Question

(55)If Evadney’s willingness to pay price for a detective novel is $50 but she pays $30 for a novel, the difference between the indicated prices represents her:

(a)Producer surplus

(b)Willingness to pay price

(c)Economic loss

(d)None of the above

(56)What would be the area of Evadney’s consumer surplus if she now buys thirty (30) detective novels given the same prices referenced in the market in Q#55 above?

(a)$600                                  

(b)$560

(c)$300

(d)$788

(57)Which of the following statements is true?

Suppose a government in a city imposes a binding price ceiling on a market for strawberries, it would be reasonable to expect:

(a)A decrease in consumers’ surplus

(b)An increase in consumer’s surplus

(c)An increase in producers’ surplus

(d)None of the above

(58)Which of the following statements is false?

Suppose given ceteris paribus, a government in a county imposes a do nothing price in a market for metro tickets, it would be plausible to expect that:

(a)Consumer surplus would rise

(b)Producer surplus to fall

(c)Consumer surplus to fall

(d)All of the above

(59)Elasticity measures how “responsive” consumers are by measuring their change in______________ as the price of the product changes.

(a)Income

(b)Quantity demanded

(c)Income

(d)Attitude

(60)Within different price ranges along a linear demand curve, elasticity is:

(a)Equal

(b)Constant

(c)Different

(d)The same as slope

Answer 1

Answers are as follows

(55) d. nono of the above

(56) a. $600

(57) b. An increase in sonsumers' surplus

(58) d. All of the above

(59) b. Quantity demanded

(60) c. Different

Explanation :

55) The difference between the price, consumer is willing to pay and the actual price he pays is called Consumr's surplus .

56) the price she is willing to pay is 50$

The actual price she pays is 30$

She buys 30 units

So the difference is 50* 30 - 30*30= 600$

57) Govt. Imposes binding price ceiling to keep the price of a good to a required level and that is below the the equilibrium point, so this reduces the producer's surplus but increases consumer's surplus.

58)a do nothing price won't effect them.

59) Elasticity is the consumer's responsiveness, expressed by changing the demand to the change in the price for a good or service.

60) The linear curve may have a constant slope but the elasticity is different at different points along the curve