曼昆微观经济学课后练习英文答案(第七章)

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1、7CONSUMERS, PRODUCERS, AND THE EFFICIENCY OF MARKETSrketsWHATS NEW IN THE SIXTH EDITION:There are no major changes to this chapter.LEARNING OBJECTIVES:By the end of this chapter, students should understand:the link between buyers willingness to pay for a good and the demand curve.how to define and m

2、easure consumer surplus.the link between sellers costs of producing a good and the supply curve.how to define and measure producer surplus.that the equilibrium of supply and demand maximizes total surplus in a market.CONTEXT AND PURPOSE:Chapter 7 is the first chapter in a three-chapter sequence on w

3、elfare economics and market efficiency. Chapter 7 employs the supply and demand model to develop consumer surplus and producer surplus as a measure of welfare and market efficiency. These concepts are then utilized in Chapters 8 and 9 to determine the winners and losers from taxation and restriction

4、s on international trade.The purpose of Chapter 7 is to develop welfare economicsthe study of how the allocation of resources affects economic well-being. Chapters 4 through 6 employed supply and demand in a positive framework, which focused on the question, “What is the equilibrium price and quanti

5、ty in a market?” This chapter now addresses the normative question, “Is the equilibrium price and quantity in a market the best possible solution to the resource allocation problem, or is it simply the price and quantity that balance supply and demand?” Students will discover that under most circums

6、tances the equilibrium price and quantity is also the one that maximizes welfare.精选文档KEY POINTS:精选文档Consumer surplus equals buyers willingness to pay for a good minus the amount they actually pay for it, and it measures the benefit buyers get from participating in a market. Consumer surplus can be c

7、omputed by finding the area below the demand curve and above the price.Producer surplus equals the amount sellers receive for their goods minus their costs of production, and it measures the benefit sellers get from participating in a market. Producer surplus can be computed by finding the area belo

8、w the price and above the supply curve.An allocation of resources that maximizes the sum of consumer and producer surplus is said to be efficient. Policymakers are often concerned with the efficiency, as well as the equality, of economic outcomes.The equilibrium of supply and demand maximizes the su

9、m of consumer and producer surplus. That is, the invisible hand of the marketplace leads buyers and sellers to allocate resources efficiently.Markets do not allocate resources efficiently in the presence of market failures such as market power or externalities.CHAPTER OUTLINE:I.Definition of welfare

10、 economics: the study of how the allocation of resources affects economic well-being.Students often are confused by the use of the word “welfare.” Remind them that we are talking about social well-being and not public assistance.II.Consumer SurplusA.Willingness to Pay1.Definition of willingness to p

11、ay: the maximum amount that a buyer will pay for a good.2.Example: You are auctioning a mint-condition recording of Elvis Presleys first album. Four buyers show up. Their willingness to pay is as follows:Students will understand consumer surplus if you take the time to work through the Elvis Presley

12、 example. If you start with this simple example, students will have no trouble understanding how to find consumer surplus on a graph.Table 1精选文档BuyerWillingness to PayJohn$100Paul$80George$70Ringo$50If the bidding goes to slightly higher than $80, all buyers drop out except for John. Because John is

13、 willing to pay more than he has to for the album, he derives some benefit from participating in the market.Activity 1Value of a Time MachineType:In-class demonstrationTopics: Consumer surplusMaterials needed: NoneTime: 10 minutesClass limitations: Works in any size classPurposeConsumer surplus can

14、be a hard concept for students because it is based on avoided expense rather than on money that is actually exchanged. This example puts a specific dollar value on consumer surplus.InstructionsTell the class, “A new technology has been developed that allows individuals to travel backward or forward

15、in time. We want to identify the value this time machine provides to consumers. Lets assume the four consumers who most desire this product are in this class.”Choose four student names and use them in the following example:“Scott is the consumer who most values this product. He wants to go back to t

16、he time of the dinosaurs. He is willing to pay $3,000.”“Carol is the consumer with the next highest willingness to pay. She would like to see 200 years in the future. Shed pay $2,500.”“Steve is the next highest bidder. Hed like to relive this entire semester. Hell pay up to $800.”“Jeanne is our four

17、th consumer. Shed pay $200 to move the clock forward to the end of this class period.”On the board write:Scott $3,000Carol $2,500Steve $800Jeanne$2003.Definition of consumer surplus: the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.4.Note that if you ha

18、d more than one copy of the album, the price in the auction would end up being lower (a little over $70 in the case of two albums) and both John and Paul would gain consumer surplus.精选文档“This represents the demand curve for the time machine. Consumer surplus is the difference between what consumers

19、are willing to pay and the amount they actually have to pay. The market price will determine who uses the time machine and how much surplus they keep.”“If the price of a time machine ride was $500, three rides would be soldone to Scott, one to Carol, and one to Steve. Jeanne is not willing to pay $5

20、00, so she wouldnt time travel.” “We can calculate the consumer surplus of three time trips. Scott would pay $3,000 but only pays $500, leaving $2,500 of net benefits.” (Put these numbers on the board.) “Carol has net benefits of $2,000. Steve has $300 in net benefits. Adding up these net savings gi

21、ves $4,800 in consumer surplus.”Points for DiscussionThe consumer surplus depends on a goods selling price and the number of consumers who are willing to purchase the good at that price. The lower the price, the greater the consumer surplus.B.Using the Demand Curve to Measure Consumer Surplus1.We ca

22、n use the information on willingness to pay to derive a demand curve for the rare Elvis Presley album.PriceBuyersQuantity DemandedMore than $100None0$80 to $100John1$70 to $80John, Paul2$50 to $70John, Paul, George3$50 or lessJohn, Paul, George, Ringo4Figure 1精选文档2.At any given quantity, the price g

23、iven by the demand curve reflects the willingness to pay of the marginal buyer. Because the demand curve shows the buyers willingness to pay, we can use the demand curve to measure consumer surplus.Figure 23.Consumer surplus can be measured as the area below the demand curve and above the price.C.Ho

24、w a Lower Price Raises Consumer SurplusFigure 31.As price falls, consumer surplus increases for two reasons.a.Those already buying the product will receive additional consumer surplus because they are paying less for the product than before (area A on the graph).b.Because the price is now lower, som

25、e new buyers will enter the market and receive consumer surplus on these additional units of output purchased (area B on the graph).D.What Does Consumer Surplus Measure?It is important to stress that consumer surplus is measured in monetary terms. Consumer surplus gives us a way to place a monetary

26、cost on inefficient market outcomes (due to government involvement or market failure).1.Remember that consumer surplus is the difference between the amount that buyers are willing to pay for a good and the price that they actually pay. 精选文档2.Thus, it measures the benefit that consumers receive from

27、the good as the buyers themselves perceive it.ALTERNATIVE CLASSROOM EXAMPLE:Review the material on price ceilings from Chapter 6. Redraw the market for two-bedroom apartments in your town. Draw in a price ceiling below the equilibrium price. Then go through:consumer surplus before the price ceiling

28、is put into place.consumer surplus after the price ceiling is put into place.III.Producer SurplusA.Cost and the Willingness to Sell1.Definition of cost: the value of everything a seller must give up to produce a good.You will need to take some time to explain the relationship between the producers w

29、illingness to sell and the cost of producing the good. The relationship between cost and the supply curve is not as apparent as the relationship between the demand curve and willingness to pay.2.Example: You want to hire someone to paint your house. You accept bids for the work from four sellers. Ea

30、ch painter is willing to work if the price you will pay exceeds her opportunity cost. (Note that this opportunity cost thus represents willingness to sell.) The costs are:SellerCostMary$900Frida$800Georgia$600Grandma$500Table 23.Bidding will stop when the price gets to be slightly below $600. All se

31、llers will drop out except for Grandma. Because Grandma receives more than she would require to paint the house, she derives some benefit from producing in the market.4.Definition of producer surplus: the amount a seller is paid for a good minus the sellers cost of providing it.5.Note that if you ha

32、d more than one house to paint, the price in the auction would end up being higher (a little under $800 in the case of two houses) and both Grandma and Georgia would gain producer surplus.精选文档B.Using the Supply Curve to Measure Producer Surplus1.We can use the information on cost (willingness to sel

33、l) to derive a supply curve for house painting services.PriceSellersQuantity Supplied$900 or moreMary, Frida, Georgia, Grandma4$800 to $900Frida, Georgia, Grandma3$600 to $800Georgia, Grandma2$500 to $600Grandma1less than $500None02.At any given quantity, the price given by the supply curve represen

34、ts the cost of the marginal seller. Because the supply curve shows the sellers cost (willingness to sell), we can use the supply curve to measure producer surplus.Figure 4Figure 53.Producer surplus can be measured as the area above the supply curve and below the price.精选文档C.How a Higher Price Raises

35、 Producer SurplusFigure 61.As price rises, producer surplus increases for two reasons.a.Those already selling the product will receive additional producer surplus because they are receiving more for the product than before (area C on the graph).b.Because the price is now higher, some new sellers wil

36、l enter the market and receive producer surplus on these additional units of output sold (area D on the graph).ALTERNATIVE CLASSROOM EXAMPLE:Review the material on price floors from Chapter 6. Redraw the market for an agricultural product such as corn. Draw in a price support above the equilibrium p

37、rice. Then go through:producer surplus before the price support is put in place.producer surplus after the price support is put in place. Make sure that you discuss the cost of the price support to taxpayers.D.Producer surplus is used to measure the economic well-being of producers, much like consum

38、er surplus is used to measure the economic well-being of consumers.Pretty Woman, Chapter 6. Vivien (Julia Roberts) and Edward (Richard Gere) negotiate a price. Afterward, Vivien reveals she would have accepted a lower price, while Edward admits he would have paid more. If you have done a good job of

39、 introducing consumer and producer surplus, you will see the light bulbs go off above your students heads as they watch this clip.精选文档IV.Market EfficiencyA.The Benevolent Social Planner1.The economic well-being of everyone in society can be measured by total surplus, which is the sum of consumer sur

40、plus and producer surplus:Total Surplus = Consumer Surplus + Producer SurplusTotal Surplus = (Value to Buyers Amount Paid by Buyers) + (Amount Received by Sellers Cost to Sellers)Because the Amount Paid by Buyers = Amount Received by Sellers:2.Definition of efficiency: the property of a resource all

41、ocation of maximizing the total surplus received by all members of society.3.Definition of equality: the property of distributing economic prosperity uniformly the members of society.Now might be a good time to point out that many government policies involve a trade-off between efficiency and equity

42、. When you evaluate government policies, like price ceilings or floors, you can explain them in terms of equity and efficiency.B.Evaluating the Market EquilibriumFigure 7精选文档1.At the market equilibrium price:a.Buyers who value the product more than the equilibrium price will purchase the product; th

43、ose who do not, will not purchase the product. In other words, the free market allocates the supply of a good to the buyers who value it most highly, as measured by their willingness to pay.b.Sellers whose costs are lower than the equilibrium price will produce the product; those whose costs are hig

44、her, will not produce the product. In other words, the free market allocates the demand for goods to the sellers who can produce it at the lowest cost.2.Total surplus is maximized at the market equilibrium.Figure 8a.At any quantity of output smaller than the equilibrium quantity, the value of the pr

45、oduct to the marginal buyer is greater than the cost to the marginal seller so total surplus would rise if output increases.b.At any quantity of output greater than the equilibrium quantity, the value of the product to the marginal buyer is less than the cost to the marginal seller so total surplus

46、would rise if output decreases.3.Note that this is one of the reasons that economists believe Principle #6: Markets are usually a good way to organize economic activity.It would be a good idea to remind students that there are circumstances when the market process does not lead to the most efficient

47、 outcome. Examples include situations such as when a firm (or buyer) has market power over price or when there are externalities present. These situations will be discussed in later chapters.精选文档C.In the News: Ticket Scalping1.Ticket scalping is an example of how markets work to achieve an efficient

48、 outcome.2.This article from The Boston Globe describes economist Chip Cases experience with ticket scalping.D.Case Study: Should There Be a Market in Organs?1.As a matter of public policy, people are not allowed to sell their organs.a.In essence, this means that there is a price ceiling on organs o

49、f $0.b.This has led to a shortage of organs.2.The creation of a market for organs would lead to a more efficient allocation of resources, but critics worry about the equity of a market system for organs.V.Market Efficiency and Market FailureA.To conclude that markets are efficient, we made several a

50、ssumptions about how markets worked.1.Perfectly competitive markets.2.No externalities.B.When these assumptions do not hold, the market equilibrium may not be efficient.C.When markets fail, public policy can potentially remedy the situation.精选文档SOLUTIONS TO TEXT PROBLEMS:Quick Quizzes1.Figure 1 show

51、s 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 is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. It measures the benefit to buyers of participating in a m

52、arket.Figure 1Figure 22.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 is the amount sellers are paid for a good minus the sellers cost of providing it (measured by the supply curve). It meas

53、ures the benefit to sellers of participating in a market.精选文档Figure 33.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 turkeys than the equilibrium quantity would lower total surplus because the value to t

54、he marginal buyer would be lower than the cost to the marginal seller on those additional units.Questions for Review1.The price a buyer is willing 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. C

55、onsumer surplus is the area below the demand curve and above the price, which equals the price that each buyer is willing to pay minus the price actually paid.2.Sellers costs, producer surplus, and the supply curve are all closely related. The height of the supply curve represents the costs of the s

56、ellers. Producer surplus is the area below the price and above the supply curve, which equals the price received minus each sellers costs of producing the good.Figure 43.Figure 4 shows producer and consumer surplus in a supply-and-demand diagram.4.An allocation of resources is efficient if it maximi

57、zes 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 equitythe fairness of the distribution of well-being.5.The invisible hand of the marketplace guides the self-interest of buyers and

58、sellers into promoting general economic well-being. Despite decentralized decision making and self-interested decision makers, free markets often lead to an efficient outcome.精选文档6.Two types of market failure are market power and externalities. Market power may cause market outcomes to be inefficien

59、t because firms may cause price and quantity to differ from the levels they would be under perfect competition, which keeps total surplus from being maximized. Externalities are side effects that are not taken into account by buyers and sellers. As a result, the free market does not maximize total s

60、urplus.Problems and Applications1.a.Consumer surplus is equal to willingness to pay minus the price paid. Therefore, Melissas willingness to pay must be $200 ($120 + $80).b.Her consumer surplus at a price of $90 would be $200 $90 = $110.c.If the price of an iPod was $250, Melissa would not have purc

61、hased one because the price is greater than her willingness to pay. Therefore, she would receive no consumer surplus.2.If an early freeze in California sours the lemon crop, the supply curve for lemons shifts to the left, as shown in Figure 5. The result is a rise in the price of lemons and a declin

62、e in consumer surplus from A + B + C to just A. So consumer surplus declines by the amount B + C.Figure 5 Figure 6In the market for lemonade, the higher cost of lemons reduces the supply of lemonade, as shown in Figure 6. The result is a rise in the price of lemonade and a decline in consumer surplus from D + E + F to just D, a loss of E + F. Note that an event that affects consumer surplus in one market often has effects on consumer surplus in other markets.3.A rise in the demand for French bread leads to an increase in producer surplus in the market for French bread, as shown in F