Elasticities & Mod 2.6: Consumer and Producer Surplus

Good X and Good Y have a cross-price elasticity of -1.2. Therefore, the goods are:

• normal

• inferior

• complements

• supplements

• substitutes

The income elasticity of good C is -1. If John's income ___, he will buy ___ of the good​.

• falls, less

• falls, more

• rises, the same amount

• rises, more

• falls, the same amount

Which of the following leads to a more inelastic price elasticity of supply?

• more inelastic price elasticity of demand

• inputs that have many substitutes

• more time to obtain inputs

• improvements in technology

• inputs that are harder to obtain

Consumer surplus is the difference between the market price and the amount

• consumers are willing to pay for a product.

• consumers have to pay for a product.

• firms are willing to accept for a product.

• firms receive for a product.

• consumers can resell the product for.

Producer surplus is found in the area:

• above the supply curve but below the price.

• above the demand curve but below the price.

• below the demand curve but above the price.

• below the supply curve but above the price.

• nearest equilibrium.

Other things equal, a rise in price will result in which of the following?

• consumer surplus will rise

• producer surplus will rise

• consumer surplus will fall

• producer surplus will fall

• revenue will fall

Allocating organs to patients based on who would receive the highest net benefit attempts to maximize:

• profit

• equity for elders

• consumer surplus

• producer surplus

• efficiency