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 called
a. producer surplus
b. the substitution effect
c. price discrimination
d. the income effect
e. consumer surplus
QUESTION 2If Debbye is willing to pay 50 for a pair of shoes but only has to pay 20 because the shoes are on sale, then her consumer surplus on that pair of shoes is
a. 50
b. 20
c. 70
d. 30
e. 25
QUESTION 3The market demand curve is the sum of individual quantities demanded at each price.
a. True
b. False
QUESTION 4When price decreases, consumer surplus
a. increases
b. remains constant
c. decreases
d. becomes negative
e. may increase or decrease
QUESTION 5Consumer 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 difference between the price of the good paid by the consumer and the costs of production to the seller
e. the difference between the maximum amount that a consumer is willing to pay for a given amount of a good and the amount that the consumer actually pays
QUESTION 6Suppose that Hannah spends 3 to buy five biscuits. The marginal utility of the fifth biscuit is valued at 0.60; total utility of the five biscuits is valued at 4.20 . Given this information, what do we know about consumer surplus?
a. It is impossible to determine consumer surplus without knowing the marginal utility of the first four biscuits.
b. It is impossible to determine consumer surplus without knowing the price per biscuit.
c. It is impossible to determine consumer surplus without knowing the price Hannah was willing to pay for the first five biscuits.
d. Consumer surplus is equal to 2.40.
e. Consumer surplus is equal to 1.20.
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