Author: Anonymous

The sum of consumers’ surplus and producers’ surplus is not maximized at equilibrium.

Table 3-1Units of Good XMaximum Buying PriceMinimum Selling PriceResult1st$12$6(A)2nd117(B)3rd108(C)4th99(D)5th810(E)6th711(F)​Refer to Table 3-1. Fill in blanks (E) and (F) respectively with “Exchange” or “No Exchange”to indicate whether or not exchange would take place at the given prices.

Figure 4-7​​​​​Refer to Figure 4-7. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What has happened to the consumers’ surplus as a result of the imposition of the price floor?

If Max’s demand for hot dogs rises as his income rises, then for Max hot dogs are

Table 3-5Price of Good XQuantitySuppliedQuantityDemanded$204002601936029018310310172303501613040015  70450​Refer to Table 3-5. At a price of $16, the quantity demanded of good X is ____________ than the quantity supplied of good X, and economists would use this information to predict that the price of good X would soon ______________.  This would push the price __________ the equilibrium price.

Figure 2-5​​​Refer to Figure 2-5. Given available resources and technology, this economy can produce 50,000 television sets and 40,000 fax machines only if it chooses to produce at point

Price ceilings sometimes result in some buyers and sellers purchasing the good at prohibited prices.

Suppose that the price of butter is $3 per pound and the price of margarine is $2 per pound.  If the price of butter rises to $3.90 and the price of margarine rises to $2.20, then the absolute price of butter has _______________ and the relative price of butter has _______________.

Exhibit 4-3 Refer to Exhibit 4-3. Which of the following is true?

If the minimum wage law sets a price floor that is below the equilibrium wage in the unskilled labor market, the minimum wage will create a shortage of unskilled labor.