Question 1

Consumer surplus in a market can be represented by the

Accepted Answer

A) area below the demand curve and above the price. 
B) distance from the demand curve to the horizontal axis. 
C) distance from the demand curve to the vertical axis. 
D) area below the demand curve and above the horizontal axis.

Question 2

A consumer's willingness to pay directly measures

Accepted Answer

A) the extent to which advertising and other external forces have influenced the consumer's preferences. 
B) the cost of a good to the buyer. 
C) how much a buyer values a good. 
D) consumer surplus.

Question 3

If the cost of producing sofas decreases,then consumer surplus in the sofa market will

Accepted Answer

A) increase. 
B) decrease. 
C) remain constant. 
D) increase for some buyers and decrease for other buyers.

Question 4

If the price a consumer pays for a product is equal to a consumer's willingness to pay,then the consumer surplus relevant to that purchase is

Accepted Answer

A) zero. 
B) negative,and the consumer would not purchase the product. 
C) positive,and the consumer would purchase the product. 
D) There is not enough information given to answer this question.

Question 5

Suppose Larry,Moe,and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie.Each has in mind a maximum amount that he will bid.This maximum is called

Accepted Answer

A) a resistance price. 
B) willingness to pay. 
C) consumer surplus. 
D) producer surplus.

Question 6

The maximum price that a buyer will pay for a good is called

Accepted Answer

A) consumer surplus. 
B) willingness to pay. 
C) equilibrium. 
D) efficiency.

Question 7

Jeff decides that he would pay as much as $3,000 for a new laptop computer.He buys the computer and realizes consumer surplus of $700.How much did Jeff pay for his computer?

Accepted Answer

A) $700 
B) $2,300 
C) $3,000 
D) $3,700

Question 8

Dawn's bridal boutique is having a sale on evening dresses.The increase in consumer surplus comes from the benefit of the lower prices to

Accepted Answer

A) only existing customers who now get lower prices on the gowns they were already planning to purchase. 
B) only new customers who enter the market because of the lower prices. 
C) both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. 
D) Consumer surplus does not increase;it decreases.

Question 9

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

Accepted Answer

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

Question 10

Chuck would be willing to pay $20 to attend a dog show,but he buys a ticket for $15.Chuck values the dog show at

Accepted Answer

A) $5. 
B) $15. 
C) $20. 
D) $35.

Question 11

Cameron visits a sporting goods store to buy a new set of golf clubs.He is willing to pay $750 for the clubs but buys them on sale for $575.Cameron's consumer surplus from the purchase is

Accepted Answer

A) $175. 
B) $575. 
C) $750. 
D) $1,325.

Question 12

Consumer surplus is

Accepted Answer

A) a concept that helps us make normative statements about the desirability of market outcomes. 
B) represented on a graph by the area below the demand curve and above the price. 
C) a good measure of economic welfare if buyers' preferences are the primary concern. 
D) All of the above are correct.

Question 13

Figure 7-1 
-Refer to Figure 7-1.If the price of the good is $50,then consumer surplus amounts to

Accepted Answer

A) $400. 
B) $500. 
C) $600. 
D) $750.

Question 14

Bob purchases a book for $6,and his consumer surplus is $2.How much is Bob willing to pay for the book?

Accepted Answer

A) $6. 
B) $2. 
C) $8. 
D) $4.

Question 15

Figure 7-3 
-Refer to Figure 7-3.When the price rises from P1 to P2,which of the following statements is not true?

Accepted Answer

A) The buyers who still buy the good are worse off because they now pay more. 
B) Some buyers leave the market because they are not willing to buy the good at the higher price. 
C) Buyers place a higher value on the good after the price increase. 
D) Consumer surplus in the market falls.

Question 16

Figure 7-5 
-Refer to Figure 7-5.If the price of the good is $12,then consumer surplus is

Accepted Answer

A) $9. 
B) $11. 
C) $13. 
D) $16.

Question 17

Josh is willing to pay $500 for a set of tire,but he is able to pay $300 at the local tire store.His consumer surplus is

Accepted Answer

A) $800. 
B) $300. 
C) $200. 
D) $500.

Question 18

Suppose there is an early freeze in California that reduces the size of the lemon crop.What happens to consumer surplus in the market for lemons?

Accepted Answer

A) Consumer surplus increases. 
B) Consumer surplus decreases. 
C) Consumer surplus is not affected by this change in market forces. 
D) We would have to know whether the demand for lemons is elastic or inelastic to make this determination.

Question 19

When there is a technological advance in the pork industry,consumer surplus in that market will

Accepted Answer

A) increase. 
B) decrease. 
C) not change,since technology affects producers and not consumers. 
D) not change,since consumers' willingness to pay is unaffected by the technological advance.

Question 20

Alex is willing to pay $10,and Bella is willing to pay $8,for 1 pound of ribeye steak.When the price of ribeye steak increases from $9 to $11,

Accepted Answer

A) Alex experiences a decrease in consumer surplus,but Bella does not. 
B) Bella experiences a decrease in consumer surplus,but Alex does not. 
C) both Bella and Alex experience a decrease in consumer surplus. 
D) neither Bella nor Alex experiences a decrease in consumer surplus.

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