MANKIW: PRINCIPLES OF MICROECONOMICS
8th Edition
ISBN: 9781337801775
Author: Mankiw
Publisher: CENGAGE L
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Question
Chapter 7, Problem 4CQQ
To determine
The impact of efficient allocation of resources.
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Check out a sample textbook solutionStudents have asked these similar questions
An efficient allocation of resources maximizesa. consumer surplus.b. producer surplus.c. consumer surplus plus producer surplus.d. consumer surplus minus producer surplus
When an economist refers to "an efficient allocation of resources," she typically means
is maximized.
Select one:
a. consumer surplus, but not producer surplus
b. producer surplus, but not consumer surplus
C. the sum of consumer and producer surplus
d. consumer surplus minus producer surplus
If the market demand for a product shifts to the right (parallel to the first demand curve), which of the following is correct?
A. producer surplus and consumer surplus both decrease.
B. producer surplus increases, consumer surplus decreases
C. producer surplus decreases, condumer surplus increases.
D. producer surplus and consumer surplus both increase
Chapter 7 Solutions
MANKIW: PRINCIPLES OF MICROECONOMICS
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- Why can total surplus never fall below zero in a market for goods and services?arrow_forward' surplus For each of the scenarios, calculate the surplus and indicate if it is a producer surplus or a consumer Alice is willing to spend $30 on a pair of jeans, and has a coupon for $10 off which she found online. She selects and purchases a $35 pair of jeans which cost $35 pre-discount Alice has a Alice's surplus: $ producer surplus. surplus consumer Nicole has a hockey puck from the 2010 Winter Olympic Games and puts it up for sale on eBay. She will only sell the puck if the winning bid is greater than or equal to $500. After bidding closes, the last bid stands at $50o Nicole has a Nicole's surplus: $ producer surplus. consumer surplusarrow_forwardFor each scenario, decide whether it results in a producer or consumer surplus. Then calculate the resulting surplus. Alice is willing to spend $30$30 on a pair of jeans and has a coupon for $10$10 off. She purchases a pair of jeans that costs $35$35 pre-discount. Alice receives a Alice's surplus: $ Jeff finds steak in the supermarket priced at$16$16 but that he would have been willing to pay $20$20 for. The butcher notices the meat is near the expiration date and gives him an extra 7575% off. Jeff receives a producer surplus. consumer surplus. Jeff's surplus: $ Nicole has a hockey puck from the 2018 Winter Olympic Games and puts it up for sale on eBay. She will only sell the puck if the winning bid is greater than or equal to $500$500. After the bidding closes, the last bid stands at $501$501. Nicole receives a Nicole's surplus: $arrow_forward
- Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither. Statement Consumer Surplus Producer Surplus Neither I sold a used laptop for $140 on eBay last week. This week, someone offered me $30 for it. Even though I was willing to pay up to $47 for a used textbook, I bought a used textbook for only $42. I sold a jersey sweater for $35, even though I was willing to go as low as $25 in order to sell it.arrow_forwardIdentify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither. Consumer Producer Statement Surplus Surplus Neither A local store was having a sale on sweaters, so I bought a jersey sweater for my brother. Even though I was willing to pay up to $80 for a watch, I bought a watch for only $71. I sold a used textbook for $52, even though I was willing to go as low as $42 in order to sell it.arrow_forwardWhen a market has a surplus, the quantity demanded is greater than quantity supplied. Select one: True Falsearrow_forward
- What is the term used to describe the situation where resources are allocated in a way that maximizes total surplus? A. Pareto efficiency B. Market equilibrium C. Social welfare D. Deadweight lossarrow_forwardSuppose the daily demand curve for gasoline is as provided in the accompanying graph. a. Calculate the consumer surplus in the market for gasoline if the market price is $3.50. Consumer surplus = $ ___________ million Now suppose the price decreases to $2.50 per gallon. Move the price line on the graph to reflect this change, then calculate the new consumer surplus. New consumer surplus = $________millionarrow_forwardHelp pleasearrow_forward
- Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither. Consumer Producer Surplus Surplus Neither Statement Even though I was willing to pay up to $120 for a used laptop, I bought a used laptop for only $115. I sold a watch for $61, even though I was willing to go as low as $55 in order to sell it. Even though I was willing to pay up to $67 for a used textbook and even though the seller was willing to go as low as $63 in order to sell it, we couldn't reach a deal because the government imposed a price floor of $76 on the sale of textbooks. O Oarrow_forwardGood X is produced in a competitive market using input A. Explain what would happen to the supply of good X in each of the following situations: a. The price of input A decreases. b. An excise tax of $3 is imposed on good X. c. An ad valorem tax of 7 percent is imposed on good X. d. A technological change reduces the cost of producing additional units of good X.arrow_forwardassume an initial market price of $5. identify the initial area of producer surplus (PS(sub 1) when the market price is $5. Next, assume that demand decreases and the market price falls to $4. draw new demand curve and then identify new areas of produce surplus (PS (sub 2)). Need help with graph Thank you Carolarrow_forward
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