Deck 7: 2: Sec 72 Mc Producer Surplus

Question 1

Caroline sharpens knives in her spare time for extra income.Buyers of her service are willing to pay $2.95 per knife for as many knives as Caroline is willing to sharpen.On a particular day,she is willing to sharpen the first knife for $2.00,the second knife for $2.25,the third knife for $2.75,and the fourth knife for $3.50.Assume Caroline is rational in deciding how many knives to sharpen.Her producer surplus is

A)$0.95.
B)$1.15.
C)$1.30.
D)$1.85.

Answer 1

A

Question 2

Cost is a measure of the

A)seller's willingness to sell.
B)seller's producer surplus.
C)producer shortage.
D)seller's willingness to buy.

Answer 2

A

Question 3

Justin builds fences for a living.Justin's out-of-pocket expenses (for wood,paint,etc. )plus the value that he places on his own time amount to his

A)producer surplus.
B)producer deficit.
C)cost of building fences.
D)profit.

Answer 3

D

Question 4

David tunes pianos in his spare time for extra income.Buyers of his service are willing to pay $135 per tuning.One particular week,David is willing to tune the first piano for $115,the second piano for $125,the third piano for $140,and the fourth piano for $175.Assume David is rational in deciding how many pianos to tune.His producer surplus is

A)$-15.
B)$20.
C)$30.
D)$75.

Question 5

A supply curve can be used to measure producer surplus because it reflects

A)the actions of sellers.
B)quantity supplied.
C)sellers' costs.
D)the amount that will be purchased by consumers in the market.

Question 6

Tom tunes pianos in his spare time for extra income.Buyers of his service are willing to pay $155 per tuning.One particular week,Tom is willing to tune the first piano for $120,the second piano for $125,the third piano for $140,and the fourth piano for $160.Assume Tom is rational in deciding how many pianos to tune.His producer surplus is

A)$95.
B)$80.
C)$75.
D)$60.

Question 7

Ronnie operates a lawn-care service.On each day,the cost of mowing the first lawn is $15,the cost of mowing the second lawn is $25,and the cost of mowing the third lawn is $40.His producer surplus on the first three lawns of the day is $100.If Ronnie charges all customers the same price for lawn mowing,that price is

A)$20.
B)$60.
C)$80.
D)$180.

Question 8

Producer surplus measures the

A)benefits to sellers of participating in a market.
B)costs to sellers of participating in a market.
C)price that buyers are willing to pay for sellers' output of a good or service.
D)benefit to sellers of producing a greater quantity of a good or service than buyers demand.

Question 9

Producer surplus is

A)measured using the demand curve for a good.
B)always a negative number for sellers in a competitive market.
C)the amount a seller is paid minus the cost of production.
D)the opportunity cost of production minus the cost of producing goods that go unsold.

Question 10

George produces cupcakes.His production cost is $10 per dozen.He sells the cupcakes for $16 per dozen.His producer surplus per dozen cupcakes is

A)$6.
B)$10.
C)$16.
D)$26.

Question 11

A seller's willingness to sell is

A)measured by the seller's cost of production.
B)related to her supply curve,just as a buyer's willingness to buy is related to his demand curve.
C)less than the price received if producer surplus is a positive number.
D)All of the above are correct.

Question 12

A seller's opportunity cost measures the

A)value of everything she must give up to produce a good.
B)amount she is paid for a good minus her cost of providing it.
C)consumer surplus.
D)out of pocket expenses to produce a good but not the value of her time.

Question 13

At Nick's Bakery,the cost to make a cheese danish is $1.50 per danish.As a result of selling ten danishes,Nick experiences a producer surplus in the amount of $20.Nick must be selling his danishes for

A)$2.00 each.
B)$0.50 each.
C)$3.50 each.
D)$5.00 each.

Question 14

Allen tutors in his spare time for extra income.Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor.On a particular day,he is willing to tutor the first hour for $10,the second hour for $18,the third hour for $28,and the fourth hour for $40.Assume Allen is rational in deciding how many hours to tutor.His producer surplus is

A)$40.
B)$64.
C)$12.
D)$56.

Question 15

If Martin sells a shirt for $40,and his producer surplus from the sale is $8,his cost must have been

A)$48.
B)$32.
C)$8.
D)$40.

Question 16

Kristi and Rebecca sell lemonade on the corner.It costs them 7 cents to make each cup.On a certain day,they sell 40 cups.Their producer surplus for that day amounts to $19.20.Kristi & Rebecca sold each cup for

A)31 cents.
B)38 cents.
C)45 cents.
D)55 cents.

Question 17

Kristi sells purses.Her cost is $35 per purse.On a certain day,she sells 12 purses,and her producer surplus for that day amounts to $180.Kristi sold each purse for

A)$65.
B)$50.
C)$45.
D)$53.

Question 18

A seller is willing to sell a product only if the seller receives a price that is at least as great as the

A)seller's producer surplus.
B)seller's cost of production.
C)seller's profit.
D)average willingness to pay of buyers of the product.

Question 19

Donald produces nails at a cost of $200 per ton.If he sells the nails for $350 per ton,his producer surplus per ton is

A)$150.
B)$200.
C)$350.
D)$550.

Question 20

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup.It costs them $0.10 to make each cup.On a certain day,their producer surplus is $20.How many cups did Kristi and Rebecca sell?

A)40.
B)200.
C)8.
D)50.

Question 21

Figure 7-9
Refer to Figure 7-9.If the price of the good is $14,then producer surplus is

A)$19.50.
B)$22.50.
C)$20.50.
D)$25.00.

Question 22

Figure 7-11
Refer to Figure 7-11.If the demand curve is D and the supply curve shifts from S' to S,what is the change in producer surplus?

A)Producer surplus increases by $625.
B)Producer surplus increases by $1,875.
C)Producer surplus decreases by $625.
D)Producer surplus decreases by $1,875.

Question 23

Figure 7-11
Refer to Figure 7-11.If the supply curve is S and the demand curve shifts from D to D',what is the increase in producer surplus to existing producers?

A)$625
B)$2,500
C)$3,125
D)$5,625

Question 24

Bill created a new software program he is willing to sell for $300.He sells his first copy and enjoys a producer surplus of $250.What is the price paid for the software?

A)$50.
B)$250.
C)$300.
D)$550.

Question 25

Bill created a new software program he is willing to sell for $200.He sells his first copy and enjoys a producer surplus of $150.What is the price paid for the software?

A)$50.
B)$150.
C)$200.
D)$350.

Question 26

At Nick's Bakery,the cost to make homemade chocolate cake is $4 per cake.As a result of selling five cakes,Nick experiences a producer surplus in the amount of $17.50.Nick must be selling his cakes for

A)$6.50 each.
B)$7.50 each.
C)$9.50 each.
D)$10.50 each.

Question 27

Donald produces nails at a cost of $350 per ton.If he sells the nails for $500 per ton,his producer surplus is

A)$150.
B)$350.
C)$500.
D)$850.

Question 28

Figure 7-12
Refer to Figure 7-12.If the equilibrium price is $350,what is the producer surplus?

A)$60,000
B)$15,000
C)$30,000
D)$70,000

Question 29

Figure 7-10
Refer to Figure 7-10.Which area represents the increase in producer surplus when the price rises from P1 to P2?

A)BCG
B)ACH
C)ABGD
D)AHGB

Question 30

Figure 7-9
Refer to Figure 7-9.If the price of the good is $9.50,then producer surplus is

A)$3.00.
B)$6.50.
C)$10.50.
D)$8.50.

Question 31

Figure 7-10
Refer to Figure 7-10.Which area represents producer surplus when the price is P1?

A)BCG
B)ACH
C)ABGD
D)DGH

Question 32

Figure 7-11
Refer to Figure 7-11.If the supply curve is S',the demand curve is D,and the equilibrium price is $150,what is the producer surplus?

A)$625
B)$1,250
C)$2,500
D)$5,000

Question 33

Figure 7-12
Refer to Figure 7-12.If the equilibrium price is $200,what is the producer surplus?

A)$7,500
B)$3,750
C)$10,000
D)$15,000

Question 34

Figure 7-11
Refer to Figure 7-11.If the supply curve is S and the demand curve shifts from D to D',what is the increase in producer surplus due to new producers entering the market?

A)$625
B)$2,500
C)$3,125
D)$5,625

Question 35

Figure 7-11
Refer to Figure 7-11.If the supply curve is S,the demand curve is D,and the equilibrium price is $100,what is the producer surplus?

A)$625
B)$1,250
C)$2,500
D)$5,000

Question 36

Figure 7-11
Refer to Figure 7-11.If the supply curve is S and the demand curve shifts from D to D',what is the change in producer surplus?

A)Producer surplus increases by $3,125.
B)Producer surplus increases by $5,625.
C)Producer surplus decreases by $3,125.
D)Producer surplus decreases by $5,625.

Question 37

Figure 7-10
Refer to Figure 7-10.Which area represents producer surplus when the price is P2?

A)BCG
B)ACH
C)ABGD
D)AHGB

Question 38

Figure 7-10
Refer to Figure 7-10.When the price rises from P1 to P2,which area represents the increase in producer surplus to existing producers?

A)BCG
B)ACH
C)DGH
D)ABGD

Question 39

Figure 7-10
Refer to Figure 7-10.Which area represents the increase in producer surplus when the price rises from P1 to P2 due to new producers entering the market?

A)BCG
B)ACH
C)DGH
D)AHGB

Question 40

Figure 7-9
Refer to Figure 7-9.If producer surplus is $19,then the price of the good is

A)$11.50.
B)$14.50.
C)$13.50.
D)$9.75.

Question 41

Figure 7-12
Refer to Figure 7-12.If the equilibrium price rises from $200 to $350,what is the producer surplus to new producers?

A)$15,000
B)$3,750
C)$7,500
D)$30,000

Question 42

Figure 7-14
Refer to Figure 7-14.At the equilibrium price,producer surplus is

A)$800.
B)$400.
C)$450.
D)$900.

Question 43

Figure 7-12
Refer to Figure 7-12.If the equilibrium price rises from $200 to $350,what is the additional producer surplus to initial producers?

A)$15,000
B)$3,750
C)$7,500
D)$30,000

Question 44

Figure 7-15
Refer to Figure 7-15.Area A represents

A)producer surplus to new producers entering the market as the result of an increase in price from P1 to P2.
B)the increase in consumer surplus that results from an upward-sloping supply curve.
C)the increase in total surplus when sellers are willing and able to increase supply from Q1 to Q2.
D)the increase in producer surplus to those producers already in the market when the price increases from P1 to P2.

Question 45

Figure 7-14
Refer to Figure 7-14.If the government imposes a price ceiling of $50 in this market,then producer surplus will decrease by

A)$325.
B)$100.
C)$300.
D)$200.

Question 46

Figure 7-13
Refer to Figure 7-13.If the equilibrium price is $60,what is the producer surplus?

A)$600
B)$1,200
C)$2,400
D)$4,800

Question 47

Figure 7-15
Refer to Figure 7-15.When the price is P1,producer surplus is

A)A.
B)C.
C)A+B.
D)C+D.

Question 48

Figure 7-13
Refer to Figure 7-13.If the equilibrium price rises from $60 to $120,what is the additional producer surplus to initial producers in the market?

A)$1,200
B)$2,400
C)$3,600
D)$4,800

Question 49

Figure 7-15
Refer to Figure 7-15.Area B represents

A)the combined profits of all producers when the price is P2.
B)the increase in producer surplus to all producers as the result of an increase in the price from P1 to P2.
C)producer surplus to new producers entering the market as the result of an increase in the price from P1 to P2.
D)that portion of the increase in producer surplus that is offset by a loss in consumer surplus when the price increases from P1 to P2.

Question 50

Figure 7-15
Refer to Figure 7-15.Suppose producer surplus is larger than C but smaller than A+B+C.The price of the good must be

A)lower than P1.
B)P1.
C)between P1 and P2.
D)higher than P2.

Question 51

Figure 7-16
Refer to Figure 7-16.If the price of the good is $300,then producer surplus amounts to

A)$100.
B)$200.
C)$300.
D)$400.

Question 52

Figure 7-15
Refer to Figure 7-15.When the price falls from P2 to P1,which of the following would not be true?

A)The sellers who still sell the good are worse off because they now receive less.
B)Some sellers leave the market because they are not willing to sell the good at the lower price.
C)The total cost of what is now sold by sellers is actually higher than it was before the decrease in the price.
D)Producer surplus would fall by area A + B.

Question 53

Figure 7-13
Refer to Figure 7-13.If the equilibrium price rises from $60 to $120,what is the producer surplus to new producers in the market?

A)$1,200
B)$2,400
C)$3,600
D)$4,800

Question 54

Figure 7-15
Refer to Figure 7-15.When the price rises from P1 to P2,which area represents the increase in producer surplus to existing producers?

A)A
B)A+B
C)A+B+C
D)G

Question 55

Figure 7-15
Refer to Figure 7-15.When the price rises from P1 to P2,which area represents the increase in producer surplus due to new producers entering the market?

A)A
B)B
C)A+B
D)G

Question 56

Figure 7-14
Refer to Figure 7-14.If the market price increases to $130 due to an increase in demand,then producer surplus is

A)$1,800.
B)$900.
C)$975.
D)$1,950.

Question 57

Figure 7-15
Refer to Figure 7-15.When the price falls from P2 to P1,producer surplus

A)decreases by an amount equal to C.
B)decreases by an amount equal to A+B.
C)decreases by an amount equal to A+C.
D)increases by an amount equal to A+B.

Question 58

Figure 7-15
Refer to Figure 7-15.When the price rises from P1 to P2,what area represents the increase in producer surplus?

A)A
B)A+B
C)A+B+C
D)G

Question 59

Figure 7-15
Refer to Figure 7-15.When the price is P2,producer surplus is

A)A.
B)A+C.
C)A+B+C.
D)D+G.

Question 60

Figure 7-14
Refer to Figure 7-14.If the government imposes a price ceiling of $50 in this market,then the new producer surplus will be

A)$200.
B)$100.
C)$125.
D)$250.

Question 61

Producer surplus is

A)represented on a graph by the area below the demand curve and above the supply curve.
B)the amount a seller is paid minus the cost of production.
C)also referred to as excess supply.
D)All of the above are correct.

Question 62

Suppose the demand for peanuts increases.What will happen to producer surplus in the market for peanuts?

A)It increases.
B)It decreases.
C)It remains unchanged.
D)It may increase,decrease,or remain unchanged.

Question 63

Figure 7-16
Refer to Figure 7-16.If the price of the good is $600,then

A)consumer surplus is $800.
B)consumer surplus is $900.
C)producer surplus is $900.
D)producer surplus is $1,000.

Question 64

Producer surplus directly measures

A)the well-being of sellers.
B)production costs.
C)excess demand.
D)unsold inventories.

Question 65

Producer surplus is the area

A)under the supply curve.
B)between the supply and demand curves.
C)below the price and above the supply curve.
D)under the demand curve and above the price.

Question 66

Figure 7-17
Refer to Figure 7-17.If the supply curve is S and the demand curve is D,what is total producer surplus at the equilibrium price?

A)$202.50
B)$405
C)$810
D)$1,215

Question 67

Figure 7-16
Refer to Figure 7-16.If the price of the good is $600,then producer surplus amounts to

A)$650.
B)$800.
C)$900.
D)$1,000.

Question 68

Figure 7-16
Refer to Figure 7-16.Suppose the price of the good is $450.Then,on the first unit of the good that is sold,producer surplus is

A)$250,and on the second unit of the good that is sold,producer surplus is $100.
B)$250,and on the second unit of the good that is sold,producer surplus is $150.
C)$350,and on the second unit of the good that is sold,producer surplus is $100.
D)$350,and on the second unit of the good that is sold,producer surplus is $150.

Question 69

Producer surplus is the

A)area under the supply curve to the left of the amount sold.
B)amount a seller is paid minus the cost of production.
C)area between the supply and demand curves,above the equilibrium price.
D)cost to sellers of participating in a market.

Question 70

Producer surplus directly measures

A)the well-being of society as a whole.
B)the well-being of buyers and sellers.
C)the well-being of sellers.
D)sellers' willingness to sell.

Question 71

Another way to think of the marginal seller is the seller who

A)will accept the lowest price of any seller in the market.
B)requires the highest price of any potential seller in the market.
C)would leave the market first if the price were any lower.
D)would leave the market last if the price falls.

Question 72

Producer surplus equals

A)Value to buyers - Amount paid by buyers.
B)Amount received by sellers - Costs of sellers.
C)Value to buyers - Costs of sellers.
D)Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers.

Question 73

The marginal seller is the seller

A)for whom the marginal cost of producing one more unit of output is the lowest among all sellers,and the marginal buyer is the buyer for whom the marginal benefit of one more unit of the good is the highest among all buyers.
B)who supplies the smallest quantity of the good among all sellers,and the marginal buyer is the buyer who demands the smallest quantity of the good among all buyers.
C)who would leave the market first if the price were any lower,and the marginal buyer is the buyer who would leave the market first if the price were any higher.
D)who has the largest producer surplus,and the marginal buyer is the buyer who has the largest consumer surplus.

Question 74

Figure 7-16
Refer to Figure 7-16.Producer surplus amounts to $300 if the price of the good is

A)$300.
B)$350.
C)$400.
D)$450.

Question 75

Figure 7-16
Refer to Figure 7-16.If the price of the good is $500,then producer surplus amounts to

A)$450.
B)$575.
C)$700.
D)$800.

Question 76

Figure 7-16
Refer to Figure 7-16.Suppose the price of the good is $400.Then,on the first unit of the good that is sold,producer surplus amounts to

A)$200.
B)$300.
C)$400.
D)$450.

Question 77

Figure 7-16
Refer to Figure 7-16.Sellers will be unwilling to sell more than

A)1 unit of the good if its price is below $200.
B)2 units of the good if its price is below $450.
C)3 units of the good if its price is below $700.
D)All of the above are correct.

Question 78

The marginal seller is the seller who

A)cannot compete with the other sellers in the market.
B)would leave the market first if the price were any lower.
C)can produce at the lowest cost.
D)has the largest producer surplus.

Question 79

Figure 7-17
Refer to Figure 7-17.If the demand curve is D and the supply curve shifts left from S to S',what is the change in producer surplus when comparing the new equilibrium with the original equilibrium?

A)Producer surplus increases by $225.
B)Producer surplus increases by $675.
C)Producer surplus decreases by $225.
D)Producer surplus decreases by $675.

Question 80

Figure 7-17
Refer to Figure 7-17.Suppose the market starts out in equilibrium with demand curve D and supply curve S.Next,suppose demand shifts left so as to decrease the quantity demanded by 20 units at every price.What is the change in producer surplus as a result of this demand shift?

A)$80
B)$160
C)$240
D)$320