OLQ41. The total surplus generated in a market is:

A) the excess supply due to the imposition of a price floor.

B) the surplus that exists when a good is not scarce, defined as the total amount (if any) by which quantity supplied exceeds quantity demanded at a zero price.

C) the net benefit to consumers, defined as the excess of consumer surplus over producer surplus.

D) the sum of consumer surplus and producer surplus.

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Use the following to answer question 2:

Table: Consumer Surplus and Phantom Tickets

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2. (Table: Consumer Surplus and Phantom Tickets) Using the information in the table, 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.

3. Along a given supply curve, an increase in the price of a good will:A) increase producer surplus.

B) decrease producer surplus.

C) increase consumer surplus.

D) decrease producer surplus and increase consumer surplus.

4. If there is a decrease in demand, total surplus:A) will increase.

B) will decrease.

C) will remain the same.

D) may change, but we can't tell how.

5. Consider the market for milkshakes. An increase in the consumer surplus may result from:A) an increase in the price of milkshakes.

B) an increase in the supply of milkshakes.

C) a decrease in the demand for milkshakes.

D) a decrease in the supply of milkshakes.

6. 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.

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7. Luis is willing to sell his pool table for $600, but is paid $840 for the table. The producer surplus Luis receives is ________.A) $600

B) $840

C) $240

D) $1,440

8. Producer surplus for an individual seller is equal to:A) the price of the good, minus the marginal 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.

9. Which of the following is true when a market is in equilibrium and there is no government intervention?A) Total surplus is minimized.

B) The deadweight loss is maximized.

C) No mutually beneficial trades are missed.

D) Some mutually beneficial trades may be missed.

10. The total consumer surplus for Good X can be calculated in all except one of the following ways. Which is the exception?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

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Use the following to answer question 11:

Figure: Consumer Surplus II

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11. (Figure: Consumer Surplus II) At a price of P1, consumer surplus equals the area:A) ABP2.

B) AFP1.

C) AQ30.

D) P1P2BF.

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Use the following to answer question 12:

Figure: Consumer Surplus III

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12. (Figure: Consumer Surplus III) If the price of the good is $2, consumer surplus will equal:A) $30.

B) $45.

C) $60.

D) $90.

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Use the following to answer question 13:

Table: Economics Textbooks

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13. (Table: Economics Textbooks) The table shows how much money four consumers would be willing to pay for a new economics textbook. The price of the textbook is $100. How much total consumer surplus would be earned by these consumers?A) $125

B) $500

C) $100

D) $75

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Use the following to answer question 14:

Figure: Gains from Trade

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14. (Figure: Gains from Trade) What is the total surplus in this market when the demand curve is D1?A) $25

B) $31.25

C) $62.50

D) $90

15. If the government were to intervene in the market by lowering the price below the equilibrium price on a good, then which of the following will not occur?A) Consumers would be happy.

B) Producers would likely not be pleased.

C) The outcome would be efficient.

D) Total surplus would be lower.

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Use the following to answer question 16:

Figure: Producer Surplus II

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16. (Figure: Producer Surplus II) At a price of P1, producer surplus equals the area:A) LMK.

B) P1K0.

C) P2M0.

D) P2P1KM.

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Use the following to answer question 17:

Table: Producer Surplus

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17. (Table: Producer Surplus and Phantom Tickets) Given the information in the table, 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.

18. Which of the following is true if there is a decrease in the supply of ice cream?A) There is an increase in consumer surplus.

B) There is a decrease in consumer surplus.

C) There is no change to consumer surplus.

D) It's impossible to tell what will happen to consumer surplus.

19. 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) 4; $110

B) 3; $230

C) 3; $80

D) 4; $80

20. Suppose the United States removes the current sugar quotas and the market price of sugar drops. 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.

21. If more agricultural land is devoted to producing peanuts, total surplus in the peanut butter market:A) will increase.

B) will decrease.

C) will not change.

D) may change, but we cannot determine the change without more information.

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22. If the government imposes an effective price ceiling in the market for grapefruit, total surplus:A) will increase.

B) will decrease.

C) will not change.

D) may change, but we cannot determine the change without more information.

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Use the following to answer question 23:

Figure: Consumer Surplus

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23. (Figure: Consumer Surplus) In the figure, total consumer surplus is ________ when the price is $10.A) $50

B) $59

C) $124

D) $144

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Use the following to answer question 24:

Figure: Producer Surplus

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24. (Figure: Producer Surplus) Total producer surplus is ________ when the price is $40.A) $40

B) $60

C) $80

D) $85

25. Coffee and tea are substitutes. If there is an increase in the price of coffee, total surplus in the tea market:A) will increase.

B) will decrease.

C) will not change.

D) may change, but we cannot determine the change without more information.

26. Peanut butter and jelly are complements. If there is a decrease in the price of jelly, producer surplus in the peanut butter market:A) will increase.

B) will decrease.

C) will not change.

D) may change, but it is impossible to tell if it will increase or decrease.

27. Peanut butter is an inferior good. If there is an increase in income, total surplus in the peanut butter market:A) will increase.

B) will decrease.

C) will not change.

D) may change, but we cannot determine the change without more information.

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Figure: Market for Sandwiches

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28. (Figure: Market for Sandwiches) Referring again to the market for sandwiches during the lunch hour at a local deli, suppose a price floor is set at $7. At this price, consumer surplus is equal to ________ and producer surplus is equal to ________.A) $64; $40

B) $64; $24

C) $32; $24

D) $32; $40

29. If total surplus rises, which of the following must have occurred?A) There was an increase in demand and a decrease in supply.

B) There was an increase in demand or an increase in supply.

C) There was a decrease in demand and a decrease in supply.

D) There was a decrease in demand or an increase in supply.

30. 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

Answer Key OLQ-4 Practice

 

1. D

2. C

3. A

4. B

5. B

6. A

7. C

8. A

9. C

10. C

11. B

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12. B

13. A

14. C

15. C

16. B

17. D

18. B

19. C

20. A

21. A

22. B

23. C

24. C

25. A

26. A

27. B

28. D

29. B

30. B

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