Deck 7: 1: Sec 71 Mc Consumer Surplus

Question 1

Consumer surplus is equal to the

A)Value to buyers - Amount paid by buyers.
B)Amount paid by buyers - Costs of sellers.
C)Value to buyers - Costs of sellers.
D)Value to buyers - Willingness to pay of buyers.

Answer 1

D

Question 2

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

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

Answer 2

D

Question 3

Consumer surplus is the

A)amount of a good consumers get without paying anything.
B)amount a consumer pays minus the amount the consumer is willing to pay.
C)amount a consumer is willing to pay minus the amount the consumer actually pays.
D)value of a good to a consumer.

Answer 3

D

Question 4

Consumer surplus

A)is the amount of a good that a consumer can buy at a price below equilibrium price.
B)is the amount a consumer is willing to pay minus the amount the consumer actually pays.
C)is the number of consumers who are excluded from a market because of scarcity.
D)measures how much a seller values a good.

Question 5

Consumer surplus in a market can be represented by the

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 6

Consumer surplus

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 7

In which of the following circumstances would a buyer be indifferent about buying a good?

A)The amount of consumer surplus the buyer would experience as a result of buying the good is zero.
B)The price of the good is equal to the buyer's willingness to pay for the good.
C)The price of the good is equal to the value the buyer places on the good.
D)All of the above are correct.

Question 8

Consumer surplus

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 9

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

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

Question 10

On a graph,consumer surplus is represented by the area

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 11

Consumer surplus is

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 12

A demand curve reflects each of the following except the

A)willingness to pay of all buyers in the market.
B)value each buyer in the market places on the good.
C)highest price buyers are willing to pay for each quantity.
D)ability of buyers to obtain the quantity they desire.

Question 13

Consumer surplus is

A)the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
B)the amount a buyer is willing to pay for a good minus the cost of producing the good.
C)the amount by which the quantity supplied of a good exceeds the quantity demanded of the good.
D)a buyer's willingness to pay for a good plus the price of the good.

Question 14

In a market,the marginal buyer is the buyer

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 15

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field.Assume the ticket has no resale value.Willie Nelson is performing on the same night,and his concert is your next-best alternative activity.Tickets to see Willie Nelson cost $40.On any given day,you would be willing to pay up to $50 to see and hear Willie Nelson perform.Assume there are no other costs of seeing either event.Based on this information,at a minimum,how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?

A)$0
B)$10
C)$40
D)$50

Question 16

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

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 17

Willingness to pay

A)measures the value that a buyer places on a good.
B)is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept.
C)is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept.
D)is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

Question 18

On a graph,the area below a demand curve and above the price measures

A)producer surplus.
B)consumer surplus.
C)deadweight loss.
D)willingness to pay.

Question 19

A consumer's willingness to pay directly measures

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 20

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction.Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist.This maximum is called

A)deadweight loss.
B)willingness to pay.
C)consumer surplus.
D)producer surplus.

Question 21

Henry is willing to pay 45 cents,and Janine is willing to pay 55 cents,for 1 pound of bananas.When the price of bananas falls from 50 cents a pound to 40 cents a pound,

A)Henry experiences an increase in consumer surplus,but Janine does not.
B)Janine experiences an increase in consumer surplus,but Henry does not.
C)both Janine and Henry experience an increase in consumer surplus.
D)neither Janine nor Henry experiences an increase in consumer surplus.

Question 22

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

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

Question 23

A drought in California destroys many red grapes.As a result of the drought,the consumer surplus in the market for red grapes

A)increases,and the consumer surplus in the market for red wine increases.
B)increases,and the consumer surplus in the market for red wine decreases.
C)decreases,and the consumer surplus in the market for red wine increases.
D)decreases,and the consumer surplus in the market for red wine decreases.

Question 24

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

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

Question 25

Bob purchases a book,and his consumer surplus is $3.If Bob is willing to pay $8 for the book,then the price of the book must be

A)$3.
B)$8.
C)$5.
D)$11.

Question 26

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

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

Question 27

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

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

Question 28

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good,then for that consumer,consumer surplus amounts to

A)$4.
B)$16.
C)$20.
D)$36.

Question 29

If a consumer places a value of $20 on a particular good and if the price of the good is $25,then the

A)consumer has consumer surplus of $5 if he buys the good.
B)consumer does not purchase the good.
C)price of the good will rise due to market forces.
D)market is out of equilibrium.

Question 30

Celine buys a new MP3 player for $90.She receives consumer surplus of $15 on her purchase if her willingness to pay is

A)$15.
B)$90.
C)$105.
D)$75.

Question 31

Kelly is willing to pay $5.20 for a gallon of gasoline.The price of gasoline at her local gas station is $3.80.If she purchases ten gallons of gasoline,then Kelly's consumer surplus is

A)$1.40.
B)$14.
C)$3.80.
D)$52.

Question 32

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,

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.

Question 33

Suppose Katie,Kendra,and Kristen each purchase a particular type of cell phone at a price of $80.Katie's willingness to pay was $100,Kendra's willingness to pay was $95,and Kristen's willingness to pay was $80.Which of the following statements is correct?

A)For the three individuals together,consumer surplus amounts to $35.
B)Having bought the cell phone,Kristen is better off than she would have been had she not bought it.
C)Had the price of the cell phone been $95 rather than $80,Katie and Kendra definitely would have been buyers and Kristen definitely would not have been a buyer.
D)The fact that all three individuals paid $80 for the same type of cell phone indicates that each one placed the same value on that cell phone.

Question 34

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?

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 35

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

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

Question 36

Chad is willing to pay $5.00 to get his first cup of morning latté.He buys a cup from a vendor selling latté for $3.75 per cup.Chad's consumer surplus is

A)$8.75.
B)$5.00.
C)$3.75.
D)$1.25.

Question 37

If a consumer places a value of $15 on a particular good and if the price of the good is $17,then the

A)consumer has consumer surplus of $2 if he or she buys the good.
B)consumer does not purchase the good.
C)market is not a competitive market.
D)price of the good will fall due to market forces.

Question 38

Brock is willing to pay $400 for a new suit,but he is able to buy the suit for $250.His consumer surplus is

A)$650.
B)$150.
C)$250.
D)$400.

Question 39

Suppose Brent,Callie,and Danielle each purchase a particular type of electric pencil sharpener at a price of $20.Brent's willingness to pay was $22,Callie's willingness to pay was $25,and Danielle's willingness to pay was $30.Which of the following statements is correct?

A)Had the price of the pencil sharpener been $24 rather than $20,only Danielle would have been a buyer.
B)Brent's consumer surplus is the smallest of the three individual consumer surpluses.
C)For the three individuals together,consumer surplus amounts to $60.
D)The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener.

Question 40

Janine would be willing to pay $50 to see Les Misérables,but she buys a ticket for only $30.Janine values the performance at

A)$20.
B)$30.
C)$50.
D)$80.

Question 41

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

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

Question 42

Suppose the market demand curve for a good passes through the point (quantity demanded = 100,price = $25).If there are five buyers in the market,then

A)the marginal buyer's willingness to pay for the 100^th unit of the good is $25.
B)the sum of the five buyers' willingness to pay for the 100^th unit of the good is $25.
C)the average of the five buyers' willingness to pay for the 100^th unit of the good is $25.
D)all of the five buyers are willing to pay at least $25 for the 100^th unit of the good.

Question 43

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

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 44

Which of the following will cause an increase in consumer surplus?

A)an increase in the production cost of the good
B)a technological improvement in the production of the good
C)a decrease in the number of sellers of the good
D)the imposition of a binding price floor in the market

Question 45

Suppose your own demand curve for tomatoes slopes downward.Suppose also that,for the last tomato you bought this week,you paid a price exactly equal to your willingness to pay.Then

A)you should buy more tomatoes before the end of the week.
B)you already have bought too many tomatoes this week.
C)your consumer surplus on the last tomato you bought is zero.
D)your consumer surplus on all of the tomatoes you have bought this week is zero.

Question 46

Michael values a stainless steel refrigerator for his new house at $3,500,but he succeeds in buying one for $3,000.Michael's consumer surplus is

A)$500.
B)$3,000.
C)$3,500.
D)$6,500.

Question 47

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

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 48

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

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 49

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

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

Question 50

Pat bought a new car for $15,500 but was willing to pay $24,000.The consumer surplus is

A)$8,500.
B)$15,500.
C)$24,000.
D)$39,500.

Question 51

Denise values a stainless steel dishwasher for her new house at $500,but she succeeds in buying one for $350.Denise's consumer surplus is

A)$150.
B)$350.
C)$500.
D)$850.

Question 52

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?

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 53

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

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

Question 54

Jeff decides that he would pay as much as $2,000 for a new laptop computer.He buys the computer and realizes a consumer surplus of $300.How much did Jeff pay for his computer?

A)$300.
B)$1,700.
C)$2,000.
D)$2,300.

Question 55

Ray buys a new tractor for $118,000.He receives consumer surplus of $13,000 on his purchase.Ray's willingness to pay is

A)$13,000.
B)$105,000.
C)$118,000.
D)$131,000.

Question 56

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

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 57

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?

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

Question 58

Billie Jo values a stainless steel dishwasher for her new house at $500,but she succeeds in buying one for $425.Billie Jo's willingness to pay for the dishwasher is

A)$150.
B)$425.
C)$500.
D)$850.

Question 59

Michael values a stainless steel refrigerator for his new house at $3,500,but he succeeds in buying one for $3,000.Michael's willingness to pay is

A)$500.
B)$3,000.
C)$3,500.
D)$6,500.

Question 60

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

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

Question 61

Which of the following is not true when the price of a good or service falls?

A)Buyers who were already buying the good or service are better off.
B)Some new buyers,who are now willing to buy,enter the market.
C)The total consumer surplus in the market increases.
D)The total value of purchases before and after the price change is the same.

Question 62

Figure 7-1
Refer to Figure 7-1.If the price of the good is $150,then consumer surplus amounts to

A)$150.
B)$200.
C)$250.
D)$300.

Question 63

Figure 7-3
Refer to Figure 7-3.When the price is P1,consumer surplus is

A)A.
B)A+B.
C)A+B+C.
D)A+B+D.

Question 64

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

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 65

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

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 66

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

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 67

Figure 7-3
Refer to Figure 7-3.When the price is P2,consumer surplus is

A)A.
B)B.
C)A+B.
D)A+B+C.

Question 68

Figure 7-3
Refer to Figure 7-3.Area C represents the

A)decrease in consumer surplus that results from a downward-sloping demand curve.
B)consumer surplus to new consumers who enter the market when the price falls from P2 to P1.
C)increase in producer surplus when quantity sold increases from Q2 to Q1.
D)decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2.

Question 69

Figure 7-1
Refer to Figure 7-1.If the price of the good is $250,then consumer surplus amounts to

A)$50.
B)$100.
C)$150.
D)$200.

Question 70

Figure 7-1
Refer to Figure 7-1.If the price of the good is $200,then

A)consumer surplus is $150.
B)consumer surplus is $650.
C)producer surplus is $650.
D)producer surplus is $750.

Question 71

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

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

Question 72

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

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 73

Figure 7-1
Refer to Figure 7-1.The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

A)$200.
B)$150.
C)$125.
D)$100.

Question 74

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

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

Question 75

Motor oil and gasoline are complements.If the price of motor oil increases,consumer surplus in the gasoline market

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

Question 76

Figure 7-2
Refer to Figure 7-2.If the price of the good is $100,then consumer surplus amounts to

A)$50.
B)$75.
C)$100.
D)$125.

Question 77

Suppose televisions are a normal good and buyers of televisions experience a decrease in income.As a result,consumer surplus in the television market

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

Question 78

Dallas buys strawberries,and he would be willing to pay more than he now pays.Suppose that Dallas has a change in his tastes such that he values strawberries more than before.If the market price is the same as before,then

A)Dallas's consumer surplus would be unaffected.
B)Dallas's consumer surplus would increase.
C)Dallas's consumer surplus would decrease.
D)Dallas would be wise to buy fewer strawberries than before.

Question 79

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

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

Question 80

Figure 7-2
Refer to Figure 7-2.If the price of the good is $80,then consumer surplus amounts to

A)$110.
B)$135.
C)$160.
D)$185.