Question

In: Economics

1. When demand and supply are linear, consumer surplus is equal to: Group of answer choices...

1. When demand and supply are linear, consumer surplus is equal to:

Group of answer choices

The area between the demand curve and the price, out to the quantity that is exchanged.

The area between the supply curve and the price, out to the quantity that is exchanged.

The entire area between the demand curve and the price.

The entire area between the supply curve and the price.

2. Which of the following is not an assumption underlying the supply and demand model?

Group of answer choices

The focus is on supply and demand in a single market.

All goods sold in the market are identical.

Different firms sell their goods at different prices

There are many producers and consumers in the market

If the inverse demand curve is P = 12 – 2QD and the inverse supply curve is P = 4QS,
then the equilibrium price and quantity are:

Group of answer choices

Pe = 6; Qe = 1.

Pe = 8; Qe = 2.

Pe = 2; Qe = 8.

Pe = 1; Qe = 6.

4. If the demand curve is Qd = 10 – 2P, then the lowest price at which no consumer is
willing to buy the good (i.e., the demand choke price) is :

Group of answer choices

Solutions

Expert Solution

1. (a) The area between the demand curve and the price, out to the quantity that is exchanged.

Consumer surplus is the difference between what consumers are willing to pay and what they actually end up paying. Graphically, it is area under demand curve and above equilibrium price upto the equilibrium quantity.

2. (c) Different firms sell their goods at different prices.

3. (b) Pe = 8; Qe = 2

At equilibrium, Demand curve= Supply curve.

12 – 2QD = 4QS

12= 6 Q (Since Qd= Qs)

2= Qe

Putting Qe= 2 in Price equation, we get P= 4x2= 8

Thus Pe=8.

4. (d) 5

Choke price is an economic term used to describe the lowest price at which the quantity demanded of a good is equal to zero. At any price below the choke price, consumers will demand some quantity of the good.

Qd= 10- 2P

2P= 10 - Qd

P=5 - Qd/2

Substitute Qd=0 since no quantity is demanded at choke price. Any price higher than that and demand will be completely “choked off.” Thus P=5.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

This question is about producer surplus and consumer surplus. (a) Given a linear demand curve, if...

This question is about producer surplus and consumer surplus. (a) Given a linear demand curve, if domestic consumption changes by 10%, does consumer surplus also change by 10%? Why or why not? What is the relationship between change in domestic consumption and consumer surplus? Start with an algebraic form of a demand curve and to answer the question. (b) Is there a difference between producer surplus and profit? Explain.

Answer each of the following questions about demand and consumer surplus a. What is consumer surplus,...

Answer each of the following questions about demand and consumer surplus a. What is consumer surplus, and how is it measured? b. What is the relationship between the demand curve and the willingness to pay? c. Other things equal, what happens to consumer surplus if the price of a good falls? Why? Illustrate using a demand curve. d. In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand...

Consumer problem recognition occurs when: Group of answer choices the consumer has depleted his or her...

Consumer problem recognition occurs when: Group of answer choices the consumer has depleted his or her inventory of a product the consumer is dissatisfied with his or her previous purchase the consumer’s situation has changed creating new needs the purchase of one product necessitates a new purchase of a related product any of the above situations occur

a. Show on a demand supply graph how consumer surplus and producer surplus is defined b....

a. Show on a demand supply graph how consumer surplus and producer surplus is defined b. In general to evaluate welfare effects we need to consider the welfare of groups of individuals. What problem does consumer surplus pose in this regard ? c. There are to firms in an economy facing a upward sloping supply curve in a perfectly competitive setting. Show graphically how you would find the total producer surplus in the economy.

When it comes to supply and demand, government policies including trade, consumer and producer surplus play...

When it comes to supply and demand, government policies including trade, consumer and producer surplus play a key role. provide a real example of how consumer and producer surplus is used in the economy and why? Give and briefly discuss the importance of inelastic and elastic when it comes to purchasing certain goods and or services. Provide a real-world example beyond the text listing a pro and con of each one in your own words.

Which is not a reason for a decrease in aggregate demand? Group of answer choices 1....

Which is not a reason for a decrease in aggregate demand? Group of answer choices 1. Decrease in taxes 2. Increase in taxes 3..Decrease in income 4. Increase in interest rates

1. The supply of loanable funds ultimately depends on: Group of answer choices the Federal Reserve's...

1. The supply of loanable funds ultimately depends on: Group of answer choices the Federal Reserve's monetary and economic policy commercial banks' inclination to lend at prevailing interest rates the time preference for consumption the opportunities available to use the funds 2. The interest rates we observe in the economy differ from the risk-free rate because of Group of answer choices the real rate of interest. diversification. risk premiums. all the above

1.List conditions for a market to be efficient? Hint: Maximize consumer surplus plus producer surplus equal...

1.List conditions for a market to be efficient? Hint: Maximize consumer surplus plus producer surplus equal total society surplus is maximized equal society is happier. Start your answer with this hint. 2. This data is very similar to the data in chapter 9, power point slide 9. Without trade, PD = $2,500, Q = 300 In world markets, PW = $1200 Under free trade, how many TVs will the country import or export? Identify consumer surplus (CS), producer surplus (PS),...

1. The aggregate demand curve Group of answer choices a. is derived from equilibrium conditions in...

1. The aggregate demand curve Group of answer choices a. is derived from equilibrium conditions in the labor and money markets b. plots the interest rate as a function of output c. is the sum of an economy’s individual demand curves d. gives the equilibrium level of GDP corresponding to a given price level e. represents the relationship between prices and quantities of all goods produced in an economy 2. Everything else constant, who is least likely to lose from...

1. An increase in aggregate demand will increase Group of answer choices Both real output and...

1. An increase in aggregate demand will increase Group of answer choices Both real output and the price level The real domestic output and have no effect on the price level The price level and have no effect on real domestic output The price level and decrease the real domestic output 2. The aggregate supply curve shows: Group of answer choices The quantity of goods and services that will be produced at various price levels. The relative price of goods...

Subjects