Worksheets1.2.8 Consumer and Producer surplus
Total questions: 14
Worksheet time: 8mins
What area represents producer surplus in the graph shown here if this market is in equilibrium?
P2MP0
P4MP2
LMN
P4PLN
P0MP4
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.
You are the manager of Fun World, a small amusement park that charges per ride. The diagram shows the demand curve for a typical customer. At $5 per ride, what is the total consumer surplus?
$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 Civic is £35,500 and she is able to actually buy it for £32,000, her consumer surplus is
£7,500
£2,500
£3,500
£67,500
Which of these statements about consumer surplus is correct?
Consumer surplus is shown by the area above the demand curve but below the prevailing price in the market.
Consumer surplus is calculated as the sum of the price consumers are willing to pay for a good, and the price they actually pay
Consumer surplus is the benefit the consumers receive when they pay a price below what they are willing to p
Consumer surplus shows the benefit that consumers receive when factors of production are allocated efficien
2 This diagram shows a market for short weekend breaks in a hotel, which is in equilibrium at P1Q1.
Which ONE of the following statements can be inferred from the information provided
Price elasticity of supply is constant along the supply curve
Demand is price inelastic
Price and quantity supplied have an inverse relationship
Consumer surplus is greater than producer surplus
When there is an increase in demand, ceteris paribus, and the market supply curve is upward sloping, then
consumer surplus will increase and producer surplus will increase
consumer surplus will increase and producer surplus will fall
consumer surplus will fall and producer surplus will increase
consumer surplus will fall and producer surplus will fall
The diagram shows the market for books.
A decrease in demand from D1 to D2 will cause a fall in
Producer Surplus to P2JY
Producer surplus to P2YK
Consumer surplus to P2YQ2
Consumer surplus to LXP1
In the market for an online game, a consumer is willing to pay £30 but the price is only £25. Which of the following is MOST likely to cause their consumer surplus to decrease
A fall in price to £20
New, more efficient technology used in producing the game
A rise in wages in the business producing the game
The market becoming more competitive
A producer of superior quality, fair trade and organic chocolate is supplying bars of chocolate to high-end retailers and would be willing to sell 100 bars for £3 each. If the actual market price is £5 per bar, which ONE of the following statements is correct?
The total producer surplus for each hundred bars is £200
The opportunity cost of each bar is less than the consumer surplus
C The total consumer surplus for each hundred bars is £200
The total producer surplus for each hundred bars is £500
This diagram shows demand and supply of a new pizza restaurant in a small town. The market in equilibrium at P1Q1.
If consumer surplus was to change from P1ab to P2ac, which of the following is the MOST likely reason for that change?
Consumers choose to go to a different pizza restaurant
Wages at the restaurant are raised by £1 per hour
Business rates paid by the restaurant owner are reduced
The restaurant becomes much more popular amongst local
D1 and S1 represent the initial demand and supply curves for a product.
D2 and S2 are the equivalent curves after changes in market conditions.
What are the resulting changes in consumer and producer surplus?
Change in consumer surplus is from R to P, Change in producer surplus is from U to Q
Change in consumer surplus is from R+T to P, Change in producer surplus is from U to Q +R
Change in consumer surplus is from R+T to P, Change in producer surplus is from V to Q
Change in consumer surplus is from R to P + S, Change in producer surplus is From V to Q +R
