Suppose favorable weather provides increases apple production. As a result, consumer surplus in the market for orange juice decreases because the supply curve of apple juice shifted to the The particular price that results in quantity supplied being equal to quantity demanded is the best price for consumers because it maximizes consumer surplus. The willingness to pay is the maximum amount that a buyer will pay for a goo
Suppose favorable weather provides increases apple production. As a result, consumer surplus in the market for orange juice decreases because the supply curve of apple juice shifted to the The particular price that results in quantity supplied being equal to quantity demanded is the best price for consumers because it maximizes consumer surplus. The willingness to pay is the maximum amount that a buyer will pay for a goo
Chapter7: Market Efficiency And Welfare
Section: Chapter Questions
Problem 2P
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which statements are true
- Suppose favorable weather provides increases apple production. As a result,
consumer surplus in the market for orange juice decreases because the supply curve of apple juice shifted to the - The particular price that results in quantity supplied being equal to quantity demanded is the best price for consumers because it maximizes consumer surplus.
- The willingness to pay is the maximum amount that a buyer will pay for a good.
- Dora visits a clothing store to buy new dress suit. She is willing to pay $100 for the suit, but buys one on sale for $75. Dora's consumer surplus from the purchase is $75.
- If production technology improves in the shoe industry, consumer surplus for shoe buyers will increase because the rightward shift of supply caused the price to fall.
- Suppose that the
equilibrium price in the market for heating oil is $3.50 per gallon. If a law imposed aprice ceiling on the market and reduced the maximum legal price for heating oil to $3.00 per gallon then any possible decrease inproducer surplus would be smaller than the gain of consumer surplus. - A result of welfare economics is that the price of a product is considered to be the best price because it maximizes total surplus.
- A seller would be willing to sell a product only if the price received is less than the cost of production.
- Suppose that the equilibrium wage in the labor market is $8.00 per hour of labor. If a law increased the minimum wage from $7.25 to $10.00 per hour of labor, any possible increase in producer surplus would be smaller than the loss of consumer surplus.
- In a market, for any given quantity, the price on a demand curve represents the marginal buyer's willingness to pay.
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