A consumer values a car at $525,00 . and a producer values the same car at $485,000 . If the transaction is completed at $510,000 . the transaction will generate:
a. No surplus
b. $25,00 . worth of seller surplus and unknown amount of buyer surplus
c. $15,00 . worth of buyer surplus and $25,00 . of seller surplus
d. $25,00 . worth of buyer surplus and unknown amount of seller surplus
c
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In the figure above, when the price of a CD is $8.00, total producer surplus from all the CDs will be
A) zero. B) greater than at $10.00 per CD. C) $20 million. D) $10 million.
Part of the surplus lost to market participants when a tax is imposed is:
A. transferred to others who are affected. B. transferred to the government in revenues. C. redistributed from seller to buyer. D. redistributed from buyer to seller.
Jeff runs a bakery that is famous for its handmade sweet buns. Suppose the elasticity of demand for sweet buns is equal to 0.21, then an increase in the price of the buns: a. will result in a decrease in the supply of sweet buns. b. will result in an increase in the demand for sweet buns
c. will result in a decrease in the total revenue earned by Jeff. d. will result in an increase in the total revenue earned by Jeff.
When the current price of a good is below the equilibrium price:
A. sellers will notice their inventories are growing. B. the price will tend to stay below the equilibrium price. C. buyers have an incentive to offer to pay sellers more than the current price. D. there will be excess supply.