1972 Consumers, Producers, and the Efficiency of Markets
Problems
1. What do economists call the highest amount a consumer will pay to purchase a good?
2. If John’s willingness to pay for a good is $20 and the price of the good is $15, how much is John’s
consumer surplus
from purchasing the good?
Table 7-18
The following table shows the willingness to pay for a good for the only four consumers in a
market.
Consumer
Willingness to Pay
A
$25
B
$40
C
$15
D
$30
3. Refer to Table 7-18. If the price of the good is $20, how many units will be demanded?
Consumers, Producers, and the Efficiency of Markets 1973
4. Refer to Table 7-18. If the price of the good is $20, how much is the total consumer surplus?
Scenario 7-1
Suppose market demand is given by the equation
5. Refer to Scenario 7-1. If the market equilibrium price is $10, how much is total consumer surplus
in this market?
6. Refer to Scenario 7-1. If the market equilibrium price rises from $10 to $15, what is the change
in total consumer surplus in the market?
1974 Consumers, Producers, and the Efficiency of Markets
7. Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, what is the change in
total consumer surplus in the market?
8. Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, how much additional
consumer surplus do consumers initially in the market at the $10 price receive?
Consumers, Producers, and the Efficiency of Markets 1975
9. Refer to Scenario 7-1. If the market equilibrium price falls from $10 to $5, how much consumer
surplus do consumers entering the market after the price drop receive?
Figure 7-30
10. Refer to Figure 7-30. If the market equilibrium price is $120, how much is total consumer
surplus?
1976 Consumers, Producers, and the Efficiency of Markets
11. Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the
change in total consumer surplus in the market?
12. Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much is the
increase in consumer surplus to the consumers who were initially in the market at the $120 price?
13. Refer to Figure 7-30. If the market equilibrium price falls from $120 to $80, how much
consumer surplus do consumers entering the market after the price drop receive?
Consumers, Producers, and the Efficiency of Markets 1977
14. Suppose John’s cost for performing some carpentry work is $120. If John is paid $200 for the
carpentry work, what is his producer surplus?
Table 7-19
The following table shows the cost of producing a good for the only four producers in a market.
Producer
Cost
W
$40
X
$30
Y
$20
Z
$10
15. Refer to Table 7-19. If the market price is $28, which producers will supply units in the market?
16. Refer to Table 7-19. If the market equilibrium price is $28, what is total producer surplus in the
market?
1978 Consumers, Producers, and the Efficiency of Markets
17. Refer to Table 7-19. If these four producers bid in an auction to supply one unit to a consumer,
at what price will the good be sold?
Figure 7-31
18. Refer to Figure 7-31. If the market equilibrium price is $25, how much is total producer surplus
in this market?
Consumers, Producers, and the Efficiency of Markets 1979
19. Refer to Figure 7-31. If the market equilibrium price is $35, how much is total producer surplus
in this market?
20. Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the
increase in producer surplus to the producers supplying units at the initial $25 price?
21. Refer to Figure 7-31. If the market equilibrium price rises from $25 to $35, how much is the
producer surplus for the producers entering the market after the price increase?
1980 Consumers, Producers, and the Efficiency of Markets
Table 7-20
22. Refer to Table 7-20. How much is total consumer surplus at the equilibrium price in this
market?
23. Refer to Table 7-20. How much is total producer surplus at the equilibrium price in this market?
24. Refer to Table 7-20. How much is total surplus at the equilibrium price in this market?
Buyer
Willingness to Pay ($)
Seller
Cost
($)
A
15
W
10
B
30
X
20
C
45
Y
30
D
60
Z
40
Consumers, Producers, and the Efficiency of Markets 1981
Figure 7-32
25. Refer to Figure 7-32. How much are consumer surplus, producer surplus, and total surplus at
the market equilibrium price?
26. Refer to Figure 7-32. At what price will total surplus be maximized in this market?
1982 Consumers, Producers, and the Efficiency of Markets
27. Refer to Figure 7-32. If the government imposed a price floor at $35 in this market, how much
is consumer surplus?
28. Refer to Figure 7–32. If the government imposed a price ceiling at $20 in this market, how
much are consumer surplus, producer surplus, and total surplus?
Figure 7-33
Consumers, Producers, and the Efficiency of Markets 1983
29. Refer to Figure 7-33. How much is total consumer surplus in this market at the equilibrium
price?
30. Refer to Figure 7-33. How much is total producer surplus in this market at the equilibrium
price?
31. Refer to Figure 7-33. How much is total surplus in this market at the equilibrium price?
1984 Consumers, Producers, and the Efficiency of Markets
32. Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer
units at every price.
How much is total consumer surplus in this market at the new equilibrium price?
33. Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer
units at every price.
How much is total producer surplus in this market at the new equilibrium price?
34. Refer to Figure 7-33. Suppose demand shifts such that consumers wish to purchase 12 fewer
units at every price.
How much is total surplus in this market at the new equilibrium price?
Consumers, Producers, and the Efficiency of Markets 1985
Figure 7-34
35. Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this
market. With the price floor, how much is total consumer surplus?
36. Refer to Figure 7-34. Suppose the government imposes a price floor at $10 per unit in this
market. With the price floor, how much is total producer surplus assuming those producers with
the lowest cost are the ones who supply the market?
1986 Consumers, Producers, and the Efficiency of Markets
37. Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the
government removed the price floor, by how much would total consumer surplus increase?
38. Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the
government removed the price floor, by how much would total consumer surplus increase for
those consumers who were purchasing the good when the price floor was in place?
39. Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the
government removed the price floor, by how much would total consumer surplus increase for
those consumers who enter the market after the price floor is removed?
Consumers, Producers, and the Efficiency of Markets 1987
40. Refer to Figure 7-34. Suppose there is initially a price floor set at $10 in this market. If the
government removed the price floor, by how much would total producer surplus change, assuming
the producers with the lowest cost were the ones supplying the market when the price floor was in
place?
41. Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. How
much is total producer surplus with the price ceiling in place?
42. Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the
government removed the price ceiling, by how much would total producer surplus change?
1988 Consumers, Producers, and the Efficiency of Markets
43. Refer to Figure 7-34. Suppose there is initially a price ceiling set at $4 in this market. If the
government removed the price ceiling, by how much would total producer surplus increase for
those producers entering the market after the price ceiling is removed?
Scenario 7-2
Suppose market demand and market supply are given by the equations:
44. Refer to Scenario 7-2. How much is total consumer surplus at the equilibrium price in this
market?
Consumers, Producers, and the Efficiency of Markets 1989
45. Refer to Scenario 7-2. How much is total producer surplus at the equilibrium price in this
market?
46. Refer to Scenario 7-2. How much is total surplus at the equilibrium price in this market?
47. Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to
By how much does total consumer surplus increase as a result of this supply shift?
1990 Consumers, Producers, and the Efficiency of Markets
48. Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to
By how much does total consumer surplus increase for those consumers who were already willing
to purchase the good with the original supply curve?
49. Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to
How much total consumer surplus goes to new consumers who enter the market after the supply
curve shifts?
50. Refer to Scenario 7-2. Suppose a reduction in input prices shifts the market supply curve to
By how much does total producer surplus increase as a result of this supply shift?