AP Lesson: Consumer and Producer Surplus, Elasticity of Income, and Cross-Price Elasticity
Which of the following best illustrates the concept of consumer surplus?
A thirsty athlete pays $0.85 for a cold drink when she would have gladly paid $1.50 for the drink.
An individual who is willing to accept a job at $7.50 per hour is offered $7.00 per hour.
An individual pays the sale price of $15.00 for the same shirt that the individual refused to purchase earlier at $18.00.
An individual finds that the price of artichokes, a food she dislikes, has been reduced by 50 percent.
A wood-carver has a marginal cost of $5.00 for a unit of output, but sells that unit at $6.00.
Based on the graph above, which of the following represents the consumer surplus, producer surplus, and deadweight loss?
If the demand for potatoes increases whenever a person’s income increases, then potatoes are an example of
An inferior good
A free good
A Giffen good
A normal good
A public good
If the income elasticity of demand coefficient is negative then the good is:
a normal good
an inferior good
none of the above
Which of the following is true about cross-price elasticity of demand?
It can indicate whether the good is a luxury or a necessity
If it is zero the two goods are closely related
It is never negative
It is less than zero for two goods that are complements
It decreases as income decreases
Mary purchased a stuffed animal toy for $15. After a few weeks, someone offered her $100 for the toy. Mary refused. One can conclude that Mary’s consumer surplus from the toy is:
less than $15
at least $75
at least $100
Suppose a new law makes illegal the sale of a good that had been legal. This will:
Increase producer surplus
Eliminate dead weight loss
Decrease consumer surplus
Increase consumer surplus
In the figure above, what is the consumer surplus?
In the figure above, what is the producer surplus?
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