Deck 4: Consumer and Producer Surplus

Question 1

Use the following to answer questions:
(Table: Willingness to Pay for Basketball Sneakers) The table Willingness to Pay for Basketball Sneakers shows each player's willingness to pay for basketball sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the price of basketball sneakers is $100, how many pairs will be purchased?

A) one
B) two
C) three
D) four

Answer 1

D

Question 2

Use the following to answer questions:
(Table: Consumer Surplus) Look at the table Consumer Surplus. Assume that each student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is $75 and there is no other market for tickets, the total consumer surplus for the five students is:

A) $190.
B) $125.
C) $40.
D) $0.

Answer 2

C

Question 3

Use the following to answer questions:
(Table: Consumer Surplus) Look at the table Consumer Surplus. Assume that each student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is $50 and there is no other market for tickets, total consumer surplus for the five students is:

A) $105.
B) $130.
C) $270.
D) $320.

Answer 3

A

Question 4

A consumer's willingness to pay reflects:

A) the maximum price at which he or she would buy the good or service.
B) the minimum price at which he or she would buy the good or service.
C) the cost of producing the good or service.
D) the equilibrium price of the good or service.

Question 5

Use the following to answer questions:
(Table: Consumer Surplus and Phantom Tickets) The table Consumer Surplus and Phantom Tickets shows each student's willingness to pay for a Phantom of the Opera ticket. Assume that each student wants to buy one ticket. If the price of a ticket to see Phantom of the Opera is $50, then Robert's consumer surplus is:

A) $60.
B) $50.
C) $10.
D) $240.

Question 6

Use the following to answer questions:
(Table: Willingness to Pay for Basketball Sneakers) The table Willingness to Pay for Basketball Sneakers shows each player's willingness to pay for basketball sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the price of basketball sneakers is $145, which player will purchase sneakers?

A) Jamichael
B) Corey
C) Rudy
D) Ray

Question 7

A consumer's willingness to pay depends on:

A) the cost of producing the good or service.
B) the expected additional benefit of consuming the good or service.
C) the size of the shortage of the good or service.
D) the size of the surplus of the good or service.

Question 8

Use the following to answer questions:
(Table: Consumer Surplus) Look at the table Consumer Surplus. Assume that each student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is $75, Miguel's consumer surplus is:

A) $60.
B) $50.
C) $15.
D) $240.

Question 9

Use the following to answer questions:
(Table: Consumer Surplus) Look at the table Consumer Surplus. Assume that each student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is $50, Lois's consumer surplus is:

A) $60.
B) $50.
C) $15.
D) $240.

Question 10

Use the following to answer questions:
(Table: Consumer Surplus) Look at the table Consumer Surplus. Assume that each student wants to buy one ticket. If the tickets to The Nutty Nutcracker are free and there is no other market for tickets, the total consumer surplus for the five students is:

A) $0.
B) $100.
C) $150.
D) $320.

Question 11

Use the following to answer questions:
(Table: Consumer Surplus) Look at the table Consumer Surplus. Assume that each student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is $50, Narum's consumer surplus is:

A) $60.
B) $50.
C) $15.
D) $240.

Question 12

Use the following to answer questions:
(Table: Consumer Surplus and Phantom Tickets) The table shows Consumer Surplus and Phantom Tickets each student's willingness to pay for a Phantom of the Opera ticket. Assume that each student wants to buy one ticket. If the box office price of a ticket to see Phantom of the Opera is $50 and there is no other market for tickets, the total consumer surplus for the five students is:

A) $100.
B) $175.
C) $230.
D) $240.

Question 13

Use the following to answer questions:
(Table: Willingness to Pay for Basketball Sneakers) The table Willingness to Pay for Basketball Sneakers shows each player's willingness to pay for basketball sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the price of basketball sneakers is $60, how many pairs will be purchased?

A) five
B) four
C) three
D) two

Question 14

Use the following to answer questions:
(Table: Willingness to Pay for Basketball Sneakers) The table Willingness to Pay for Basketball Sneakers shows each player's willingness to pay for basketball sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the price of basketball sneakers is $130, how many pairs will be purchased?

A) none
B) one
C) two
D) three

Question 15

Use the following to answer questions:
(Table: Consumer Surplus and Phantom Tickets) The table Consumer Surplus and Phantom Tickets shows each student's willingness to pay for a Phantom of the Opera ticket. Assume that each student wants to buy one ticket. If the box office price of a ticket to see Phantom of the Opera is $130 and there is no other market for tickets, the total consumer surplus for the five students is:

A) $150.
B) $125.
C) $20.
D) $0.

Question 16

Use the following to answer questions:
(Table: Consumer Surplus) Look at the table Consumer Surplus. Assume that each student wants to buy one ticket. If the price of a ticket to see The Nutty Nutcracker is $75, Lois's consumer surplus is:

A) $25.
B) $60.
C) $75.
D) $100.

Question 17

Consumers' willingness to pay for a good is used to derive the _____ for that good.

A) producer surplus
B) cost of production
C) supply curve
D) demand curve

Question 18

Use the following to answer questions:
(Table: Willingness to Pay for Basketball Sneakers) The table Willingness to Pay for Basketball Sneakers shows each player's willingness to pay for basketball sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the price of basketball sneakers is $125, which players will purchase sneakers?

A) Jamichael and Javon
B) Jamichael and Corey
C) Jamichael, Corey, and Rudy
D) Jamichael, Corey, Rudy, and Ray

Question 19

The total consumer surplus for good X can be calculated in all ways EXCEPT as:

A) the sum of the individual consumer surpluses for all buyers of X.
B) the area below the demand curve for X and above the price of X.
C) the area bounded by the demand curve for X and the two axes.
D) the sum, for all buyers of X, of the difference between what each buyer is willing to pay for X and the amount actually paid.

Question 20

Use the following to answer questions:
(Table: Willingness to Pay for Basketball Sneakers) The table Willingness to Pay for Basketball Sneakers shows each player's willingness to pay for basketball sneakers. Assume that each player wants to buy at most, one pair of sneakers. If the price of basketball sneakers is $180, how many pairs will be purchased?

A) none
B) one
C) two
D) three

Question 21

Use the following to answer question:
Figure: Monthly Demand for Ice Cream Cones
(Figure: Monthly Demand for Ice Cream Cones) The graph Monthly Demand for Ice Cream Cones shows one individual's monthly demand for ice cream cones. At $5 per cone, this individual will consume 10 cones in a month. How much consumer surplus does this consumer receive?

A) $100
B) $50
C) $150
D) $500

Question 22

We can measure total consumer surplus for good X as:

A) the sum of the individual consumer surpluses for all buyers of X.
B) the area above the demand curve for X and below the price of X.
C) the area bounded by the demand curve for X and the two axes.
D) the area above the supply curve for X.

Question 23

Consumer surplus is represented by the area _____ the demand curve and _____ the market price.

A) above; below
B) above; above
C) below; above
D) below; below

Question 24

Vonda and Aleiyah are shopping together at the mall for new jeans. Vonda is willing to pay $90 and Aleiyah is willing to pay $50 for a pair of jeans. What is the gain in total consumer surplus when the price decreases from $59 to $40?

A) $10
B) $29
C) $31
D) $60

Question 25

Use the following to answer question:
Figure: Wireless Mouse Market
(Figure: Wireless Mouse Market) Use the graph to calculate consumer surplus when the market is at equilibrium.

A) $4,000
B) $5,000
C) $2,000
D) $3,000

Question 26

Ashley bought a new pair of jeans. When she walked out of the store, she thought, "I got such a great deal; I would have paid $40 more for these jeans!" This best represents the concept of:

A) consumer surplus.
B) producer surplus.
C) total surplus.
D) equilibrium.

Question 27

Some smaller retailers often go out of business when Walmart opens a new store. The most likely reason for this development is that:

A) Walmart practices unfair pricing methods that reduce consumer surplus over time.
B) consumers in those areas receive no consumer surplus from Walmart.
C) consumers in those areas receive a larger consumer surplus from shopping at Walmart than from the smaller stores.
D) smaller stores increase prices to compete.

Question 28

Which situation would most likely cause a DECREASE in consumer surplus in the toy market?

A) The cost of shipping increases because of higher oil prices.
B) Consumer income increases.
C) There is an unexpected baby boom.
D) A new assembly line design increases worker productivity.

Question 29

Consumer surplus for an individual buyer is equal to:

A) the consumer's willingness to pay for the good minus the marginal cost of producing the good.
B) the price of the good minus the marginal cost of producing the good.
C) the consumer's willingness to pay for the good minus the price of the good.
D) the marginal cost of the good minus the consumer's willingness to pay for the good.

Question 30

Along a given downward-sloping demand curve, an increase in the price of a good will _____ consumer surplus.

A) increase
B) decrease
C) not change
D) The answer cannot be determined without information about the supply curve.

Question 31

Adie wants to take some online classes this semester. She is willing to pay $1,000 for the first class, $800 for the second, $700 for the third, and $500 for the fourth. If online classes cost $750, Adie will take _____ online classes, and her consumer surplus will equal _____.

A) three; $350
B) four; $600
C) two; $400
D) two; $300

Question 32

Jeanette is willing to pay $100 for the first pair of shoes, $80 for the second pair, $50 for the third, and $30 for the fourth. If shoes cost $50, Jeanette will buy _____ pairs of shoes and her total consumer surplus equals _____.

A) four; $110
B) three; $230
C) three; $80
D) four; $80

Question 33

Consumer surplus can be found by computing the area _____ the _____ curve and _____ the price.

A) above; supply ; below
B) below; supply; above
C) below; demand; above
D) below; demand; below

Question 34

An increase in the consumer surplus in the market for milkshakes may result from a(n) _____ in the _____ of milkshakes.

A) increase; price
B) increase; supply
C) decrease; demand
D) decrease; supply

Question 35

Use the following to answer question:
(Table: Economics Textbooks) The table Economics Textbooks shows how much money four consumers would be willing to pay for a new economics textbook. If the price of the textbook is $100, what is the total consumer surplus received by these consumers?

A) $125
B) $500
C) $100
D) $75

Question 36

Use the following to answer question:
(Table: Music Downloads) Two consumers, Eli and Madison, like to download songs to their iPhones, and the table Music Downloads represents their willingness to pay for each downloaded song. If an individual song can be downloaded for $1, what is the total consumer surplus received by these consumers?

A) $19.25
B) $18
C) $10
D) $11

Question 37

Mark and Rasheed are at the bookstore buying new calculators for the semester. Mark is willing to pay $75 and Rasheed is willing to pay $100 for a graphing calculator. The price for a calculator at the bookstore is $65. How much is their total consumer surplus?

A) $10
B) $35
C) $45
D) $60

Question 38

Vonda and Aleiyah are shopping together at the mall for new jeans. Vonda is willing to pay $90 and Aleiyah is willing to pay $50 for a pair of jeans. If the price of jeans is $59, how much total consumer surplus is achieved in this market?

A) $0
B) $9
C) $31
D) $40

Question 39

Mark and Rasheed are at the bookstore buying new calculators for the semester. Mark is willing to pay $75 and Rasheed is willing to pay $100 for a graphing calculator. The price for a calculator at the bookstore is $65. How much is Mark's individual consumer surplus?

A) $10
B) $25
C) $35
D) $75

Question 40

Use the following to answer question:
Figure: Market Demand
(Figure: Market Demand) Look at the figure Market Demand. The amount by which the total benefits to consumers exceed their total expenditure is called _____, and if the price is B, is depicted by the area _____.

A) producer surplus; BCD
B) consumer surplus; 0CDE
C) consumer surplus; BCD
D) net benefit; 0BDE

Question 41

Use the following to answer questions:
Figure: Market for Hamburgers
(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Irvine, Kentucky. If the price of a hamburger is $1 and 200 hamburgers are supplied, producer surplus will equal:

A) $60.
B) $65.
C) $50.
D) $360.

Question 42

Along a given downward-sloping demand curve, an increase in the price of a good will:

A) increase consumer surplus.
B) decrease consumer surplus.
C) have no effect on consumer surplus.
D) decrease producer surplus.

Question 43

Use the following to answer questions:
Figure: Producer Surplus III
(Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the price of the good is $4, producer surplus will equal:

A) $20.
B) $40.
C) $60.
D) $80.

Question 44

Use the following to answer questions:
Figure: Producer Surplus
(Figure: Producer Surplus) Look at the figure Producer Surplus. Total producer surplus is _____ when the price is $40.

A) $40
B) $60
C) $80
D) $85

Question 45

Along a given downward-sloping demand curve, a decrease in the price of a good will _____ consumer surplus.

A) increase
B) decrease
C) have no effect on
D) It's impossible to tell what will happen to consumer surplus.

Question 46

Use the following to answer questions:
Figure: Market for Hamburgers
(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Irvine, Kentucky. If 400 hamburgers are sold, producer surplus will equal:

A) $650.
B) $400.
C) $510.
D) $200.

Question 47

Use the following to answer questions:
Figure: Producer Surplus II
(Figure: Producer Surplus II) Look at the figure Producer Surplus II. At a price of P₂, producer surplus equals the area:

A) LMK.
B) P₁K0.
C) P₂M0.
D) P₂P₁KM.

Question 48

Use the following to answer questions:
Figure: Producer Surplus
(Figure: Producer Surplus) Look at the figure Producer Surplus. When the price falls from $45 to $35, producer surplus _____ for a total producer surplus of _____.

A) increases by $10; $140
B) decreases by $40; $60
C) increases by $35; $180
D) decreases by $10; $140

Question 49

When there is a bountiful harvest of grapefruit, assuming that the demand curve for grapefruit is downward-sloping, total consumer surplus in the grapefruit market:

A) will increase.
B) will decrease.
C) will remain the same.
D) may change, but we can't tell how.

Question 50

Use the following to answer questions:
Figure: Market for Hamburgers
(Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Irvine, Kentucky. If the price of burgers falls from $1.50 to $1.00, there is a loss in producer surplus. How much of the loss accrues because of the change in the quantity supplied?

A) $50
B) $45
C) $75
D) $90

Question 51

Use the following to answer questions:
Figure: Producer Surplus
(Figure: Producer Surplus) Look at the figure Producer Surplus. When the price rises from $25 to $35, producer surplus _____ for a total producer surplus of _____.

A) increases by $10; $30
B) decreases by $10; $30
C) increases by $30; $60
D) decreases by $35; $100

Question 52

Suppose the United States removes sugar quotas and the market price of sugar drops. If the demand curve for candy bars is downward-sloping, in the candy bar market we would expect:

A) the consumer surplus to increase.
B) the consumer surplus to decrease.
C) the consumer surplus to be unchanged.
D) the deadweight loss to increase.

Question 53

Which of the following is most likely to INCREASE consumer surplus in the market for cotton T-shirts?

A) Weather provides for a bountiful cotton harvest.
B) Consumer incomes fall and cotton T-shirts are normal goods.
C) The price of polyester T-shirts falls.
D) The price of industrial sewing machines used to produce garments increases.

Question 54

Use the following to answer questions:
Figure: Producer Surplus III
(Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the price of the good is $2, producer surplus will equal:

A) $20.
B) $40.
C) $60.
D) $80.

Question 55

Use the following to answer questions:
Figure: Producer Surplus III
(Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the price of the good increases from $3 to $4, producer surplus will increase by:

A) $5.
B) $15.
C) $25.
D) $35.

Question 56

The number of seats in a football stadium is fixed at 70,000. The team raises the price of a ticket from $30, at which 70,000 are sold, to $40, and it sells 60,000 tickets. The price change caused a change in the consumer surplus of:

A) -$10.
B) -$650,000
C) -$100,000
D) -$10,000

Question 57

Use the following to answer questions:
Figure: Producer Surplus II
(Figure: Producer Surplus II) Look at the figure Producer Surplus II. At a price of P₁, producer surplus equals the area:

A) LMK.
B) P₁K0.
C) P₂M0.
D) P₂P₁KM.

Question 58

Use the following to answer questions:
Figure: Producer Surplus II
(Figure: Producer Surplus II) Look at the figure Producer Surplus II. If the price rises from P₁ to P₂, producer surplus increases by the area:

A) LMK.
B) P₁K0.
C) P₂M0.
D) P₂P₁KM.

Question 59

If the demand curve for ice cream is downward-sloping and the supply of it decreases, there is _____ in consumer surplus.

A) an increase
B) a decrease
C) no change
D) It's impossible to tell what will happen to consumer surplus.

Question 60

Use the following to answer questions:
Figure: Producer Surplus II
(Figure: Producer Surplus II) Look at the figure Producer Surplus II. If the price falls from P₂ to P₁, producer surplus decreases by the area:

A) LMK.
B) P₁K0.
C) P₂M0.
D) P₂P₁KM.

Question 61

Use the following to answer questions:
Figure: Producer Surplus III
(Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the price of the good decreases from $2 to $1, producer surplus will decrease by:

A) $5.
B) $15.
C) $25.
D) $35.

Question 62

Use the following to answer question:
Figure: Monthly Supply of Bread
(Figure: Monthly Supply of Bread) The figure Monthly Supply of Bread represents the monthly supply of bread at a local bakery. At $3 per loaf, the bakery produces 120 loaves per month. The producer surplus received by this bakery is equal to:

A) $120.
B) $60.
C) $360.
D) $180.

Question 63

Use the following to answer questions:
(Table: Producer Surplus) Look at the table Producer Surplus. If the price of a ticket to see The Nutty Nutcracker is $75, then Caitlin's producer surplus is:

A) $0.
B) $74.
C) $75.
D) $100.

Question 64

Use the following to answer questions:
(Table: Producer Surplus) Look at the table Producer Surplus. If the price of a ticket to see The Nutty Nutcracker is $75 and there is no other market for tickets, the total producer surplus for the five students is:

A) $190.
B) $139.
C) $75.
D) $40.

Question 65

Use the following to answer questions:
(Table: Producer Surplus) Look at the table Producer Surplus. If the price of a ticket to see The Nutty Nutcracker is $50 and there is no other market for tickets, then total producer surplus for the five students is:

A) $50.
B) $74.
C) $100.
D) $276.

Question 66

Producer surplus is represented by the area _____ the supply curve and _____ the price.

A) above; above
B) above; below
C) below; above
D) below; below

Question 67

Use the following to answer questions:
(Table: Producer Surplus and Phantom Tickets) The table Producer Surplus and Phantom Tickets shows the minimum price at which each of the students is willing to sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to sell. Given the information in the table, if these students can sell their Phantom tickets for only $5, then:

A) Tim will be the only student not to sell his ticket.
B) Laura, Whitney, Ralph, and Rick will sell their tickets.
C) the total producer surplus for the five students will be $4.
D) the total producer surplus for the five students will be $330.

Question 68

Use the following to answer questions:
(Table: Producer Surplus) Look at the table Producer Surplus. If the tickets to The Nutty Nutcracker are free and there is no other market for tickets, the total producer surplus for the five students is:

A) $276.
B) $100.
C) $74.
D) $0.

Question 69

Anna is willing to sell her 20-year-old boat, but not for less than $2,300. For Anna, the cost of selling this boat is _____ $2,300.

A) more than
B) less than
C) equal to
D) There is not enough information to answer the question.

Question 70

Producer surplus for an individual seller is equal to:

A) the price of the good minus the cost of producing the good.
B) the cost of the good minus the willingness to pay for the good.
C) the willingness to pay for the good minus the price of the good.
D) the cost of the good minus the price of the good.

Question 71

Use the following to answer questions:
(Table: Producer Surplus and Phantom Tickets) The table Producer Surplus and Phantom Tickets shows the minimum price at which each of the students is willing to sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to sell. If the price for Phantom tickets is $55, which student has the highest individual producer surplus?

A) Tim
B) Laura
C) Rick
D) Ralph

Question 72

Use the following to answer questions:
(Table: Producer Surplus and Phantom Tickets) The table Producer Surplus and Phantom Tickets shows the minimum price at which each of the students is willing to sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to sell. Given the information in the table, if the price for Phantom tickets is $55, total producer surplus for the five students is:

A) $54.
B) $79.
C) $84.
D) $64.

Question 73

Maria wants to get rid of her bookshelf. She is willing to give it away, but her neighbor offers to pay $30 for it. Maria takes a:

A) consumer surplus gain.
B) consumer surplus loss.
C) producer surplus gain.
D) producer surplus loss.

Question 74

The total producer surplus in the Wisconsin milk market is:

A) the sum of the individual producer surpluses in this market.
B) the sum of all prices paid multiplied by the number of gallons of milk sold.
C) the total revenue of the milk producers in Wisconsin.
D) the total cost of selling milk in Wisconsin.

Question 75

Use the following to answer questions:
(Table: Producer Surplus) Look at the table Producer Surplus. If the price of a ticket to see The Nutty Nutcracker is $50, then Francisco's producer surplus is:

A) $0.
B) $40.
C) $90.
D) $240.

Question 76

We can measure total producer surplus for good X as:

A) the sum of the individual producer surpluses for all buyers of X.
B) the area below the supply curve for X and above the price of X.
C) the area bounded by the supply curve for X and the two axes.
D) the area between the demand curve for X and the supply curve for X.

Question 77

The total producer surplus for a good can be calculated in all of the following ways EXCEPT as:

A) the sum of the individual producer surpluses for all sellers of the good.
B) the area below the supply curve for the good up to the quantity of the good sold.
C) the area above the supply curve and below the price at which the good is being sold.
D) the sum, for all sellers of the good, of the difference between what each seller receives and the minimum amount he or she is willing to accept for selling the good.

Question 78

Use the following to answer questions:
(Table: Producer Surplus) Look at the table Producer Surplus. If the price of a ticket to see The Nutty Nutcracker is $75, then Dudley's producer surplus is:

A) $15.
B) $25.
C) $50.
D) $240.

Question 79

Use the following to answer questions:
(Table: Producer Surplus) Look at the table Producer Surplus. If the price of a ticket to see The Nutty Nutcracker is $50, then Dudley's producer surplus is:

A) $0.
B) $25.
C) $60.
D) $240.

Question 80

Use the following to answer questions:
(Table: Producer Surplus and Phantom Tickets) The table Producer Surplus and Phantom Tickets shows the minimum price at which each of the students is willing to sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to sell. If the price for Phantom tickets is $140 and there is no other market for tickets, total producer surplus for these five students is:

A) $139.
B) $110.
C) $40.
D) $379.