Question 1

The difference between the amount a consumer is willing to pay and the amount they actually must pay for a good is called the:

Accepted Answer

Consumer surplus is the difference between the maximum amount that a consumer is willing to pay for a good and the actual price they pay for it. It represents the benefit or surplus that the consumer receives from the transaction.

Question 2

Graphically, consumer surplus is measured by:

Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay. Graphically, it is represented by the area below the demand curve and above the market price.

Question 3

If Stephanie buys a laptop for $700 and the maximum she would have paid was $1,000, which of the following is true?

Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they pay. Stephanie was willing to pay up to $1,000 but only paid $700, so her consumer surplus is $300.

Question 4

Lydia enjoys going to the theater to see Broadway musicals. The following demand schedule shows Lydia's willingness to pay for theater tickets in a year. ​

If the price of tickets to Broadway musicals equals $50, Lydia's consumer surplus will be:​

Accepted Answer

The answer of Lydia enjoys going to the theater to...

Question 5

Ceteris paribus, a decrease in the price of a good will cause the:

Accepted Answer

Ceteris paribus, a decrease in the price of a good will cause the consumer surplus derived from the good to increase because consumers are getting the good for a lower price than they were willing to pay, thus increasing the difference between their willingness to pay and the actual price.

Question 6

The difference between the value of a good to consumers and its price is known as:

Accepted Answer

Consumer surplus is the difference between the price a consumer is willing to pay for a good and the actual price they pay. It represents the value that the consumer receives in excess of what they actually paid for the good. This surplus arises when the consumer's perception of the value of the good is higher than the actual price they have to pay for it.

Question 7

Phil and Kelly have always wanted to take a cruise. Although willing to pay $5,000 for a Caribbean cruise for two, they were able to purchase a cruise vacation for two for $3,500. Their total consumer surplus amounted to:

Accepted Answer

Consumer Surplus = willingness to pay - actual price paid
Willingness to pay = $5,000
Actual price paid = $3,500
Consumer Surplus = $5,000 - $3,500 = $1,500. Therefore, the total consumer surplus for Phil and Kelly is $1,500.

Question 8

The area between the market price and the supply curve provides a measure of:​

Accepted Answer

Producer surplus is the area between the market price and the supply curve, representing the difference between what producers are willing to accept for a good or service versus what they actually receive.

Question 9

Exhibit 7-3 -Refer to Exhibit 7-3. What is the producer surplus of the 10^th unit bought/sold?

Accepted Answer

Producer surplus is the difference between what producers are willing to accept for a good versus what they actually receive. Without the specific details from Exhibit 7-3, such as the supply and demand curves or the equilibrium price, it's impossible to accurately determine the producer surplus for the 10th unit or any unit. The correct answer would depend on the specific details provided in the exhibit, which are not available in this format.

Question 10

Ceteris paribus, an increase in the price of a good will cause the:​

Accepted Answer

An increase in the price of a good, with all other factors being equal (ceteris paribus), will decrease the consumer surplus because consumers are paying more for the same amount of the good, reducing the difference between what consumers are willing to pay and what they actually pay.

Question 11

Which of the following best explains the source of consumer surplus for Good A?

Accepted Answer

Consumer surplus arises when consumers are willing to pay more than the market price for some units of a good or service. Therefore, option B best explains the source of consumer surplus for Good A.

Question 12

Consumer surplus is:​

Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay. It represents the satisfaction that consumers derive from a transaction, and is measured as the area above the market price and below the demand curve. Therefore, option D is the correct answer.

Question 13

Total welfare gains from trade to the economy can be measured:​

Accepted Answer

The total welfare gains from trade to the economy can be measured as the sum of consumer and producer surpluses. This measures the net benefits to both consumers and producers, taking into account the gains from trade and the potential gains if the trade did not occur. This measure gives a more accurate picture of the overall welfare gains from trade compared to other metrics.

Question 14

Gains from trade are measured by:​

Accepted Answer

Gains from trade are measured by the sum of consumer and producer surplus, as both parties benefit from trade. Consumer surplus represents the difference between the maximum amount a consumer is willing to pay for a good and the actual price paid. Producer surplus represents the difference between the actual price a producer receives and the minimum amount they are willing to accept. The total gains from trade are the combined benefits to both producers and consumers, which is measured by the sum of consumer and producer surplus.

Question 15

Exhibit 7-3 -Refer to Exhibit 7-3. What is the consumer surplus of the 10^th unit bought/sold?

Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. If the 10th unit is bought at a price of $1.25 less than the maximum price the consumer is willing to pay, then the consumer surplus for that unit is $1.25.

Question 16

Marginal willingness to pay

Accepted Answer

Marginal willingness to pay refers to the maximum amount a consumer is willing to pay for an additional unit of a good or service. As more of the good or service is consumed, the marginal benefit decreases, meaning that the willingness to pay for an additional unit decreases. Therefore, the marginal willingness to pay falls as greater quantities are consumed.

Question 17

The area between the market price and the demand curve provides a measure of:

Accepted Answer

The area between the market price and the demand curve represents the difference between the amount that consumers are willing to pay for a good or service (as reflected by the demand curve) and the actual market price. This difference is known as consumer surplus, which represents the additional satisfaction or utility that consumers receive from being able to purchase the good at a lower price than they are willing to pay. Producer surplus, on the other hand, is the difference between the market price and the cost of production, and is represented by the area between the market price and the supply curve. Therefore, option A is the correct answer.

Question 18

The maximum price a buyer is willing to pay for a good is called:​

Accepted Answer

The maximum price a buyer is willing to pay for a good is called "willingness to pay". This is a fundamental concept in economics that represents the highest price a buyer is willing to pay for a unit of a good or service that they desire to have. It is determined by the buyer's preferences, needs, and budget constraints. Therefore, option B is the correct answer. Options A, C, and D are incorrect as they do not accurately represent the concept described in the question.

Question 19

Exhibit 7-3 -Refer to Exhibit 7-3. What is the sum of consumer surplus and producer surplus for the 10^th unit bought/sold?

Accepted Answer

Consumer surplus is the difference between the price consumers are willing to pay and the price they actually pay. Producer surplus is the difference between the price producers are willing to accept and the price they actually receive. For the 10th unit bought/sold, the consumer surplus is $2.50 and the producer surplus is $1.00. The sum of consumer surplus and producer surplus is $3.50.

Question 20

The difference between the value of a good to sellers and its price is known as:​

Accepted Answer

The difference between the value of a good to sellers (i.e. the price they are willing to sell it for) and the price it actually sells for is called Producer Surplus. This represents the benefit that producers receive from participating in a market, beyond the minimum amount needed to produce the good. Consumer Surplus (choice A) refers to the difference between the value a consumer places on a good and the price they actually pay for it. Demand (choice C) refers to the willingness and ability of consumers to purchase a good at various prices. Supply (choice D) refers to the willingness and ability of producers to produce and sell a good at various prices.

Quiz 7: Market Efficiency and Welfare

The difference between the amount a consumer is willing to pay and the amount they actually must pay for a good is called the:

Graphically, consumer surplus is measured by:

If Stephanie buys a laptop for $700 and the maximum she would have paid was $1,000, which of the following is true?

Lydia enjoys going to the theater to see Broadway musicals. The following demand schedule shows Lydia's willingness to pay for theater tickets in a year. If the price of tickets to Broadway musicals equals $50, Lydia's consumer surplus will be:

Ceteris paribus, a decrease in the price of a good will cause the:

The difference between the value of a good to consumers and its price is known as:

Phil and Kelly have always wanted to take a cruise. Although willing to pay $5,000 for a Caribbean cruise for two, they were able to purchase a cruise vacation for two for $3,500. Their total consumer surplus amounted to:

The area between the market price and the supply curve provides a measure of:

Exhibit 7-3 -Refer to Exhibit 7-3. What is the producer surplus of the 10^th unit bought/sold?

Ceteris paribus, an increase in the price of a good will cause the:

Which of the following best explains the source of consumer surplus for Good A?

Consumer surplus is:

Total welfare gains from trade to the economy can be measured:

Gains from trade are measured by:

Exhibit 7-3 -Refer to Exhibit 7-3. What is the consumer surplus of the 10^th unit bought/sold?

Marginal willingness to pay

The area between the market price and the demand curve provides a measure of:

The maximum price a buyer is willing to pay for a good is called:

Exhibit 7-3 -Refer to Exhibit 7-3. What is the sum of consumer surplus and producer surplus for the 10^th unit bought/sold?

The difference between the value of a good to sellers and its price is known as:

Quiz 7: Market Efficiency and Welfare

The difference between the amount a consumer is willing to pay and the amount they actually must pay for a good is called the:

Graphically, consumer surplus is measured by:

If Stephanie buys a laptop for $700 and the maximum she would have paid was $1,000, which of the following is true?

Lydia enjoys going to the theater to see Broadway musicals. The following demand schedule shows Lydia's willingness to pay for theater tickets in a year. ​ If the price of tickets to Broadway musicals equals $50, Lydia's consumer surplus will be:​

Ceteris paribus, a decrease in the price of a good will cause the:

The difference between the value of a good to consumers and its price is known as:

Phil and Kelly have always wanted to take a cruise. Although willing to pay $5,000 for a Caribbean cruise for two, they were able to purchase a cruise vacation for two for $3,500. Their total consumer surplus amounted to:

The area between the market price and the supply curve provides a measure of:​

​Exhibit 7-3 -Refer to Exhibit 7-3. What is the producer surplus of the 10th unit bought/sold?​

Ceteris paribus, an increase in the price of a good will cause the:​

Which of the following best explains the source of consumer surplus for Good A?

Consumer surplus is:​

Total welfare gains from trade to the economy can be measured:​

Gains from trade are measured by:​

​Exhibit 7-3 -Refer to Exhibit 7-3. What is the consumer surplus of the 10th unit bought/sold?​

Marginal willingness to pay

The area between the market price and the demand curve provides a measure of:

The maximum price a buyer is willing to pay for a good is called:​

​Exhibit 7-3 -Refer to Exhibit 7-3. What is the sum of consumer surplus and producer surplus for the 10th unit bought/sold?​

The difference between the value of a good to sellers and its price is known as:​

Lydia enjoys going to the theater to see Broadway musicals. The following demand schedule shows Lydia's willingness to pay for theater tickets in a year. If the price of tickets to Broadway musicals equals $50, Lydia's consumer surplus will be:

The area between the market price and the supply curve provides a measure of:

Exhibit 7-3 -Refer to Exhibit 7-3. What is the producer surplus of the 10^th unit bought/sold?

Ceteris paribus, an increase in the price of a good will cause the:

Consumer surplus is:

Total welfare gains from trade to the economy can be measured:

Gains from trade are measured by:

Exhibit 7-3 -Refer to Exhibit 7-3. What is the consumer surplus of the 10^th unit bought/sold?

The maximum price a buyer is willing to pay for a good is called:

Exhibit 7-3 -Refer to Exhibit 7-3. What is the sum of consumer surplus and producer surplus for the 10^th unit bought/sold?

The difference between the value of a good to sellers and its price is known as: