ECON B251: Modules 5-8 Test Questions and All Correct Answers - Updated.

graphically, consumer surplus is... - Answer the area above price but below demand graphically, producer surplus is... - Answer the area below price but above supply what is the equation you use to calculate consumer and producer surplus? - Answer (1/2)(b)(h) = CS or PS how do you calculate total surplus? - Answer CS + PS = TS in terms of total surplus, what outcome does not create a deadweight loss? - Answer when the quantity in the market is equal to equilibrium quantity what do price allocation and equilibrium mechanisms result in? - Answer they result in efficiency but do not guarantee equity graphically, total surplus is... - Answer the area above supply but below demand what is a price ceiling? - Answer a legal maximum price for a product what is a price floor? - Answer a legal minimum price for a product when is a price ceiling binding? - Answer when it is below the equilibrium price when is a price floor binding? - Answer when it is above the equilibrium price if the government sets a price ceiling equal to the equilibrium price what will occur? - Answer the market clears, there will be no shortages or surpluses if the government sets a price ceiling below the equilibrium price what will occur? - Answer a shortage