To select: The option which correctly explains when the market for a good can be considered as efficient.

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Chapter 6, Problem 4MCQ

To determine

To select:

The option which correctly explains when the market for a good can be considered as efficient.

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What is meant by consumer surplus? a It is the total quantity of a good bought by a consumer divided by the price paid. b It is a measure of an individual consumer's utility from the consumption of a good. c It is the difference between a consumer's maximum willingness to pay and the price. d It is a measure of the total benefit to consumers from the purchase of a good.

Question 1 Suppose the demand and supply for eggs in a small economy are given by: QD=100-20P Qs=-20+40P Where, Qo and Qs are in thousand dozen of eggs and P is the price per dozen of eggs. a. b. Find the total surplus if only 50 thousand dozen eggs are produced and sold. Indicate the area of total surplus in a figure. Find the total surplus if 80 thousand dozen eggs are produced and sold. Indicate the area of total surplus in a figure. Suppose eggs can be imported to the domestic egg market and domestic consumers can buy any amount at $1.5 per dozen. d. Comparing to part a, compute the change in consumer surplus. e. For the change in consumer surplus in d, compute the change in consumer surplus for new consumers and the change in consumer surplus to initial consumers. Find the consumer surplus, producer surplus and total surplus at the market equilibrium. Draw a well-labeled figure to illustrate the surpluses. C.

If the demand curve for chocolate bars is downward sloping and the supply of it decreases, there is __ in consumer surplus; a. an increase, b. no change, c. it's impossible to tell what will happen to consumer surplus, d. a decrease