Deck 5: Efficiency

Question 1

The willingness to pay of buyers' in a market:

A) is represented by the demand curve.
B) is represented by the supply curve.
C) explains why the demand curve is bowed-out.
D) explains why the demand curve is bowed-in.

Answer 1

is represented by the demand curve.

Question 2

At prices above a consumer's reservation price:

A) the opportunity cost is less than the benefit from having the good.
B) the opportunity cost is greater than the benefit from having the good.
C) the buyer will purchase the good.
D) the willingness to pay is greater than the price.

Answer 2

the opportunity cost is greater than the benefit from having the good.

Question 3

Which of the following prices could represent Eli's willingness to pay for a baseball glove if he observed the market price of $43 and decided not to buy one?

A) $37
B) $45
C) $50
D) None of these could represent Eli's willingness to pay.

Answer 3

$37

Question 4

Surplus refers to:

A) the difference between the price at which a buyer or seller would be willing to trade and the actual price.
B) the difference between the willingness to pay and the actual price paid.
C) the difference between the willingness to sell and the actual price accepted.
D) All of these are true.

Question 5

At prices below a consumer's willingness to pay:

A) the buyer will participate in the market because the opportunity cost is less than the benefit from consuming the good.
B) the buyer will participate in the market because the opportunity cost is more than the benefit from consuming the good.
C) the buyer will not participate in the market because the opportunity cost is less than the benefit from consuming the good.
D) the buyer will not participate in the market because the opportunity cost is more than the benefit from consuming the good.

Question 6

A buyer always wants to:

A) buy for a price that is as high as possible, but never higher than his willingness to pay.
B) buy for a price that is as low as possible, but never lower than his willingness to pay.
C) buy for a price that is as low as possible, but never higher than his willingness to pay.
D) buy for a price that is as high as possible, but never lower than his willingness to pay.

Question 7

The concept of surplus can:

A) show the benefits of introducing new markets.
B) show who benefits from a tax.
C) show who loses from minimum wage.
D) show any of these.

Question 8

If Claire's reservation price on a sweater is $37, which of the following prices would she have to observe in the market in order to buy a sweater?

A) $37.01
B) $38.00
C) $37.00
D) Claire would not buy a sweater at any of these prices.

Question 9

Which of the following prices could represent Sally's willingness to pay for a pair of shoes if she bought them for $45?

A) $15.00
B) $25.00
C) $44.99
D) $55.00

Question 10

In economics, the concept of surplus:

A) measures the benefit that people receive when they buy something for less than they would have been willing to pay.
B) measures the benefit that people receive when they sell something for more than they would have been willing to accept.
C) is the best way to look at the benefits people receive from successful transactions.
D) All of these are true.

Question 11

Willingness to pay represents:

A) the point at which the benefit that a person will get from a good is equal to the benefit of spending the money on the next best alternative.
B) the opportunity cost of a good.
C) the buyer's reservation price.
D) All of these represent willingness to pay.

Question 12

Surplus refers to:

A) a way of measuring who benefits from transactions and by how much.
B) the difference between the price the buyer would have paid and the actual price paid.
C) the difference between the price the seller would have accepted and the actual sell price.
D) All of these statements are true.

Question 13

If Sam's opportunity cost of a sweater is $37, which of the following prices would he have to observe in the market in order to sell a sweater?

A) $37
B) $37.01
C) $50
D) Sam would sell a sweater at any of these prices.

Question 14

If Billy's reservation price on a snowboard is $250, how many snowboards would he buy if the market price of snowboards is $500?

A) 0
B) 1
C) 2
D) The amount of snowboards purchased would depend on Billy's income.

Question 15

The maximum price that a buyer would be willing to pay for a good or service is also called:

A) the reservation price.
B) the buyer-max price.
C) the reserved max price.
D) the opportunity cost.

Question 16

A seller's willingness to sell:

A) is the maximum price that a seller is willing to accept in exchange for a good or service.
B) is the minimum price that a seller is willing to accept in exchange for a good or service.
C) is his or her reserved minimum bid-price.
D) must always equal the buyer's willingness to buy.

Question 17

When someone's willingness to pay is the same as the actual price paid for an item:

A) the individual will not purchase the item.
B) the individual's surplus is zero.
C) surplus cannot be maximized.
D) All of these are true.

Question 18

A consumer's willingness to pay:

A) is the maximum price that a buyer would be willing to pay for a good or service.
B) is the minimum price that a buyer would be willing to pay for a good or service.
C) is his or her reserved minimum bid-price.
D) must always equal the seller's willingness to sell.

Question 19

Each seller's opportunity costs are:

A) determined monetarily, which is why they can never be zero.
B) determined by a number of factors, none of which is monetary.
C) determined by a number of factors, including monetary considerations.
D) less than the monetary costs of manufacturing the good or service.

Question 20

If Thelma's willingness to sell her homemade fudge is $4, then at which of the following prices would Thelma sell her fudge?

A) $2
B) $3.99
C) $4.01
D) Thelma would not sell her fudge at any of these prices.

Question 21

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers was $12, then total producer surplus would be:

A) $7.
B) $9.
C) $17.
D) $30.

Question 22

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills is $320, given the scenario described, Abe's consumer surplus would be:

A) $400.
B) $350.
C) $320.
D) $80.

Question 23

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills falls from $375 to $330, given the scenario described, which of the following can be said?

A) Butch will join the market, but receive no consumer surplus.
B) Butch and Collin will join the market, and together will receive $30 in consumer surplus.
C) Abe will experience a decrease in consumer surplus of $45.
D) Abe will experience an increase in consumer surplus of $45.

Question 24

Assume the market is in equilibrium in the graph shown at demand D and supply S1 (and a quantity of 5). If the supply curve shifts to S2, and a new equilibrium is reached (at a quantity of 7), which of the following is true?

A) Consumer surplus increases by $5.
B) Consumer surplus decreases by $5.
C) Consumer surplus increases by $9.
D) Consumer surplus decreases by $9.

Question 25

Assume the market in the graph shown with demand D and supply S₁ is in equilibrium at a quantity of 5 units. Consumer surplus is:

A) $5.
B) $10.
C) $45.
D) $9.

Question 26

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills increases from $310 to $350, given the scenario described:

A) total consumer surplus would fall by $120.
B) total consumer surplus would fall by $90.
C) Collin and Butch would experience a decrease in consumer surplus, but Abe's consumer surplus would rise.
D) Collin would experience a decrease in consumer surplus, but Abe and Butch would experience a rise in consumer surplus.

Question 27

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills is $300, given the scenario described, the total consumer surplus would be:

A) $1,070.
B) $170.
C) $200.
D) None of these is true.

Question 28

What consumer surplus is received by someone whose willingness to pay is $35 below the market price of a good?

A) $35
B) $0
C) ($35 x P*)
D) None of these is correct.

Question 29

According to the graph shown, consumer surplus is:

A) the area under the supply curve and above the price.
B) the area above the supply curve and below the price.
C) the area under the demand curve and above the market price.
D) the area above the demand curve and below the price.

Question 30

According to the graph shown, consumer surplus is:

A) $10.
B) $15.
C) $20.
D) $30.

Question 31

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer this hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers was $13, then total producer surplus would be:

A) $9.
B) $30.
C) $17.
D) $7.

Question 32

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills increases from $300 to $325, given the scenario described:

A) Collin would drop out of the market.
B) Collin's surplus would decrease the most.
C) Collin is the only consumer who would be affected in terms of surplus.
D) Daniel's surplus would decrease.

Question 33

When Bob's willingness to pay for a cup of coffee is $1, and the price of a cup of coffee is $1:

A) Bob is indifferent about purchasing the coffee.
B) Bob will get no surplus by purchasing the coffee.
C) Bob will get the same surplus whether he purchases the coffee or not.
D) All of these are true.

Question 34

Surplus is:

A) a measure of the value that buyers and sellers get from participating in a market
B) maximized for individuals whose reservation price equals the market price.
C) negative for those who do not participate in a market.
D) All of these are true.

Question 35

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. Given the scenario described, if the market price of grills is $300, who participates in the market?

A) Only Abe, Butch, and Collin participate.
B) Only Collin and Daniel participate.
C) Only Abe and Butch participate.
D) Only Daniel participates.

Question 36

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers was $10, then:

A) only House Depot would gain surplus by supplying hammers to the market.
B) only House Depot and Lace Hardware would gain surplus by supplying hammers to the market.
C) House Depot, Lace Hardware, and Bob's Hardware would all supply hammers to the market, but Bob's would lose surplus.
D) only House Depot and Bob's Hardware would supply hammers to the market.

Question 37

According to the graph shown, if the market is in equilibrium, consumer surplus is:

A) $30.
B) $20.
C) $50.
D) $60.

Question 38

According to the graph shown, consumer surplus is:

A) $36.
B) $72.
C) $120
D) None of these.

Question 39

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. Given the scenario described, if the market price of grills falls from $395 to $340, then we can say:

A) Abe's consumer surplus increases from $5 to $60, and total consumer surplus increases from $5 to $70.
B) Abe's consumer surplus decreases from $60 to $5, and total consumer surplus decreases from $70 to $5.
C) Collin's consumer surplus increases from $0 to $20, and total consumer surplus increases from $5 to $70.
D) Butch's consumer surplus decreases from $10 to $0, and total consumer surplus increases from $10 to $80.

Question 40

A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills is $350, given the scenario described, total consumer surplus would be:

A) $750.
B) $400.
C) $50.
D) $870.

Question 41

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $8 to $14, total producer surplus would:

A) increase from $8 to $14.
B) increase from $1 to $12.
C) decrease from $14 to $8.
D) increase from $7 to $30.

Question 42

Assume the market is in equilibrium in the graph shown at demand D and supply S1. If the supply curve shifts to S2, and a new equilibrium is reached, equilibrium quantity will increase from 4 to 4.5 units. Which of the following is true?

A) Producer surplus increases by $3.00.
B) Producer surplus decreases by $8.50.
C) Producer surplus increases by $7.50.
D) Producer surplus decreases by $16.

Question 43

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $6 to $7:

A) total producer surplus would increase.
B) total producer surplus would remain unchanged.
C) total producer surplus would decrease.
D) total producer surplus cannot be determined with the information given.

Question 44

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $9 to $12, total producer surplus would increase by:

A) $1.
B) $3.
C) $5.
D) $7.

Question 45

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers decreased from $13 to $11:

A) total producer surplus would decrease from $9 to $5.
B) total producer surplus would increase from $5 to $9.
C) total producer surplus would decrease from $30 to $17.
D) total producer surplus would remain unchanged.

Question 46

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers decreased from $17 to $12:

A) producer participation in the market would increase.
B) producer participation in the market would decrease.
C) producer participation in the market would not be affected.
D) total producer surplus would remain unchanged.

Question 47

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $9 to $13:

A) House Depot's producer surplus would increase by $4.
B) Lace Hardware Hardware's producer surplus would increase by $3.
C) Bob's Hardware's producer surplus would remain unchanged.
D) All of these statements are true.

Question 48

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $8 to $11:

A) total producer surplus would increase by $3.
B) total producer surplus would increase by $6.
C) total producer surplus would increase by $9.
D) total producer surplus would increase by $4.

Question 49

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $8 to $11:

A) total producer surplus would increase to $5.
B) total producer surplus would decrease to $1.
C) total producer surplus would increase to $17.
D) total producer surplus would decrease to $7.

Question 50

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $6 to $8:

A) producer participation in the market would increase.
B) producer participation in the market would decrease.
C) producer participation in the market would remain unchanged.
D) total producer surplus would increase by $2.

Question 51

According to the graph shown, producer surplus is:

A) $36.
B) $48.
C) $120.
D) None of these.

Question 52

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $8 to $12, producer surplus would:

A) increase from $8 to $12.
B) increase by $4 for each producer.
C) increase by $4 for House Depot.
D) increase by $7 in total.

Question 53

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers decreased from $15 to $13, which of the following can be said with certainty?

A) Bob's Hardware would no longer participate in the market.
B) Total producer surplus would decrease.
C) Only Bob's Hardware will experience a drop in producer surplus.
D) Bob's Hardware would continue to participate in the market.

Question 54

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $7 to $11:

A) more producers would participate in the market.
B) only Bob's Hardware would lose surplus.
C) both Bob's Hardware and Lace Hardware would lose surplus.
D) House Depot is the only producer that will gain surplus.

Question 55

Assume the market in the graph shown with demand D and supply S₁ is in equilibrium at a quantity of 5 units. Producer surplus is:

A) $5.
B) $10.
C) $15.
D) $7.50.

Question 56

What is the producer surplus earned by a seller whose willingness to sell is $10 below the market price of a good?

A) $0
B) $10
C) (P* $10)
D) None of these is correct.

Question 57

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers decreased from $15 to $10:

A) total producer surplus falls by $5.
B) producer surplus for each producer falls by $5.
C) Bob's Hardware no longer sells hammers.
D) total producer surplus falls by $15.

Question 58

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $9 to $13:

A) producer surplus would increase for each producer.
B) producer surplus would increase only for House Depot.
C) producer surplus would remain unchanged for Bob's Hardware.
D) producer surplus would increase by $4 for Lace Hardware.

Question 59

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers decreased from $15 to $11:

A) total producer surplus would fall by $4.
B) producer surplus for each producer falls by $4.
C) House Depot's producer surplus falls by $4.
D) total producer surplus falls by $8.

Question 60

According to the graph shown, producer surplus is:

A) $10.
B) $6.
C) $2.
D) $20.

Question 61

Assuming the market is in equilibrium in the graph shown with demand D and supply S₁, consumer surplus is:

A) greater than consumer surplus when market is in equilibrium at D and S₂.
B) less than consumer surplus when market is in equilibrium at D and S₂.
C) the same as consumer surplus when market is in equilibrium at D and S₂.
D) zero.

Question 62

According to the graph shown, if the market is in equilibrium, producer surplus is:

A) $30.
B) $20.
C) $50.
D) $60.

Question 63

According to the graph shown, producer surplus is:

A) the area under the demand curve and above the market price.
B) the area under the supply curve and above the price.
C) the area above the supply curve and below the price.
D) the area above the demand curve and below the price.

Question 64

According to the graph shown, if the supply increases, then

A) consumer surplus would increase.
B) consumer surplus would decrease.
C) total surplus would increase.
D) quantity would increase.

Question 65

Assuming the market is in equilibrium in the graph shown with demand D and supply S₂ at a quantity of 8, consumer surplus is:

A) $32.
B) $11.
C) $7.
D) equal to the producer surplus.

Question 66

Assume the market in the graph shown with demand D and supply S₁ is in equilibrium at a quantity of 5 units. Total surplus is:

A) $5.
B) $15.
C) $12.50.
D) $60.

Question 67

Assume the market is in equilibrium in the graph shown at demand D and supply S₁. If the supply curve shifts to S₂, and a new equilibrium is reached, which of the following is true?

A) Consumer surplus increases, but producer surplus decreases.
B) Consumer surplus decreases, but producer surplus increases.
C) Both consumer and producer surplus increase.
D) Both consumer and producer surplus decrease.

Question 68

Assume the market is in equilibrium in the graph shown at demand D and supply S₂ (at a quantity of 6). If the supply curve shifts to S₁, and a new equilibrium is reached (at a quantity of 4), which of the following is true?

A) Total surplus would increase by $7.50.
B) Total surplus would decrease by $16.50.
C) Total surplus would increase by $32.
D) Total surplus would decrease by $14.00.

Question 69

Total surplus:

A) is producer and consumer surplus combined.
B) is producer surplus minus consumer surplus.
C) is consumer surplus minus producer surplus.
D) is the total amount spent on a good in a market.

Question 70

According to the graph shown, total surplus is:

A) $25.
B) $90.
C) $50.
D) $130.

Question 71

Assume the market is in equilibrium in the graph shown at demand D and supply S₂. If the supply curve shifts to S₁, and a new equilibrium is reached, which of the following is true?

A) Producer surplus would increase, and total surplus would increase.
B) Producer surplus would decrease, and total surplus would increase.
C) Producer surplus would increase, and total surplus would decrease.
D) Producer surplus would decrease, and total surplus would decrease.

Question 72

According to the graph shown, if the market price decreases (all else staying the same):

A) producer surplus would increase.
B) producer surplus would decrease.
C) total surplus would increase.
D) quantity would increase.

Question 73

Total surplus:

A) can never be negative.
B) is always zero in an efficient market.
C) can be negative when the market is not in equilibrium.
D) is greater than the sum of consumer and producer surplus.

Question 74

Total surplus:

A) can never be zero.
B) can never fall below zero.
C) is always above zero.
D) is less than the consumer surplus.

Question 75

Assume an equilibrium price of $7 and equilibrium quantity of 8 units at demand D and supply S₂ in the graph shown. Total surplus is:

A) $32.
B) $12.
C) $56.
D) $16.

Question 76

Assuming the market is in equilibrium in the graph shown with demand D and supply S₁, total surplus is:

A) greater than total surplus when market is in equilibrium at D and S₂.
B) less than total surplus when market is in equilibrium at D and S₂.
C) the same as total surplus when market is in equilibrium at D and S₂.
D) zero.

Question 77

Assume the market is in equilibrium in the graph shown at demand D and supply S₁. If the supply curve shifts to S₂, and a new equilibrium is reached, which of the following is true?

A) Consumer surplus increases, and total surplus increases.
B) Consumer surplus decreases, and total surplus increases.
C) Consumer surplus increases, and total surplus decreases.
D) Consumer surplus decreases, and total surplus decreases.

Question 78

According to the graph shown:

A) consumer surplus is greater than producer surplus.
B) producer surplus is greater than consumer surplus.
C) total surplus is smaller than consumer surplus.
D) total surplus is smaller than producer surplus.

Question 79

Assume the market is in equilibrium in the graph shown at demand D and supply S1 (at a quantity of 5). If the supply curve shifts to S2, and a new equilibrium is reached (at a quantity of 7), which of the following is true?

A) Total surplus increases by $12.50.
B) Total surplus decreases by $12.50.
C) Total surplus increases by $15.50.
D) Total surplus decreases by $15.50.

Question 80

Assuming the market is in equilibrium in the graph shown with demand D and supply S₂ at a quantity of 8, producer surplus is:

A) 28
B) less than the consumer surplus.
C) 16
D) $32.