1) When the quantities we are dealing with are relatively large, we can identify total consumer surplus on a graph as the a) area above the demand curve and below the price. b) area above the demand curve and above the price. c) area below the demand curve and below the price. d) area below the demand curve and above the price. 2) As the price of a good increases, consumer surplus a) increases. b) decreases. c) stays the same. d) may increase, decrease, or stay the same. 3) As the price in a market falls, a) consumer surplus decreases because some consumers leave the market, reducing consumer surplus. b) consumer surplus decreases because the consumers who remain in the market receive a lower consumer surplus. c) consumer surplus increases because consumers who would have bought the good at the higher price earn more consumer surplus, and new consumers enter the market who also earn consumer surplus. d) consumer surplus may increase, decrease, or stay the same.
Ch7 Practice Sheet 7
1) When the quantities we are dealing with are relatively large, we can identify total
a) area above the
b) area above the demand curve and above the price.
c) area below the demand curve and below the price.
d) area below the demand curve and above the price.
2) As the price of a good increases, consumer surplus
a) increases.
b) decreases.
c) stays the same.
d) may increase, decrease, or stay the same.
3) As the price in a market falls,
a) consumer surplus decreases because some consumers leave the market, reducing consumer surplus.
b) consumer surplus decreases because the consumers who remain in the market receive a lower consumer surplus.
c) consumer surplus increases because consumers who would have bought the good at the higher price earn more consumer surplus, and new consumers enter the market who also earn consumer surplus.
d) consumer surplus may increase, decrease, or stay the same.
4) If the demand curve is perfectly price elastic
a) consumer surplus will equal zero.
b)
c) consumer surplus will equal total surplus.
d) consumer surplus will be greater than producer surplus.
5) After waiting in line for three hours to buy two $50 tickets for a concert, someone offered Beth $160 for her tickets. Beth refused even though she knew that comparable seats were still available for $50 per ticket if she waited in line again for three hours. We know that the
a) greater than or equal to $60 per hour.
b) less than or equal to $60 per hour.
c) greater than or equal to $20 per hour.
d) less than or equal to $20
per hour.
6) We measure total producer surplus as the
a) area above the supply curve and below the price.
b) area above the supply curve and above the price.
c) area below the supply curve and below the price.
d) area below the supply curve and above the price,
7) As the price of oranges rises, the producer surplus in the orange market
a) increases.
b) decreases.
c) does not change.
d) may increase, decrease or stay the same.
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