Bus 361 Week 4 Review Question Paper
Spring 2012
BA 361
Exam 4 Review Questions
National Welfare, Consumer, Producer and Total Surplus
Use the graph below to answer the next few questions:
Assume that the graph shows a perfectly competitive market. What is the consumer surplus?
F+B+E
Assume that the graph shows a perfectly competitive market. What is the producer surplus?
A+C+D
Assume that the graph shows a perfectly competitive market. What is the total surplus? A+C+D+F+B+E
Now assume that a monopoly is the sole supplier to the market. How does that change the surplus measures? Use the graph below.
Assume that the graph shows a monopoly. What is the consumer surplus?
F+E+A
Assume that the graph shows a monopoly. What is the producer surplus?
D
Assume that the graph shows a monopoly. What …show more content…
Without trade, what is the consumer surplus? Producer surplus? Total surplus?
2. Given the domestic and world price for Widgets, does Country Y have a comparative advantage or not? Should it import or export widgets? How many? (If Country Y were to open up to world trade, how many Widgets would domestic consumers purchase? How many Widgets would domestic producers sell?)
3. If Country Y were to open up to world trade, what would be the consumer surplus? Producer surplus? Total Surplus?
4. What is the change in total surplus if Country Y were to open up to world trade?
Consider the country EconLand. The market for shoes is shown below. PD is the domestic price of shoes, PW is the world price of shoes, and PT is the price of shoes in EconLand after a tariff. Use the information to answer the next several questions.
P ($)
A
Domestic Supply
PD 65
PT 55 PW 50
D I
450 500 600 700 750
B
C
E
F
G
H
J
Domestic Demand
Q (thousands)
5.
6.
7.
Assume that EconLand is closed – that is it does not trade. What is the equilibrium price for shoes and the equilibrium
National Welfare, Consumer, Producer and Total Surplus
Use the graph below to answer the next few questions:
Assume that the graph shows a perfectly competitive market. What is the consumer surplus?
F+B+E
Assume that the graph shows a perfectly competitive market. What is the producer surplus?
A+C+D
Assume that the graph shows a perfectly competitive market. What is the total surplus? A+C+D+F+B+E
Now assume that a monopoly is the sole supplier to the market. How does that change the surplus measures? Use the graph below.
Assume that the graph shows a monopoly. What is the consumer surplus?
F+E+A
Assume that the graph shows a monopoly. What is the producer surplus?
D
Assume that the graph shows a monopoly. What …show more content…
Without trade, what is the consumer surplus? Producer surplus? Total surplus?
2. Given the domestic and world price for Widgets, does Country Y have a comparative advantage or not? Should it import or export widgets? How many? (If Country Y were to open up to world trade, how many Widgets would domestic consumers purchase? How many Widgets would domestic producers sell?)
3. If Country Y were to open up to world trade, what would be the consumer surplus? Producer surplus? Total Surplus?
4. What is the change in total surplus if Country Y were to open up to world trade?
Consider the country EconLand. The market for shoes is shown below. PD is the domestic price of shoes, PW is the world price of shoes, and PT is the price of shoes in EconLand after a tariff. Use the information to answer the next several questions.
P ($)
A
Domestic Supply
PD 65
PT 55 PW 50
D I
450 500 600 700 750
B
C
E
F
G
H
J
Domestic Demand
Q (thousands)
5.
6.
7.
Assume that EconLand is closed – that is it does not trade. What is the equilibrium price for shoes and the equilibrium