Question 1

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.

Accepted Answer

When the price of bananas fall, both Henry and Janine experience an increase in consumer surplus. Henry will now be willing to pay more for the same pound of bananas, as it is now cheaper. Janine, who was already willing to pay more than Henry, can now purchase the same amount of bananas for a lower price, thus increasing her consumer surplus. Therefore, both Henry and Janine benefit from the decrease in price.

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

Accepted Answer

The answer of Abraham drinks Mountain Dew.He can buy as...

Question 3

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.

Accepted Answer

Due to the drought, the supply of red grapes decreases, leading to an increase in the price of red grapes. This decrease in supply also decreases the quantity of red grapes available in the market, which reduces the consumer surplus. As a result, the consumer surplus in the market for red wine also decreases because red grapes are used as an input to produce red wine. Therefore, the correct answer is D - decreases, and the consumer surplus in the market for red wine decreases.

Question 4

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.

Accepted Answer

Bob's consumer surplus is the difference between what he is willing to pay and what he actually pays. Therefore, if Bob's consumer surplus is $2, then he is willing to pay $8 for the book ($8 - $6 = $2). Therefore, choice C ($8) is the best answer.

Question 5

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.

Accepted Answer

Bob's willingness to pay for the book is $8, but he only pays $5 ($8 - $3 consumer surplus). Therefore, the price of the book must be $5.

Question 6

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.

Accepted Answer

Consumer surplus is the difference between the maximum amount that a consumer is willing to pay and the actual price they pay. In this case, Josh is willing to pay $500 for the set of tires but is able to purchase it for $300, which means his consumer surplus is $200 (i.e., $500 - $300). Therefore, the best choice is C.

Question 7

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.

Accepted Answer

Chuck values the dog show at $20, which is the maximum amount he is willing to pay for it.

Question 8

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.

Accepted Answer

The consumer surplus is the difference between the maximum amount a consumer is willing to pay and the actual price paid. Here, the consumer is willing to pay $20 but actually pays $16. Therefore, the consumer surplus is $20 - $16 = $4.

Question 9

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.

Accepted Answer

If the consumer places a value of $20 on the good and the price is $25, the consumer will not purchase the good. This is because the price is higher than the value the consumer places on the good, resulting in a loss for the consumer. Therefore, the consumer will only purchase the good if the price is lower than or equal to the value placed on it, resulting in consumer surplus.

Question 10

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.

Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. If Celine's consumer surplus is $15 and she paid $90, her willingness to pay must have been $105 ($90 + $15).

Question 11

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.

Accepted Answer

Consumer surplus is the difference between the price a consumer is willing to pay and the actual price they pay. In this case, Kelly is willing to pay $5.20 per gallon but only pays $3.80 per gallon.

Her consumer surplus per gallon is $5.20 - $3.80 = $1.40.

If she purchases 10 gallons, her total consumer surplus is:
$1.40 x 10 gallons = $14.

Therefore, the best choice is option B.

Question 12

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.

Accepted Answer

When the price of ribeye steak increased from $9 to $11, Alex's willingness to pay of $10 is no longer enough to cover the price, so he will no longer purchase the steak. As a result, he is experiencing a decrease in consumer surplus. On the other hand, Bella's willingness to pay of $8 is still below the new price, so she will continue to purchase the steak at the new price. Therefore, Bella does not experience a decrease in consumer surplus.

Question 13

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.

Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. Katie's surplus is $20 ($100 - $80), Kendra's is $15 ($95 - $80), and Kristen's is $0 ($80 - $80). Together, their consumer surplus is $35 ($20 + $15 + $0).

Question 14

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.

Accepted Answer

Chad's willingness to pay for his second cup of latte was smaller than his willingness to pay for his first cup of latte because he was willing to pay $5 for the first cup but only $4.50 for the second cup. This means that his consumer surplus on the first cup was higher than his consumer surplus on the second cup, making (B) incorrect. Chad may have chosen to buy the second cup from the same vendor because it was convenient or he preferred the taste, but this does not necessarily make him irrational, making (C) incorrect. Lastly, we cannot infer that Chad places a higher value on his second cup of latte than on his first cup of latte based on the information given, making (D) incorrect.

Question 15

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.

Accepted Answer

Consumer surplus is the difference between what the consumers are willing to pay and what they actually pay. Lauren's consumer surplus = $35 - $15 = $20. Leslie's consumer surplus = $25 - $15 = $10. Lydia's consumer surplus = $30 - $15 = $15. Total consumer surplus = $20 + $10 + $15 = $45.

Question 16

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.

Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. Chad is willing to pay $5.00 but pays $3.75, so his consumer surplus is $5.00 - $3.75 = $1.25.

Question 17

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.

Accepted Answer

The consumer values the good at $15 and the price is $17, meaning the consumer is willing to pay less than the market price. Therefore, the consumer would not purchase the good, resulting in no consumer surplus.

Question 18

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.

Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay for a good or service and what they actually have to pay. In this case, Brock's consumer surplus is $150 ($400 - $250). Therefore, the best choice is option B.

Question 19

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.

Accepted Answer

The answer of Suppose Brent,Callie,and Danielle each purchase a particular...

Question 20

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.

Accepted Answer

Janine values the performance at $50, but pays only $30, which means she is getting a surplus benefit of $20. Therefore, the value she places on the performance is $50.

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

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

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

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

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

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

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

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

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

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

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,

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?

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

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

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

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

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?

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