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Suppose a market has only one seller and only one buyer of a good in the market. The buyer is willing to pay $50 for the good and the seller is willing to accept $15. The market price of the good is determined at $30. If they trade, the social surplus will be ________.
A) $15
B) $35
C) $45
D) $65
22) For social surplus to be maximized, the ________ buyers are actually making a purchase and the ________ sellers are selling the products.
A) lowest-value; highest-cost
B) highest-value; lowest-cost
C) highest-value; highest-cost
D) lowest-value; lowest-value
23) The total surplus in a market is represented by:
A) the area between the demand curve and the market price line.
B) the area between the supply curve and the market price line.
C) the area between the demand and supply curves and the price axis.
D) the area between the demand curve and the horizontal axis.
24) Jack is a prospective buyer of a commodity that Jill is offering to sell. Social surplus in this scenario can be maximized:
A) when only Jack is optimizing.
B) when only Jill is optimizing.
C) when both Jack and Jill are optimizing.
D) when neither Jack nor Jill is optimizing.
The following table displays the reservation values of buyers and sellers in the market for notebooks, where each one either wants to buy or sell one notebook.
|
Buyers |
Reservation Value of Buyers ($) |
Sellers |
Reservation Value of Sellers ($) |
|
1 |
7 |
1 |
1 |
|
2 |
6 |
2 |
2 |
|
3 |
5 |
3 |
3 |
|
4 |
4 |
4 |
4 |
|
5 |
3 |
5 |
5 |
|
6 |
2 |
6 |
6 |
|
7 |
1 |
7 |
7 |
25) Refer to the table above. If the market for notebooks is perfectly competitive, the equilibrium price is:
A) $2.
B) $3.
C) $4.
D) $5.
26) Refer to the table above. If the market for notebooks is perfectly competitive, the equilibrium quantity is:
A) 2 units.
B) 3 units.
C) 4 units.
D) 5 units.
27) Refer to the table above. If the market is perfectly competitive, what is Buyer 3's consumer surplus?
A) $0
B) -$1
C) $1
D) $2
28) Refer to the table above. What is Seller 3's producer surplus?
A) $1
B) $2
C) $3
D) $4
29) Refer to the table above. If only the two highest-value buyers and the two least-cost sellers engage in trade, what is the social surplus?
A) $6
B) $10
C) $12
D) $20
30) Refer to the table above. If the six highest-value buyers and the six least-cost sellers engage in trade, what is the social surplus?
A) $6
B) $8
C) $10
D) $12
31) Refer to the table above. When the price is ________ and the quantity is ________, social surplus is maximized.
A) $8; 5 units
B) $6; 4 units
C) $4; 4 units
D) $2; 8 units
32) Refer to the table above. Maximum social surplus is:
A) $10.
B) $12.
C) $14.
D) $16.
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