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01:220:102 Chapter Notes - Chapter 4: Economic Surplus, Demand Curve, Efficient-Market Hypothesis

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School
Rutgers University
Department
Economic
Course
01:220:102
Professor
Alex Hohmann

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01:220:102 Full Course Notes
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01:220:102 Full Course Notes
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Document Summary

Intro to microecon 4. 1: consumer surplus and the demand curve. Willingness to pay the maximum price at which the consumer should buy that good. Individual consumer surplus - the net gain to an individual buyer from the purchase of a good. It is equal to the difference between the buyer"s willingness to pay and the price paid. Total consumer surplus - the sum of the individual consumer surpluses of all the buyers of a good in a market. Consumer surplus - often used to refer both to individual and to total consumer surplus. The total consumer surplus generated by purchases of a good at a given price is equal to the area below the demand curve but above that price. Intro to microecon 4. 2: producer surplus and the supply curve. Cost - the lowest price at which the seller is willing to sell a good. Individual producer surplus - the net gain to an individual seller from selling a good.

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Related Questions

The total surplus in a market is equal to
 
a. amount received by sellers - costs of sellers.
 
b. willingness to pay - price.
 
c. consumer surplus + producer surplus.
 
d. value to buyers - amount paid by buyers.

When a buyer’s willingness to pay for a good is equal to the price of the good, the

a.buyer’s consumer surplus for that good is maximized.

b.buyer will buy as much of the good as the buyer’s budget allows.

c.price of the good exceeds the value that the buyer places on the good.

d.buyer is indifferent between buying the good and not buying it.

True or False:

1. Consumer surplus is the buyer's willingness-to-pay minus the seller's opportunity cost of production.

2. If your willingness-to-pay for a hamburger is $3 and you paid $2, then your consumer surplus is $5.00

3. The opportunity cost of production for a seller includes the implicit cost of the seller's time.

4. The height of the supply curve at a selected quantity is the seller's opportunity cost of producing that marginal unit.

5. Total surplus (total well-being) is the seller's cost of production minus the buyer's willingness-to-pay.

6. The competitive market equilibrium outcome is efficient because it allocates the produced output to the buyers who place the highest value on the good

7. Producer surplus is the area above the supply curve and below the price.

8. The competitive market equilibrium outcome maximizes total surplus (total well-being)

9. Producing and consuming more of a good will always increase the total surplus(total well-being).