What area represents producer surplus in the graph shown here if this market is in equilibrium?

• P₂MP₀

• P₄MP₂

• LMN

• P₄P_LN

• P₀MP₄

Consumer surplus is the buyer's willingness to pay minus the seller's cost.

• True

• False

Consumer surplus decreases when the price in that market increases.

• True

• False

Consumer surplus is the area

• below the demand curve and above the price.

• above the supply curve and below the price.

• above the demand curve and below the price.

• above the demand curve and below the price.

A buyer's willingness to pay is that buyer's

• minimum amount they are willing to pay for a good.

• producer surplus.

• consumer surplus.

• maximum amount they are willing to pay for a good.

You are the manager of Fun World, a small amusement park that only charges per ride. The diagram shows the demand curve for a typical customer. At $5 per ride, how much consumer surplus does each customer get?

• $5
• $15
• $25
• $50

Producer Surplus is the area

• Below the price and above the supply curve

• Under the supply curve

• Between the supply and demand curves

• Under the demand curve, and above the price

Other things being equal, if the price of a good falls, the consumer surplus

• May increase, decrease, or remain unchanged

• Increases

• Is unchanged

• Decreases

If a buyer's willingness to pay for a new Honda is €20,000 and she is able to actually buy it for €18,000, her consumer surplus is

• €18,000

• €20,000

• €2,000

• €38,000

When the demand for a product or service is higher than the supply this causes what?

• shortage
• consumer
• surplus
• equilibrium