Question

(47)Which of the following is another name for producers’ surplus in economic theory?

(a)Trade-off

(b)Correlation

(c)Savings

(d)Economic rent

(48)Suppose the willingness to pay price of consumers in the market for almond milk is $3.99 per quart and the market price that they pay is $5.75 per quart, then consumer surplus is going to be:

(a)Positive  

(b)Negative

(c)Zero

(d)Any of the above

(49)There is a……………………relationship between the change in the price of a good and the change in……………….in a market.

(a)Direct, consumer surplus

(b)Negative, producer surplus

(c)Negative, consumer surplus

(d)Inverse, producer surplus

(50)Suppose the price that wheat farmers receive for a bushel of wheat in a market is $8.50 per bushel and the minimum price they will accept to produce that bushel of wheat is $4.75, would these wheat farmers experience an improvement in their welfare?

(a)Yes

(b)No

(c)More information needed to make a decision

(d)None of the above

(51)Suppose the initial area of a farmer’s surplus is calculated to be $185 and a subsequent calculation of the farmer’s surplus is $243, the net difference in the farmer’s surplus is:

(a)$85

(b)$58

(c)$95

(d)None of the above

(52)Which of the following statements is false?

The difference between the monetary values of the farmer’s surplus referenced in Q#51 is a_____________________

(a)Measure of an improvement in the farmer’s welfare

(b)Signal that the farmer’s market price has increased

(c)Signal that the farmer’s market price has decreased

(d)All of the above

(53)Given ceteris paribus, would consumer surplus be expected to rise or fall for the consumers in the market referenced in Q#52 above?

(a)Rise, then fall

(b)Fall then rise

(c)Fall

(d)Rise

(54)Producers’ surplus is the difference between the________________________ for a good and the _______________________ for a good.

(a)Market price, maximum price

(b)Minimum acceptable price, maximum price

(c)Market price, minimum acceptable price

(d)Willingness to pay price, actual price

Answer 1

Ans:

47) Option D

Economic rent

Explanation

Economic rent is any payment for the factors of production which is over and above the amount expected by its owner. It is the difference between the amount received and the amount expected to be received.

48) Option B

Negative

Explanation

Consumer surplus is the difference between what consumers expect to pay and what they actually pay.

Consumer surplus = $3.99 per quart - $5.75 per quart

                              = -$1.76 per quart