Multiple Choice: Consumer and Producer Surplus

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.

• below the supply curve and above the price.

• below the demand curve and above the supply curve.

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.

• none of these answers.

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.

• €0.

• €38,000.

An increase in the price of a good along a stationary demand curve

• improves the material welfare of the buyers.

• decreases consumer surplus.

• improves market efficiency.

• increases consumer surplus.

Suppose there are three identical vases available to be purchased. Buyer 1 is willing to pay €30 for one, buyer 2 is willing to pay €25 for one, and buyer 3 is willing to pay €20 for one. If the price is €25, how many vases will be sold and what is the value of consumer surplus in this market?

• Three vases will be sold and consumer surplus is €80.

• One vase will be sold and consumer surplus is €5.

• One vase will be sold and consumer surplus is €30.

• Three vases will be sold and consumer surplus is €0.

• Two vases will be sold and consumer surplus is €5.

Producer surplus is the area

• below the supply curve and above the price.

• below the demand curve and above the supply curve.

• below the demand curve and above the price.

• above the demand curve and below the price.

• above the supply curve and below the price.

If a benevolent social planner chooses to produce less than the equilibrium quantity of a good, then

• total surplus is maximized.

• the value placed on the last unit of production by buyers exceeds the cost of production.

• producer surplus is maximized.

• the cost of production on the last unit produced exceeds the value placed on it by buyers.

• consumer surplus is maximized.

If a benevolent social planner chooses to produce more than the equilibrium quantity of a good, then

• the value placed on the last unit of production by buyers exceeds the cost of production.

• the cost of production on the last unit produced exceeds the value placed on it by buyers.

• consumer surplus is maximized.

• total surplus is maximized.

• producer surplus is maximized.

The seller's cost of production is

• none of these answers.

• the minimum amount the seller is willing to accept for a good.

• the seller's producer surplus.

• the maximum amount the seller is willing to accept for a good.

• the seller's consumer surplus.

Total surplus is the area

• above the supply curve and below the price.

• below the demand curve and above the price.

• below the demand curve and above the supply curve.

• below the supply curve and above the price.

• above the demand curve and below the price.