Chapter 7 Practice Questions

Kelly is willing to pay $68 for a pair of shoes for a wedding. She finds a pair at her favorite outlet shoe store for $58. Kelly's consumer surplus is a.) $10. b.) $28. c.) $58. d.) $68.

a.) $10.

If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to a.) $4. b.) $16. c.) $20. d.) $36.

a.) $4.

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $350. His consumer surplus is a.) $50. b.) $150. c.) $350. d.) $400.

a.) $50.

On a graph, consumer surplus is represented by the area a.) between the demand and supply curves. b.) below the demand curve and above price. c.) below the price and above the supply curve. d.) below the demand curve and to the right of equilibrium price.

b.) below the demand curve and above price.

If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the a.) consumer has consumer surplus of $2 if he or she buys the good. b.) consumer does not purchase the good. c.) market is not a competitive market. d.) price of the good will fall due to market forces.

b.) consumer does not purchase the good.

If a consumer places a value of $20 on a particular good and if the price of the good is $25, then the a.) consumer has consumer surplus of $5 if he buys the good. b.) consumer does not purchase the good. c.) price of the good will rise due to market forces. d.) market is out of equilibrium.

b.) consumer does not purchase the good.

Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15. Chuck values the dog show at a.) $5. b.) $15. c.) $20. d.) $35.

c.) $20.

If Gina sells a shirt for $40, and her producer surplus from the sale is $32, her cost must have been a.) $72. b.) $32. c.) $8. d.) We would have to know the consumer surplus in order to make this determination.

c.) $8.

10. We can say that the allocation of resources is efficient if a.) producer surplus is maximized. b.) consumer surplus is maximized. c.) total surplus is maximized. d.) sellers' costs are minimized.

c.) total surplus is maximized.

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes a.) increases, and the consumer surplus in the market for red wine increases. b.) increases, and the consumer surplus in the market for red wine decreases. c.) decreases, and the consumer surplus in the market for red wine increases. d.) decreases, and the consumer surplus in the market for red wine decreases.

d.) decreases, and the consumer surplus in the market for red wine decreases.