Question 1

Consumer surplus is:​
A)the amount by which quantity supplied exceeds quantity demanded at the current market price.
B)the amount by which quantity demanded exceeds quantity supplied at the current market price.
C)the change in total utility derived from a one-unit change in the consumption of a good.
D)the horizontal sum of the individual demand curves for all consumers in the market.
E)valued by the difference between the maximum price consumers are willing to pay and the amount they actually pay.

Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and the amount they actually pay. It represents the value that consumers receive above and beyond what they have to pay for a particular product or service.

Question 2

The following diagram shows Ken's demand curve for neckties. When the price of neckties is $5, Ken purchases four neckties. When the price of neckties falls to $4, he purchases five neckties. A decline in the price of neckties causes his expenditure to: ​
Figure 6.3​
​

A)increase from $20 to $25, increasing his consumer surplus.
B)increase from $20 to $25, decreasing his consumer surplus.
C)remain constant at $20, leaving his consumer surplus unchanged.
D)remain constant at $20, increasing his consumer surplus.
E)decrease from $20 to $15, increasing his consumer surplus.

Accepted Answer

The answer of The following diagram shows Ken's demand curve...

Question 3

The following diagram shows the demand curve for neckties. At point a, total expenditure on neckties is: ​
Figure 6.3​
​

A)$5.
B)$9.
C)$20.
D)$26.
E)$45.

Accepted Answer

The answer of The following diagram shows the demand curve...

Question 4

The difference between the maximum amount a person is willing to pay for a given quantity of a good and the amount actually paid for that quantity is known as:​
A)producer surplus.
B)the substitution effect.
C)price discrimination.
D)the income effect.
E)consumer surplus.

Accepted Answer

Consumer surplus is the difference between the maximum amount a person is willing to pay for a given quantity of a good and the amount actually paid for that quantity. It represents the benefit that the consumer receives from consuming the good, and is measured as the area between the demand curve and the market price.

Question 5

As price falls along the demand curve for pretzels, _____.​
A)the ratio of marginal utility of pretzels to its price increases
B)the marginal valuation of pretzels increases
C)consumption of pretzels increases and marginal utility decreases
D)the marginal valuation of pretzels decreases
E)total utility and marginal utility remains unchanged

Accepted Answer

According to the law of demand, as the price of a good falls, the quantity demanded increases. Therefore, at lower prices, consumers have already satisfied their most urgent needs and are willing to pay less for additional units. This means that the marginal valuation of pretzels decreases as the price falls along the demand curve.

Question 6

The following diagram shows a consumer's demand schedule for a good. At a price of $2, consumer surplus is: ​
Figure 6.4
​

A)$4.
B)$5.
C)$10.
D)$80.
E)$200.

Accepted Answer

The answer of The following diagram shows a consumer's demand...

Question 7

The following diagram shows the demand curve for neckties. At point a, the monetary value of the total utility received by a consumer is: ​
Figure 6.3
​

A)$5.
B)$9.
C)$20.
D)$26.
E)$45.

Accepted Answer

The answer of The following diagram shows the demand curve...

Question 8

Suppose Debbie is willing to pay $50 for a pair of shoes but has to pay $20 because the shoes are on sale. Her consumer surplus is:​
A)$50.
B)$20.
C)$70.
D)$30.
E)$25.

Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and the actual price paid. In this case, Debbie was willing to pay $50 for the shoes but only had to pay $20 because of the sale. Therefore, her consumer surplus is $30 ($50 - $20).

Question 9

As price falls along the demand curve for pretzels, _____.​
A)consumer surplus remains unchanged
B)consumer surplus decreases
C)total utility decreases
D)consumer expenditure changes
E)marginal utility increases

Accepted Answer

As price falls along the demand curve for pretzels, consumer expenditure changes because the amount spent by consumers on pretzels is a function of both the price of pretzels and the quantity of pretzels purchased.

Question 10

The following diagram shows a market equilibrium. D is the demand curve for a good and S is the supply curve of the good. The consumer surplus at a price of $b is given by the area: ​
Figure 6.6​
​

A)below the curve D and above the curve S.
B)below the curve D and above the market price of $b.
C)below the curve D and above the market price of $d.
D)above the curve D.
E)below the curve S.

Accepted Answer

Consumer surplus is the difference between the maximum amount the consumers are willing to pay for a good and the market price they actually pay. At a price of $b, the consumer surplus is the area below the demand curve D and above the market price of $b. Therefore, the correct answer is B.

Question 11

The following image shows the demand curve for neckties. At point a, consumer surplus is _____. ​
Figure 6.3
​​

A)$0
B)$5
C)$8
D)$20
E)$26

Accepted Answer

The answer of The following image shows the demand curve...

Question 12

Jerry consumes three hamburgers at McDonald's. He figures out that the last hamburger he ate was just worth the price he paid for it. If the price of a hamburger is $1, _____.​
A)he has no consumer surplus
B)he would have a consumer surplus if he eats one more hamburger
C)he has a consumer surplus on the first hamburger
D)he has a consumer surplus on the first two hamburgers
E)he has a consumer surplus on the third hamburger alone

Accepted Answer

The answer of Jerry consumes three hamburgers at McDonald's. He...

Question 13

​The following diagram shows Ken's demand curve for neckties. Point a on the curve shows that when the price of neckties is $5, Ken purchases four neckties. Point b on the curve shows that when the price of neckties falls to $4, he purchases five neckties. At point b, the dollar value of the total utility is valued at: ​
Figure 6.3
​

A)$30.
B)$26.
C)$20.
D)$35.
E)$25.

Accepted Answer

The answer of ​The following diagram shows Ken's demand curve...

Question 14

Elvis values the first gravy sandwich at $5, the second at $4.50, the third at $4. If he buys three for $4 each, his consumer surplus has a value of:​
A)$5.
B)$4.
C)$1.50.
D)$9.50.
E)$12.

Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. Elvis values the sandwiches at $5, $4.50, and $4, totaling $13.50. He pays $12 for three sandwiches ($4 each), so his consumer surplus is $13.50 - $12 = $1.50.

Question 15

A decrease in price along the elastic segment of a demand curve will:​
A)decrease marginal utility and increase total utility.
B)decrease total utility as well as marginal utility.
C)increase marginal utility and decrease total utility.
D)increase total utility as well as marginal utility.
E)decrease consumer surplus and increase consumer expenditure.

Accepted Answer

The answer of A decrease in price along the elastic...

Question 16

The following diagram shows the market demand schedule for a good. When the price of the good is P, the shaded area represents: ​
Figure 6.5

A)shortage.
B)marginal utility of the good.
C)price floor.
D)consumer surplus.
E)marginal valuation of the good.

Accepted Answer

The shaded area represents the amount of consumer surplus, which is the difference between what consumers are willing to pay (marginal valuation) and what they actually pay (the market price). Therefore, the correct choice is D, which stands for "consumer surplus."

Question 17

Suppose Hannah spends $3 to buy five biscuits. The marginal utility of the fifth biscuit is valued at $0.60. The total utility derived from five biscuits is valued at $4.20. Hannah's consumer surplus is valued at _____.​
A)$20
B)$15
C)$5
D)$2.40
E)$1.20

Accepted Answer

Consumer surplus is calculated as the total utility minus the total expenditure. Here, the total utility is $4.20, and the total expenditure is $3. Therefore, the consumer surplus is $4.20 - $3 = $1.20.

Question 18

Which of the following is true when the price of a good falls?​
A)Consumer surplus always increases.
B)Consumer surplus always decreases.
C)Consumer surplus never changes.
D)Producer surplus increases.
E)Producer surplus remains unchanged.

Accepted Answer

When the price of a good falls, consumers are able to purchase the good at a lower price, which increases consumer surplus.

Question 19

The following image shows the demand curve for neckties. If neckties were available free of cost, then _____. ​
Figure 6.3
​​

A)total utility, consumer surplus, and consumer expenditure would be undefined
B)total utility and consumer surplus would be valued at $20, but consumer expenditure would be undefined
C)total utility, consumer surplus, and consumer expenditure would all be equal to zero
D)total utility, consumer surplus, and consumer expenditure would all be at its maximum
E)total utility and consumer surplus would be valued at $36; consumer expenditure would be zero

Accepted Answer

The answer of The following image shows the demand curve...

Question 20

If a consumer buys a good, the expected:​
A)marginal utility of the good is zero
B)opportunity cost of buying the good is more than its price
C)marginal utility of per dollar spent on the good equals its price
D)total utility derived from the consumption of the good is less than its price
E)marginal value of the good is greater than or equal to its price

Accepted Answer

If a consumer buys a good, it means that the marginal value of the good, or the additional utility gained from consuming one more unit of the good, is greater than or equal to its price. Otherwise, the consumer would not have made the purchase. Option A is incorrect because it assumes that the marginal utility is zero, which is unlikely as consumption typically brings some level of satisfaction. Option B is incorrect because the opportunity cost of buying the good refers to what the consumer must give up to buy it, which may or may not be more than the price. Option C is incorrect because while the marginal value of the good may be equal to its price, the marginal utility per dollar spent can vary depending on the consumer's preferences and the price of other goods. Option D is incorrect because the total utility derived from a good is not necessarily related to its price; a consumer may gain high levels of satisfaction from a relatively inexpensive good, for example.

Quiz 6: Consumer Choice and Demand

Consumer surplus is:

The following diagram shows Ken's demand curve for neckties. When the price of neckties is $5, Ken purchases four neckties. When the price of neckties falls to $4, he purchases five neckties. A decline in the price of neckties causes his expenditure to: Figure 6.3

The following diagram shows the demand curve for neckties. At point a, total expenditure on neckties is: Figure 6.3

The difference between the maximum amount a person is willing to pay for a given quantity of a good and the amount actually paid for that quantity is known as:

As price falls along the demand curve for pretzels, _____.

The following diagram shows a consumer's demand schedule for a good. At a price of $2, consumer surplus is: Figure 6.4

The following diagram shows the demand curve for neckties. At point a, the monetary value of the total utility received by a consumer is: Figure 6.3

Suppose Debbie is willing to pay $50 for a pair of shoes but has to pay $20 because the shoes are on sale. Her consumer surplus is:

As price falls along the demand curve for pretzels, _____.

The following diagram shows a market equilibrium. D is the demand curve for a good and S is the supply curve of the good. The consumer surplus at a price of $b is given by the area: Figure 6.6

The following image shows the demand curve for neckties. At point a, consumer surplus is _____. Figure 6.3

Jerry consumes three hamburgers at McDonald's. He figures out that the last hamburger he ate was just worth the price he paid for it. If the price of a hamburger is $1, _____.

Elvis values the first gravy sandwich at $5, the second at $4.50, the third at $4. If he buys three for $4 each, his consumer surplus has a value of:

A decrease in price along the elastic segment of a demand curve will:

The following diagram shows the market demand schedule for a good. When the price of the good is P, the shaded area represents: Figure 6.5

Suppose Hannah spends $3 to buy five biscuits. The marginal utility of the fifth biscuit is valued at $0.60. The total utility derived from five biscuits is valued at $4.20. Hannah's consumer surplus is valued at _____.

Which of the following is true when the price of a good falls?

The following image shows the demand curve for neckties. If neckties were available free of cost, then _____. Figure 6.3

If a consumer buys a good, the expected:

Quiz 6: Consumer Choice and Demand

Consumer surplus is:​

The following diagram shows Ken's demand curve for neckties. When the price of neckties is $5, Ken purchases four neckties. When the price of neckties falls to $4, he purchases five neckties. A decline in the price of neckties causes his expenditure to: ​ Figure 6.3​ ​

The following diagram shows the demand curve for neckties. At point a, total expenditure on neckties is: ​ Figure 6.3​ ​

The difference between the maximum amount a person is willing to pay for a given quantity of a good and the amount actually paid for that quantity is known as:​

As price falls along the demand curve for pretzels, _____.​

The following diagram shows a consumer's demand schedule for a good. At a price of $2, consumer surplus is: ​ Figure 6.4 ​

The following diagram shows the demand curve for neckties. At point a, the monetary value of the total utility received by a consumer is: ​ Figure 6.3 ​

Suppose Debbie is willing to pay $50 for a pair of shoes but has to pay $20 because the shoes are on sale. Her consumer surplus is:​

As price falls along the demand curve for pretzels, _____.​

The following diagram shows a market equilibrium. D is the demand curve for a good and S is the supply curve of the good. The consumer surplus at a price of $b is given by the area: ​ Figure 6.6​ ​

The following image shows the demand curve for neckties. At point a, consumer surplus is _____. ​ Figure 6.3 ​​

Jerry consumes three hamburgers at McDonald's. He figures out that the last hamburger he ate was just worth the price he paid for it. If the price of a hamburger is $1, _____.​

Elvis values the first gravy sandwich at $5, the second at $4.50, the third at $4. If he buys three for $4 each, his consumer surplus has a value of:​

A decrease in price along the elastic segment of a demand curve will:​

The following diagram shows the market demand schedule for a good. When the price of the good is P, the shaded area represents: ​ Figure 6.5

Suppose Hannah spends $3 to buy five biscuits. The marginal utility of the fifth biscuit is valued at $0.60. The total utility derived from five biscuits is valued at $4.20. Hannah's consumer surplus is valued at _____.​

Which of the following is true when the price of a good falls?​

The following image shows the demand curve for neckties. If neckties were available free of cost, then _____. ​ Figure 6.3 ​​

If a consumer buys a good, the expected:​

Consumer surplus is:

The following diagram shows Ken's demand curve for neckties. When the price of neckties is $5, Ken purchases four neckties. When the price of neckties falls to $4, he purchases five neckties. A decline in the price of neckties causes his expenditure to: Figure 6.3

The following diagram shows the demand curve for neckties. At point a, total expenditure on neckties is: Figure 6.3

The difference between the maximum amount a person is willing to pay for a given quantity of a good and the amount actually paid for that quantity is known as:

As price falls along the demand curve for pretzels, _____.

The following diagram shows a consumer's demand schedule for a good. At a price of $2, consumer surplus is: Figure 6.4

The following diagram shows the demand curve for neckties. At point a, the monetary value of the total utility received by a consumer is: Figure 6.3

Suppose Debbie is willing to pay $50 for a pair of shoes but has to pay $20 because the shoes are on sale. Her consumer surplus is:

As price falls along the demand curve for pretzels, _____.

The following diagram shows a market equilibrium. D is the demand curve for a good and S is the supply curve of the good. The consumer surplus at a price of $b is given by the area: Figure 6.6

The following image shows the demand curve for neckties. At point a, consumer surplus is _____. Figure 6.3

Jerry consumes three hamburgers at McDonald's. He figures out that the last hamburger he ate was just worth the price he paid for it. If the price of a hamburger is $1, _____.

Elvis values the first gravy sandwich at $5, the second at $4.50, the third at $4. If he buys three for $4 each, his consumer surplus has a value of:

A decrease in price along the elastic segment of a demand curve will:

The following diagram shows the market demand schedule for a good. When the price of the good is P, the shaded area represents: Figure 6.5

Suppose Hannah spends $3 to buy five biscuits. The marginal utility of the fifth biscuit is valued at $0.60. The total utility derived from five biscuits is valued at $4.20. Hannah's consumer surplus is valued at _____.

Which of the following is true when the price of a good falls?

The following image shows the demand curve for neckties. If neckties were available free of cost, then _____. Figure 6.3

If a consumer buys a good, the expected: