《西方经济学》习题答案—答案7.docVIP

SOLUTIONS TO TEXT PROBLEMS: Quick Quizzes 1. Figure 1 shows the demand curve for turkey. The price of turkey is P1 and the consumer surplus that results from that price is denoted CS. Consumer surplus measures buyers’ willingness to pay (measured by the demand curve) minus the amount the buyers actually pay. Figure 1 Figure 2 2. Figure 2 shows the supply curve for turkey. The price of turkey is P1 and the producer surplus that results from that price is denoted PS. Producer surplus measures the amount sellers are paid for a good minus the sellers’ cost (measured by the supply curve). Figure 3 3. Figure 3 shows the supply and demand for turkey. The price of turkey is P1, consumer surplus is CS, and producer surplus is PS. Producing more turkey would lower total surplus because the value to buyers would be less than the cost to sellers.  Questions for Review 1. Buyers willingness to pay, consumer surplus, and the demand curve are all closely related. The height of the demand curve represents the willingness to pay of the buyers. Consumer surplus is the area below the demand curve and above the price, which equals each buyers willingness to pay less the price of the good. 2. Sellers costs, producer surplus, and the supply curve are all closely related. The height of the supply curve represents the costs of the sellers. Producer surplus is the area below the price and above the supply curve, which equals the price minus each sellers costs. Figure 4 3. Figure 4 shows producer and consumer surplus in a supply-and-demand diagram. 4. An allocation of resources is efficient if it maximizes total surplus, the sum of consumer surplus and producer surplus. But efficiency may not be the only goal of economic policymakers; they may also be concerned about equity(the fairness of the distribution of well-being. 5. The invisible hand of the marketplace guides the self-interest of buyers and sellers into promoting general economic well-b