Question

46. Producer surplus is the difference between the

A. price and the willingness to pay for the good.

B. willingness to pay for the good and the marginal cost of producing the good summed over the quantity sold.

C. marginal benefit of consuming the good and the marginal cost of producing the good summed over the quantity sold.

D. price and the marginal cost of producing the good summed over the quantity sold.

48. A deadweight loss is created

A. only if the last unit produced has a marginal social benefit greater than its marginal social cost.

B. if for the last unit produced, marginal social cost is greater than its marginal social benefit or if its marginal social benefit is greater than its marginal social cost.

C. only if the last unit produced has a marginal social cost greater than its marginal social benefit.

D. only if the last unit produced has a marginal social benefit equal to its marginal social cost.

52. Consider the market for wheat in America. The demand function is given by q_d= 20 – p, and the supply function by q_s= p – 10. The equilibrium price for wheat is ___________________.

A. Cannot be determined

B. $15

C. $30

D. $2

53. Consider the market for wheat in America. The demand function is given by q_d= 20 – p, and the supply function by q_s= p – 10. The equilibrium quantity fir wheat is _____________.

A.15 units

B. 2 units

C. 30 units

D. 5 units

54. Consider the market for wheat in America. The demand function is given by q_d= 20 – p, and the supply function by q_s= p – 10. What is the value of the consumers’ surplus at the equilibrium price?

A. $12.5

B. $25

C. Cannot be determined

D. $0

55. Consider the market for wheat in America. The demand function is given by q_d= 20 – p, and the supply function by q_s= p – 10. What is the value of the producers’ surplus at the equilibrium price?

A. $25

B. $12.5

C. Cannot be determined

D. $0

56. Consider the market for wheat in America. The demand function is given by q_d= 20 – p, and the supply function by q_s= p – 10. Suppose the government imposes a price floor of floor of $18 on this market. What is the value of the consumer's surplus given the price floor of $18?

A. $0

B. $2

C. $6

D. $4

Answer 1

46. The correct answer is D Price and the marginal cost of producing the good summed over the quantity sold.

Because producer surplus is the difference between market price and lowest price producer willing to accept. The lowest price is equal to marginal cost of producer.

52. The correct answer is B $15

Because equilibrium price determine when demand = supply. So 20 - P = P - 10

2P = 30 so P = 15

53. The correct answer is D. $5

Because equilibrium condition demand = supply

20 - P = P - 10 and we get P = 15 after solving this. Put P = 15 in demand equation so qd = 20 - 15 = 5

54. The correct answer is A $ 12.5

Consumer surplus = 1/2 ( P1 - P) × Q

Here P1 is the highest price which consumer ready to pay P is equilibrium price and Q is quantity.

qd = 20 - P put qd = 0 we get P( highest price ) = 20 and solve above P( equilibrium price) = 15 and Q = 5

So CS = 1/2 ( 20 - 15) × 5 = 12.5

55. The correct answer is B. 12.5

PS = 1/2 ( P - P2) × Q here P2 is lowest price producer ready to accept.

qs = p - 10 put qs = 0 so P (lowest price) = 10

PS = 1/2(15-10) 5 = 12.5

56. The correct answer is B. 2

Because qd = 20 - p when price floor is 18 the qunatity demand (qd ) = 20 - 18 = 2

Consumer surplus = 1/2 × ( P - Pf) ×Qd

P is maximum price = 20, Pf is price floor = 18 and Qd = 2 when price floor = 18

Consumer surplus = 1/2 ( 20 - 18)× 2 = 2