure: Cost Curves and Profits) The market for corn is perfectly competitive, and an individual corn farmer faces the cost curves shown in the accompanying figure. If the price of a bushel of corn in the market is \$14, then the farmer will produce ______ of corn and earn an economic ______ equal to ______.
ECON 2106 Shelby Frost Exam 2 11:00am TR Spring 2008 Version A Page 9 Use the following to answer question 20: Figure: Total Product 20. (Figure: Total Product) Units of labor added after L 1 and up to L 2 are: A) subject to diminishing marginal returns. B) adding increasing amounts to total product. C) adding positive amounts to total product. D) described in A and C. Use the following to answer question 21: Figure: Prices, Cost Curves, and Profits 21. (Figure: Prices, Cost Curves, and Profits) In the accompanying figure, if the price is P 2 , then the maximum profit the firm can earn is: 22. The optimal quantity of an activity is the quantity at which:

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