Download Problem Set 5

Problem Set 5
Econ 202 (03, 04, and 05) Spring 2003
(Dr. Tin-Chun Lin)
1. If a consumer is willing and able to pay $200 for a particular good but only has to pay $140,
(A)
(B)
(C)
(D)
The consumer surplus is $340.
The consumer surplus is $60.
The willingness to pay is $140.
The consumer surplus is $140.
(Answer: (B) )
2. Jared values an hour fishing at $100. His opportunity cost of fishing for an hour is $40. Jared's
consumer surplus from one hour fishing is
(A) $100.
(B) $60.
(C) $40.
(Answer: (B))
(D) Impossible to determine, since Jared didn't actually purchase the hour of fishing time.
3. At any quantity, the price given by the demand curve
(A) Shows the willingness to pay of the marginal buyer.
(B) Represents the value placed on the good of the buyer who will leave the market first should the
price rise.
(C) Both (A) and (B) are correct.
(D) Neither (A) nor (B) is correct.
(Answer: ( C ))
P
A
P2
B
C
D
E
Q1
P1
Q2
Demand
Q
4. Refer to the graph shown. When the price is P1, consumer surplus is
(A)
(B)
(C)
(D)
(E)
A
A+B
A+B+C
A+B+D
A+B+C+D+E
5. Refer to the graph shown. At the higher price, consumer surplus is
(A) A+B+C+D+E
(B) A + B+D
(C) A + B + C
(D) A + B
(E) A
(Answer: ( C ))
(Answer (E))
6. Refer to the graph shown. When the price rises from P1 to P2, consumer surplus
(A) Increases by an amount equal to A.
(B) Decreases by an amount equal to B + C.
(C) Increases by an amount equal to B + C.
(D) Decreases by an amount equal to C.
(Answer: (B))
7. Refer to the graph shown. When the price rises from P1 to P2,
(A) The buyers who still buy the good are worse off because they now pay more.
(B) Some buyers leave the market because they are not willing to buy the good at the higher price.
(C) The total value of what is now purchased to buyers is actually higher.
(D) All of the above are correct.
(E) Both (a) and (b) are correct.
(Answer: (E))
The Costs of Five Possible Sellers
Seller
Hillary
Doug
Carla
Chris
Richard
Cost
$1500
$1200
$1000
$750
$500
8. Refer to the table above. If the market price is $1,000, the producer surplus in the market would be
(A) $700.
(B) $750.
(C) $2,250.
(D) $3,700.
(Answer: (B))
9.
Refer to the table above. If the market price is $1,000, the total cost in the market would be
(A) $3,000.
(B) $2,250.
(C) $3,700.
(D) $700.
(E) $750.
(Answer: (B))
P
S
P1
A
P2
B
D
C
Q
Q2
Q1
10. Refer to the graph shown. When the price falls from P1 to P2,
(A)
(B)
(C)
(D)
(E)
The sellers who still sell the good are worse off because they now receive less.
Some sellers leave the market because they are not willing to sell the good at the lower price.
The total cost of what is now sold by sellers is actually higher.
All of the above are correct.
Both (a) and (b) are correct.
(Answer: (E))