Question 1

Which of the following will cause a decrease in consumer surplus?

Accepted Answer

A) an increase in the number of sellers of the good 
B) a decrease in the production cost of the good 
C) sellers expect the price of the good to be lower next month 
D) the imposition of a binding price floor in the market 
A) an increase in the number of sellers of the good 
B) a decrease in the production cost of the good 
C) sellers expect the price of the good to be lower next month 
D) the imposition of a binding price floor in the market

Question 2

Abraham drinks Mountain Dew.He can buy as many cans of Mountain Dew as he wishes at a price of $0.55 per can.On a particular day,he is willing to pay $0.95 for the first can,$0.80 for the second can,$0.60 for the third can,and $0.40 for the fourth can.Assume Abraham is rational in deciding how many cans to buy.His consumer surplus is

Accepted Answer

A) $0.50. 
B) $0.60. 
C) $0.70. 
D) $1.00. 
A) $0.50. 
B) $0.60. 
C) $0.70. 
D) $1.00.

Question 3

Consumer surplus

Accepted Answer

A) is closely related to the supply curve for a product. 
B) is represented by a rectangle on a supply-demand graph when the demand curve is a straight,downward-sloping line. 
C) is measured using the demand curve for a product. 
D) does not reflect economic well-being in most markets. 
A) is closely related to the supply curve for a product. 
B) is represented by a rectangle on a supply-demand graph when the demand curve is a straight,downward-sloping line. 
C) is measured using the demand curve for a product. 
D) does not reflect economic well-being in most markets.

Question 4

When the demand for a good increases and the supply of the good remains unchanged,consumer surplus

Accepted Answer

A) decreases. 
B) is unchanged. 
C) increases. 
D) may increase,decrease,or remain unchanged. 
A) decreases. 
B) is unchanged. 
C) increases. 
D) may increase,decrease,or remain unchanged.

Question 5

Figure 7-7  
-Refer to Figure 7-7.What happens to the consumer surplus if the price rises from $100 to $150?

Accepted Answer

A) The new consumer surplus is half of the original consumer surplus. 
B) The new consumer surplus is 25 percent of the original consumer surplus. 
C) The new consumer surplus is double the original consumer surplus. 
D) The new consumer surplus is triple the original consumer surplus. 
A) The new consumer surplus is half of the original consumer surplus. 
B) The new consumer surplus is 25 percent of the original consumer surplus. 
C) The new consumer surplus is double the original consumer surplus. 
D) The new consumer surplus is triple the original consumer surplus.

Question 6

Figure 7-8  
-Refer to Figure 7-8.If the government imposes a price ceiling of $80 in this market,then,assuming those with the highest willingness to pay purchase the good,consumer surplus will be

Accepted Answer

A) $900. 
B) $1,200. 
C) $1,500. 
D) $1,600. 
A) $900. 
B) $1,200. 
C) $1,500. 
D) $1,600.

Question 7

Figure 7-6  
-Refer to Figure 7-6.If the government imposes a price floor of $110 in this market,then consumer surplus will decrease by

Accepted Answer

A) $200. 
B) $400. 
C) $600. 
D) $800. 
A) $200. 
B) $400. 
C) $600. 
D) $800.

Question 8

Denise values a stainless steel dishwasher for her new house at $500.The actual price of the dishwasher is $650.Denise

Accepted Answer

A) buys the dishwasher,and on her purchase she experiences a consumer surplus of $150. 
B) buys the dishwasher,and on her purchase she experiences a consumer surplus of $-150. 
C) does not buy the dishwasher,and on her purchase she experiences a consumer surplus of $150. 
D) does not buy the dishwasher,and on her purchase she experiences a consumer surplus of $0. 
A) buys the dishwasher,and on her purchase she experiences a consumer surplus of $150. 
B) buys the dishwasher,and on her purchase she experiences a consumer surplus of $-150. 
C) does not buy the dishwasher,and on her purchase she experiences a consumer surplus of $150. 
D) does not buy the dishwasher,and on her purchase she experiences a consumer surplus of $0.

Question 9

When policymakers are considering a particular action,they can use consumer surplus as a(n)

Accepted Answer

A) objective measure of the benefits to buyers as determined by policymakers. 
B) measure of the benefits to buyers as the buyers perceive them. 
C) potentially flawed measure of the benefits to buyers if the buyers are not rational. 
D) Both b)and c)are correct. 
A) objective measure of the benefits to buyers as determined by policymakers. 
B) measure of the benefits to buyers as the buyers perceive them. 
C) potentially flawed measure of the benefits to buyers if the buyers are not rational. 
D) Both b)and c)are correct.

Question 10

Figure 7-3  
-Refer to Figure 7-3.When the price rises from P1 to P2,consumer surplus

Accepted Answer

A) increases by an amount equal to A. 
B) decreases by an amount equal to B+C. 
C) increases by an amount equal to B+C. 
D) decreases by an amount equal to C. 
A) increases by an amount equal to A. 
B) decreases by an amount equal to B+C. 
C) increases by an amount equal to B+C. 
D) decreases by an amount equal to C.

Question 11

Consumer surplus

Accepted Answer

A) is the amount a buyer pays for a good minus the amount the buyer is willing to pay for it. 
B) is represented on a supply-demand graph by the area below the price and above the demand curve. 
C) measures the benefit sellers receive from participating in a market. 
D) measures the benefit buyers receive from participating in a market. 
A) is the amount a buyer pays for a good minus the amount the buyer is willing to pay for it. 
B) is represented on a supply-demand graph by the area below the price and above the demand curve. 
C) measures the benefit sellers receive from participating in a market. 
D) measures the benefit buyers receive from participating in a market.

Question 12

Chad is willing to pay $5.00 to get his first cup of morning latté;he is willing to pay $4.50 for a second cup.He buys his first cup from a vendor selling latté for $3.75 per cup.He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup.Chad buys a second cup.Which of the following statements is correct?

Accepted Answer

A) Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté. 
B) Chad's consumer surplus on his second cup of latté was larger than his consumer surplus on his first cup of latté. 
C) Chad is irrational in that he is willing to pay a different price for his second cup of latté than what he is willing to pay for his first cup of latté. 
D) Chad places a higher value on his second cup of latté than on his first cup of latté. 
A) Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté. 
B) Chad's consumer surplus on his second cup of latté was larger than his consumer surplus on his first cup of latté. 
C) Chad is irrational in that he is willing to pay a different price for his second cup of latté than what he is willing to pay for his first cup of latté. 
D) Chad places a higher value on his second cup of latté than on his first cup of latté.

Question 13

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

Accepted Answer

A) $15. 
B) $30. 
C) $45. 
D) $90. 
A) $15. 
B) $30. 
C) $45. 
D) $90.

Question 14

When the supply of a good decreases and the demand for the good remains unchanged,consumer surplus

Accepted Answer

A) decreases. 
B) is unchanged. 
C) increases. 
D) may increase,decrease,or remain unchanged. 
A) decreases. 
B) is unchanged. 
C) increases. 
D) may increase,decrease,or remain unchanged.

Question 15

Figure 7-4  
-Refer to Figure 7-4.Which area represents consumer surplus at a price of P1?

Accepted Answer

A) BDF 
B) AFG 
C) ABDG 
D) ABC 
A) BDF 
B) AFG 
C) ABDG 
D) ABC

Question 16

In a market,the marginal buyer is the buyer

Accepted Answer

A) whose willingness to pay is higher than that of all other buyers and potential buyers. 
B) whose willingness to pay is lower than that of all other buyers and potential buyers. 
C) who is willing to buy exactly one unit of the good. 
D) who would be the first to leave the market if the price were any higher. 
A) whose willingness to pay is higher than that of all other buyers and potential buyers. 
B) whose willingness to pay is lower than that of all other buyers and potential buyers. 
C) who is willing to buy exactly one unit of the good. 
D) who would be the first to leave the market if the price were any higher.

Question 17

When a buyer's willingness to pay for a good is equal to the price of the good,the

Accepted Answer

A) buyer's consumer surplus for that good is maximized. 
B) buyer will buy as much of the good as the buyer's budget allows. 
C) price of the good exceeds the value that the buyer places on the good. 
D) buyer is indifferent between buying the good and not buying it. 
A) buyer's consumer surplus for that good is maximized. 
B) buyer will buy as much of the good as the buyer's budget allows. 
C) price of the good exceeds the value that the buyer places on the good. 
D) buyer is indifferent between buying the good and not buying it.

Question 18

If the price of oak lumber increases,what happens to consumer surplus in the market for oak cabinets?

Accepted Answer

A) Consumer surplus increases. 
B) Consumer surplus decreases. 
C) Consumer surplus will not change consumer surplus;only producer surplus changes. 
D) Consumer surplus depends on what event led to the increase in the price of oak lumber. 
A) Consumer surplus increases. 
B) Consumer surplus decreases. 
C) Consumer surplus will not change consumer surplus;only producer surplus changes. 
D) Consumer surplus depends on what event led to the increase in the price of oak lumber.

Question 19

On a graph,consumer surplus is represented by the area

Accepted Answer

A) between the demand and supply curves. 
B) below the demand curve and above price. 
C) below the price and above the supply curve. 
D) below the demand curve and to the right of equilibrium price. 
A) between the demand and supply curves. 
B) below the demand curve and above price. 
C) below the price and above the supply curve. 
D) below the demand curve and to the right of equilibrium price.

Question 20

All else equal,what happens to consumer surplus if the price of a good increases?

Accepted Answer

A) Consumer surplus increases. 
B) Consumer surplus decreases. 
C) Consumer surplus is unchanged. 
D) Consumer surplus may increase,decrease,or remain unchanged. 
A) Consumer surplus increases. 
B) Consumer surplus decreases. 
C) Consumer surplus is unchanged. 
D) Consumer surplus may increase,decrease,or remain unchanged.

Exam 7: Consumers Producers and the Efficiency of Markets: Consumer Surplus

Which of the following will cause a decrease in consumer surplus?

Consumer surplus

When the demand for a good increases and the supply of the good remains unchanged,consumer surplus

Figure 7-7 -Refer to Figure 7-7.What happens to the consumer surplus if the price rises from $100 to $150?

Figure 7-8 -Refer to Figure 7-8.If the government imposes a price ceiling of $80 in this market,then,assuming those with the highest willingness to pay purchase the good,consumer surplus will be

Figure 7-6 -Refer to Figure 7-6.If the government imposes a price floor of $110 in this market,then consumer surplus will decrease by

Denise values a stainless steel dishwasher for her new house at $500.The actual price of the dishwasher is $650.Denise

When policymakers are considering a particular action,they can use consumer surplus as a(n)

Figure 7-3 -Refer to Figure 7-3.When the price rises from P1 to P2,consumer surplus

Consumer surplus

Suppose Lauren,Leslie and Lydia all purchase bulletin boards for their rooms for $15 each.Lauren's willingness to pay was $35,Leslie's willingness to pay was $25,and Lydia's willingness to pay was $30.Total consumer surplus for these three would be

When the supply of a good decreases and the demand for the good remains unchanged,consumer surplus

Figure 7-4 -Refer to Figure 7-4.Which area represents consumer surplus at a price of P1?

In a market,the marginal buyer is the buyer

When a buyer's willingness to pay for a good is equal to the price of the good,the

If the price of oak lumber increases,what happens to consumer surplus in the market for oak cabinets?

On a graph,consumer surplus is represented by the area

All else equal,what happens to consumer surplus if the price of a good increases?

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A

Application International Trade: Part B

Measuring a Nations Income