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- 1. Multiple Choice
The height of the supply curve is the marginal seller's cost.
True
False
- 2. Multiple Choice
Total surplus is the seller's cost minus the buyer's willingness to pay.
True
False
- 3. Multiple Choice
Producer surplus is the area above the supply curve and below the price.
True
False
- 4. Multiple Choice
In general, if a benevolent social planner wanted to maximize the total benefits received by buyers and sellers in a market, the planner should
choose a price below the market equilibrium price.
choose any price the planner wants because the losses to the sellers (buyers) from any change in price are exactly offset by the gains to the buyers (sellers).
choose a price above the market equilibrium price.
allow the market to seek equilibrium on its own.
- 5. Multiple Choice
Producer Surplus is the area
Below the price and above the supply curve
Under the supply curve
Between the supply and demand curves
Under the demand curve, and above the price
- 6. Multiple Choice
Gordon lists his old Lionel electric trains on eBay and sets a minimum acceptable price at $75. He received three bids after five days on eBay: $25, $50, and $75. He accepts the latter. His producer surplus is:
$0
$25
$50
$75
- 7. Multiple Choice
What letters represent total surplus if the current price of this good is at equilibrium
A + B + C + D + E + F
C + E
A + B + D + F
A + B + C + D + E + F+ G
G
- 8. Multiple Choice
Producer surplus is
Measured using the demand curve for a good
Always a negative number for sellers in a competitive market
The amount a seller is paid minus the cost of production/opportunity cost
The opportunity cost minus the cost of producing goods that go unsold
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