If equilibrium is achieved in a competitive market, O A. the deadweight loss will equal the sum of consumer surplus and producer surplus. OB. the deadweight loss be the same as the opportunity cost of the last unit of output sold. OC. there will be no deadweight loss. D. the deadweight loss will be maximized.

7. Producer surplus for an individual and a market Suppose the market for macaroons is perfectly competitive, so sellers take the market price as given. Musashi manages a bakery that offers. macaroons for sale. The following graph plots Musashi's weekly supply curve (orange line). Point A represents a point along his supply curve. The price of macaroons is $2.25 per macaroon, which is given by the black horizontal line. PRICE (Dollars per macaroon) 9.00 8.25 7.50 + 6.75 6.00 + 5.25 4.50 3.75 3.00 - 2.25 1.50 0.75 + 0 0 Price Supply Musashi's Weekly Supply 6, 1.5 * A 2 4 6 10 12 14 16 18 QUANTITY (Macaroons) 8 20 22 24 ? Using the previous graph, you can determine that Musashi is willing to supply his 6th weekly macaroon for $ macaroon, the producer surplus earned from supplying the 6th macaroon is $ Since he receives $2.25 per Suppose the price of macaroons were to rise to $3.00 per macaroon. At this higher price, Musashi would receive a producer surplus of $ from the 6th macaroon he…

The above reflects the short-run supply and demand for jelly... which is a normal good. Which graph best captures the following: a) The price of peanut butter rises (peanut butter and jelly sandwiches are VERY popular) b) Government begins to subsidize the production of jelly Supporting Materials Graph 5 Price Price O Graph 7 O None of the above. O Graph 6 • Graph 8 Q₁ ? Q₂ Graph 7 O Granh 5 Q₁? Q₂ Si 52 Quantity 5₂ Si Quantity Price P₁?P₂ Price P₁?P₂ ------- Graph 6 52 Graph 8 D₂ Q₁ Quantity Si Si D₁ 52 D₂ Quantity

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PRICE 5. Market efficiency and market failure The following graph shows equilibrium in a free market, with equilibrium quantity of Qu- QUANTITY Supply Demand (?) For any level of output equal to Q, a buyer values a unit of goods in this market the unit will cost a saler Suppose now that an individual firm that produces goods in this market has the power to influence market price, leading to an outcome different from the free market equilibrium illustrated in the previous graph. This is an example of ▼ due to

QUESTION 1 When there is a technological advance in the cheese industry, consumer surplus in that market will Ⓒ a not change, since technology affects producers and not consumers. Ob. Increase. O c.not change, since consumers' willingness to pay is unaffected by the technological advance. Od. Decrease.

A shift to the LEFT of the demand curve (due a decrease in in expected price of the good) results in Oa No change in producer surplus Ob. Increase in the consumer surplus OC. A negative consumer surplus Od. Decrease in the consumer surplus

Consider a market in which supply and demand are both unit elastic at the equilibrium (equals 1 in absolute value). Which of the following statements is true? a. Consumer and producer surplus are equal. O b. None of the other answers are correct. O c. Consumer surplus is larger than producer surplus. O d. Producer surplus is larger than consumer surplus.

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Draw supply and demand curves. Now suppose both curves shifted. Illustrate a case for which market equilibrium price is higher and quantity is lower after the shifts of the curves.