1 What is the price that maximizes total welfare? a. 3 b. 8 c. 20 d. 100 2. The

Question

1 What is the price that maximizes total welfare?

a. 3

b. 8

c. 20

d. 100

2. The individual willingness and ability to purchase this good at $17.00 gets the following in consumer surplus?

a. 800

b. 500

c. 300

d. 250

3. A company that produces the good for $7.00 gets the following in producer surplus?

a. 1

b. 2

c. 3

d. 7

4. What is the total consumer surplus in this market?

a. 1200

b. 900

c. 800

d. 600

5. A price ceiling is set at $6.00 results in

a. decrease consumer surplus

b. increase producer surplus

c. transfers some consumer surplus to producers.

d. transfers some producer surplus to consumers.

Explanation / Answer

1.Ans: b) 8

Explanation :

At this price , both consumer and producer surplus is maximum.

2. Ans: c) 300

Explanation :

Consumer surplus =( $20 - $17 )* 100

= 300

3.Ans: a) 1

Explanation:

$8- $7 = $1

4. Ans: a) 1200

Explanation:

C.S = ( $20 -$8 ) * 100

= $12 *100

= $1200

5. Ans: d) Transfers some producer surplus to consumers .

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