Consumer surplus is found as the area

below the demand curve but above the price.

The competitive market provides the best outcome for society because

the total welfare is maximized.

Producer surplus is found as the area

above the supply curve but below the price.

Other things equal, a rise in price will result in which of the following?

Producer surplus will rise; consumer surplus will fall.

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Chap6&7

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Questions 10

Answers

1
Effective price ceilings are inefficient because they
lead to wasted resources.
do all of above
decrease quality.
create shortages.
2
When the market is in equilibrium, the total economic surplus is equal to area
f+g+i+k
f+k
g+h+i+j
f+g+h+i+j+k
3
Consumer surplus is found as the area
above the supply curve but below the price.
below the demand curve but above the price.
below the supply curve but above the price.
above the demand curve but below the price.
4
To be effective, a price ceiling must be set
I
II
None of the above
III
5
if the government impose a price floor of $2.00 per gallon on gasoline, which of the following will result?
A shortage of 6 billion gallons
A shortage of 12 billion gallons
A surplus of 6 billion gallons
A surplus of 12 billion gallons
6
The competitive market provides the best outcome for society because
producer surplus is minimized while consumer surplus is maximized.
the total welfare is maximized.
consumer surplus is minimized while producer surplus is maximized.
the difference between consumer and producer surplus is maximized.
7
Refer to the graph provided. A price floor set at $5 will result in
a surplus of 100 units.
a shortage of 100 units.
a surplus of 200 units.
a shortage of 200 units.
8
In the figure shown, a binding price ceiling is shown in
Both panel (a) and panel (b)
Panel (b)
Panel (a)
Neither panel (a) nor panel (b)
9
Producer surplus is found as the area
below the supply curve but above the price.
above the demand curve but below the price.
below the demand curve but above the price.
above the supply curve but below the price.
10
Other things equal, a rise in price will result in which of the following?
Producer surplus will fall; consumer surplus will rise.
Producer surplus will rise; consumer surplus will fall.
Producer surplus will rise; consumer surplus will rise.
Producer surplus will fall; consumer surplus will fall.

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