Flashcards on Micro –
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Welfare economics is the study of how...
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the allocation of resources affects economic well being
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Which of the ten principles of economics does welfare economics explain more fully?
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markets are usually a good way to organize economic activity
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A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it....
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maximizes the combined welfare of buyers and sellers
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The particular price that results in quantity supplied being equal to quantity demanded is the best price because it....
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maximizes the combined welfare of buyers and sellers
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The maximum price that a buyer will pay for a good is called the...
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willingness to pay
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Suppose larry, moe and curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called...
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willingness to pay
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willingness to pay...
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measures the values that a buyer places on a good
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Consumer surplus is...
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the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
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consumer surplus is equal to the
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value to buyers- amount paid by buyers
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On a graph, the are below a demand curve and above the price measures...
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consumer surplus
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In a market, the marginal buyer is the buyer...
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who would be the first to leave the market if the price were any higher
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If the price of vanilla coke is $6.90, who will purchase the good?
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person will the higher willingness to pay.... ex. $8.50, $7.90
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If the market price is $5.50, the consumer surplus in the market will be...
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$4.50
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if a consumer places value of $20 on a particular good and if the price of the good is $25, then the...
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consumer does not purchase the good
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If the price of a good is $250 then the consumer surplus amount to....
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$50
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If the price of a good is $150, then consumer surplus amounts to....
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$150
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Who won the nobel prize in 2014?
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Jean Tirole
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Cost is a measure of the...
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sellers willingness to sell
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A supply curve can be used to measure producer surplus bc it reflects....
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sellers cost
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producer surplus is...
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the amount a seller is paid minus the cost of production
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a sellers willingness to sell is...
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all the above are correct
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ivana produces cookies. Her production cost is $6 per dozen. She sells the cookies for $8 per dozen. Her producer surplus per dozen cookies is...
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$2
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total surplus is...
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equal to producer surplus plus consumer surplus
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total surplus is equal to...
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value to buyers ‐ cost to sellers.
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total surplus is represented by the area...
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b/w the demand and supply curves up to the point of equilibrium
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which of the following equations is not valid?
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total surplus= value to sellers- cost of sellers
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Efficiency is attained when
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total surplus is maximized
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if an allocation of resources is efficient, then
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all potiental gains from the trade among buyers are sellers are being realized
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at equilibrium, consumer surplus is...
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$36
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at equilibrium producer surplus is
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$72
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at equilibrium total surplus is
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$108
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if 4 units of the good are produced and sold then
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marginal cost to sellers exceed the marginal value to buyers
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the "invisible hand" is
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a concept developed by adam smith to describe the virtues of free markets
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laissez-faire is a French expression which literally means
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allow them to do
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if the market price is $1000, then production surplus in the market is...
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$750
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If the market price is $900, the producer surplus in the market is...
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$550
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if the price of a good is $9.50 then the producer surplus is
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$10
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if the price of the good is $14 then the producer surplus is
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$25
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which area represents producer surplus when the price is P1?
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BCG
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which area represents producer surplus when the price is P2?
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ACH
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which are represents the increase in producer surplus when the price rises from P1 to P2?
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AHGB
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Which are represents consumer surplus at a price of P1?
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ABD
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Which area represents consumer surplus at a price of P2?
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ACG
