Session 4

What is consumer surplus?

• The extra cost producers pay to create goods

• The extra benefit consumers receive when they pay less than what they are willing to pay

• The tax collected by the government

• The total revenue earned by sellers

A buyer is willing to pay ₱150 for shoes but only pays ₱100. What is the consumer surplus?

• ₱25

• ₱50

• ₱100

• ₱150

What is producer surplus?

• The amount consumers save when buying products

• The total taxes collected in a market

• The total cost of production

• The extra benefit producers receive when selling above their minimum acceptable price

A seller is willing to sell a bag for ₱300 but sells it for ₱450. What is the producer surplus?

• ₱100

• ₱120

• ₱150

• ₱200

Economic surplus is best defined as:

• Consumer surplus only

• Producer surplus only

• Total revenue minus taxes

• Consumer surplus plus producer surplus

If consumer surplus is ₱200 and producer surplus is ₱300, what is total economic surplus?

• ₱100

• ₱300

• ₱400

• ₱500

What is deadweight loss?

• The gain from trade enjoyed by consumers

• The total profit earned by firms

• The lost economic benefit caused by market inefficiency

• The amount of taxes paid by producers

Which of the following may cause deadweight loss?

• Taxes and monopolies

• Efficient markets

• Perfect competition

• Increased market transactions

When deadweight loss exists, what happens in the market?

• More mutually beneficial trades happen

• Fewer beneficial trades occur than the efficient level

• Producers always gain more profit

• Consumers pay zero price

Which statement is TRUE?

• Producer surplus is the benefit sellers get from higher selling prices than their minimum price

• Deadweight loss increases total economic surplus

• Consumer surplus benefits sellers only

• Economic surplus only includes government revenue