Econ 5, 6, 7, 8
When demand is unit elastic, price elasticity of demand equals
1, and total revenue does not change when price changes.
Who once said that taxes are the price we pay for a civilized society?
Oliver Wendell Holmes, Jr.
Producer surplus directly measures
the well-being of sellers
With linear demand and supply curves in a market, suppose a tax of $0.20 per unit on a good creates a deadweight loss of $40. If the tax is increased to $0.50 per unit, the deadweight loss from the new tax will be
$250
George produces cupcakes. His production cost is $10 per dozen. He sells the cupcakes for $16 per dozen. His producer surplus per dozen cupcakes is
$6
Suppose that when the price of good X falls from $6 to $4, the quantity demanded of good Y rises from 30 units to 40 units. Using the midpoint method, the cross-price elasticity of demand is
-0.71, and X and Y are complements.
Suppose a tax of $3 per unit is imposed on a good. The supply curve is a typical upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. The tax decreases consumer surplus by $3,900 and decreases producer surplus by $3,000. The tax generates tax revenue of $6,000. The tax decreased the equilibrium quantity of the good from
2,600 to 2,000.
If the price elasticity of demand for a good is 1, then a 3 percent decrease in price results in a
3 percent increase in the quantity demanded.
Suppose the price elasticity of supply for cheese is 0.6 in the short run and 1.4 in the long run. If an increase in the demand for cheese causes the price of cheese to increase by 15%, then the quantity supplied of cheese will increase by
9% in the short run and 21% in the long run.
In 1776, the American Revolution was sparked by anger over
British taxes imposed on the American colonies.
Chapter 6 below
Chapter 6 below
Chapter 7 belowwwww
Chapter 7 belowwwww
Chapter 8 Starting nowww
Chapter 8 Starting nowww
How does the concept of elasticity allow us to improve upon our understanding of supply and demand?
Elasticity allows us to analyze supply and demand with greater precision than would be the case in the absence of the elasticity concept.
Which of the following statements is valid when the market supply curve is vertical?
Market quantity supplied does not change when the price changes.
Which of the following events would increase producer surplus?
Sellers' costs stay the same and the price of the good increases.
Suppose that when the price of ginger ale is $2 per bottle, firms can sell 4 million bottles. When the price of ginger ale is $3 per bottle, firms can sell 2 million bottles. Which of the following statements is true?
The demand for ginger ale is price elastic, so an increase in the price of ginger ale will decrease the total revenue of ginger ale producers.
The "invisible hand" is
a concept developed by Adam Smith to describe the virtues of free markets.
If an allocation of resources is efficient, then
all potential gains from trade among buyers are sellers are being realized.
Consumer surplus is the
amount a consumer is willing to pay minus the amount the consumer actually pays.
If the cross-price elasticity of two goods is negative, then the two goods are
complements
The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%. Refer to Scenario 5-3. The change in equilibrium quantity will be
greater in the bread market than in the aged cheddar cheese market.
Consider a good to which a per-unit tax applies. The greater the price elasticities of demand and supply for the good, the
greater the deadweight loss from the tax.
If the labor supply curve is very elastic, a tax on labor
has a large deadweight loss.
Minimum-wage laws dictate the
lowest price employers may pay for labor.
Market power and externalities are examples of
market failure
A legal minimum on the price at which a good can be sold is called a
price floor
When consumers face rising gasoline prices, they typically
reduce their quantity demanded more in the long run than in the short run.
Consumer surplus is a good measure of economic welfare if policymakers want to
respect the preferences of buyers.
Suppose Rebecca needs a dog sitter so that she can travel to her sister's wedding. Rebecca values dog sitting for the weekend at $200. Susan is willing to dog sit for Rebecca so long as she receives at least $175. Rebecca and Susan agree on a price of $185. Suppose the government imposes a tax of $30 on dog sitting. What is the deadweight loss of the tax?
the lost benefit to Rebecca and Susan because after the tax, Susan will not dog sit for Rebecca
The "invisible hand" refers to
the marketplace guiding the self-interests of market participants into promoting general economic well-being.
The amount of deadweight loss that results from a tax of a given size is determined by
the price elasticities of demand and supply.
When demand is perfectly inelastic, the demand curve will be
vertical, because buyers purchase the same amount as before whenever the price rises or falls.
To measure the gains and losses from a tax on a good, economists use the tools of
welfare economics.
The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. Workers will bear
(all of the above are possible) an equal share of the tax in comparison to firms. a greater share of the tax in comparison to firms. a smaller share of the tax in comparison to firms.
Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?
(all of the above) This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. The price paid by buyers is $0.30 per drink more than it was before the tax. Forty percent of the burden of the tax falls on sellers.
The price elasticity of demand for bread
(all of the above) is computed as the percentage change in quantity demanded of bread divided by the percentage change in price of bread. depends, in part, on the availability of close substitutes for bread. reflects the many economic, social, and psychological forces that influence consumers' tastes for bread.
When a tax is placed on the sellers of a product, the
(all of the above) size of the market decreases. effective price received by sellers decreases, and the price paid by buyers increases. supply of the product decreases.
Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is
-1.0, and X and Y are complements.
When the price of a good is $5, the quantity demanded is 120 units per month; when the price is $7, the quantity demanded is 100 units per month. Using the midpoint method, the price elasticity of demand is about
0.55.
When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is
0.67, and an increase in price will result in an increase in total revenue for good A.
When the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about
0.67.
At price of $1.20, a local pencil manufacturer is willing to supply 150 boxes per day. At a price of $1.40, the manufacturer is willing to supply 170 boxes per day. Using the midpoint method, the price elasticity of supply is about
0.81.
If a 15% change in price results in a 20% change in quantity supplied, then the price elasticity of supply is about
1.33, and supply is elastic.
In January the price of dark chocolate candy bars was $2.00, and Willy's Chocolate Factory produced 80 pounds. In February the price of dark chocolate candy bars was $2.50, and Willy's produced 110 pounds. In March the price of dark chocolate candy bars was $3.00, and Willy's produced 140 pounds. The price elasticity of supply of Willy's dark chocolate candy bars was about
1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00.
At a price of $1.00, a local coffee shop is willing to supply 100 cinnamon rolls per day. At a price of $1.20, the coffee shop would be willing to supply 150 cinnamon rolls per day. Using the midpoint method, the price elasticity of supply is about
2.20
If the price elasticity of demand for a good is 4, then a 12 percent decrease in price results in a
48 percent increase in the quantity demanded.
Studies indicate that the price elasticity of demand for beer is about 0.9. A government policy aimed at reducing beer consumption changed the price of a case of beer from $10 to $20. According to the midpoint method, the government policy should have reduced beer consumption by
60%
Which of the following is correct?
Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor.
Which of the following statements is valid when supply is perfectly elastic at a price of $4?
The elasticity of supply approaches infinity.
Suppose that when the average college student's income is $10,000 per year, the annual quantity demanded of Patty's Pizza is 50 and the annual quantity demanded of Sue's Subs is 80. Suppose that when the price of Patty's Pizza increases from $8 to $10 per pie, the quantity demanded of Sue's Subs increases from 80 to 100. Suppose also that when the average student's income increases to $12,000 per year, the annual quantity demanded of Patty's Pizza increases from 50 to 60. Refer to Scenario 5-1. Using the midpoint method, what is the income elasticity of demand for pizza and what does the value indicate about the demand for pizza?
The income elasticity is 1 so pizza is a normal good.
For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
The market for the good is broadly defined.
If the price elasticity of demand for a good is 0.4, then which of the following events is consistent with a 2 percent decrease in the quantity of the good demanded?
a 5 percent increase in the price of the good
Elasticity is
a measure of how much buyers and sellers respond to changes in market conditions.
Suppose good X has a negative income elasticity of demand. This implies that good X is
an inferior good
When a tax is placed on the sellers of cell phones, the size of the cell phone market
and the effective price received by sellers both decrease.
Which of the following is likely to have the most price inelastic demand?
athletic shoes
You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. Your roommate still enjoys Ramen noodles very much and buys even more, but you plan to buy fewer Ramen noodles in favor of foods you prefer more. When looking at income elasticity of demand for Ramen noodles, yours would
be negative and your roommate's would be positive.
A decrease in supply will cause the largest increase in price when
both supply and demand are inelastic.
Policymakers use taxes
both to raise revenue for public purposes and to influence market outcomes.
Under rent control, bribery is a mechanism to
bring the total price of an apartment (including the bribe) closer to the equilibrium price.
A good will have a more inelastic demand, the
broader the definition of the market
When a tax is placed on the buyers of lemonade, the
burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.
A tax on the buyers of cameras encourages
buyers to demand a smaller quantity at every price.
The price elasticity of demand measures
buyers' responsiveness to a change in the price of a good.
For which pairs of goods is the cross-price elasticity most likely to be positive?
canoes and kayaks
A legal maximum on the price at which a good can be sold is called a price
ceiling
The price elasticity of demand for a good measures the willingness of
consumers to buy less of the good as price rises.
A tax on the buyers of cereal will increase the price of cereal paid by buyers,
decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal.
If the government removes a tax on a good, then the price paid by buyers will
decrease, and the price received by sellers will increase.
The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%. Refer to Scenario 5-3. Total consumer spending on aged cheddar cheese will
decrease, and total consumer spending on bread will decrease.
If the quantity demanded of a certain good responds only slightly to a change in the price of the good, then the
demand for the good is said to be inelastic.
For a good that is a necessity,
demand tends to be inelastic.
When studying how some event or policy affects a market, elasticity provides information on the
direction and magnitude of the effect.
The minimum wage
does not apply to unpaid internships.
If the government wants to reduce the burning of fossil fuels, it should impose a tax on
either buyers or sellers of gasoline.
When quantity demanded responds strongly to changes in price, demand is said to be
elastic
Suppose that quantity demand falls by 30% as a result of a 5% increase in price. The price elasticity of demand for this good is
elastic and equal to 6.
Demand is said to have unit elasticity if the price elasticity of demand is
equal to 1.
Demand is elastic if the price elasticity of demand is
greater than 1
A minimum wage that is set below a market's equilibrium wage will
have no impact on employment.
The goal of rent control is to
help the poor by making housing more affordable
To determine whether a good is considered normal or inferior, one could examine the value of the
income elasticity of demand for that good.
Suppose the income elasticity of demand is -0.5 for good X. This implies that a 5% decrease in income will cause the quantity demanded of good X to
increase by 2.5%, and X is an inferior good.
If the price elasticity of supply is 1.2, and price increased by 5%, quantity supplied would
increase by 6%.
If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would
increase by less than $1,000.
If sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts, the price elasticity of supply approaches
infinity, and the supply curve is horizontal.
The price elasticity of demand for bread is
influenced by whether consumers view bread as a necessity or luxury.
When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. We can conclude that for Heather, macaroni
is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1.
While in college, Marty and Laura each buy 15 bus tickets per month. After they graduate and have full-time jobs, Marty buys 0 bus tickets per month and Laura buys 28 bus tickets per month. Comparing income elasticity of demand for bus tickets, Marty's
is negative, and Laura's is positive.
While in college, John and Bethany each buy five packages of mac-n-cheese per week. After they graduate and have full-time jobs, John buys six packages per week, but Bethany buys only two packages per week. When looking at income elasticity of demand for mac-n-cheese, John's
is positive, and Bethany's is negative.
The tax burden will fall most heavily on sellers of the good when the demand curve
is relatively flat, and the supply curve is relatively steep.
Demand is inelastic if the price elasticity of demand is
less than 1.
When studying how some event or policy affects a market, elasticity provides information on the
magnitude of the effect on the market.
If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will
not change, and the price received by sellers will not change
Which of the following is correct? Price controls
often hurt those they are designed to help.
If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?
one year after the price increase
The minimum wage, if it is binding, raises the incomes of
only those workers whose jobs would pay less than the minimum wage if it didn't exist.
Which of the following expressions represents a cross-price elasticity of demand?
percentage change in quantity demanded of bread divided by percentage change in price of butter
Suppose that 50 hot dogs are demanded at a particular price. If the price of hot dogs rises from that price by 5 percent, the number of hot dogs demanded falls to 48. Using the midpoint approach to calculate the price elasticity of demand, it follows that the
price elasticity of demand for hot dogs in this price range is about 0.82.
The price elasticity of demand measures how much
quantity demanded responds to a change in price.
Which of the following is likely to have the most price elastic demand?
sailboats
The price elasticity of supply measures how responsive
sellers are to a change in price.
Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the
sellers will bear a greater burden of the tax than the buyers.
Rent control
serves as an example of a price ceiling.
If the cross-price elasticity of two goods is positive, then the two goods are
subsitutes
Last month, sellers of good Y took in $100 in total revenue on sales of 50 units of good Y. This month sellers of good Y raised their price and took in $120 in total revenue on sales of 40 units of good Y. At the same time, the price of good X stayed the same, but sales of good X increased from 20 units to 40 units. We can conclude that goods X and Y are
substitutes, and have a cross-price elasticity of 1.67.
Some firms eventually experience problems with their capacity to produce output as their output levels increase. For these firms,
supply is more elastic at low levels of output and less elastic at high levels of output.
When a supply curve is relatively flat, the
supply is relatively elastic
The term tax incidence refers to
the distribution of the tax burden between buyers and sellers.
Income elasticity of demand measures how
the quantity demanded changes as consumer income changes.
The price elasticity of supply measures how much
the quantity supplied responds to changes in the price of the good.
A key determinant of the price elasticity of supply is the
time horizon
A key lesson from the payroll tax is that the
true burden of a tax cannot be legislated.
The price elasticity of demand for mobile phones
will be lower if consumers perceive mobile phones to be a necessity.
Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because
with shortages and waiting lists, they have no incentive to maintain and improve their property.
Erin would be willing to pay as much as $100 per week to have her house cleaned. Ernesto's opportunity cost of cleaning Erin's house is $70 per week. Refer to Scenario 8-1. Assume Erin is required to pay a tax of $5 when she hires someone to clean her house. Which of the following is true?
Erin will continue to hire Ernesto to clean her house, but her consumer surplus will decline.
Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss?
The greater are the price elasticities of supply and demand, the greater is the deadweight loss.
In general, elasticity is a measure of
how much buyers and sellers respond to changes in market conditions.
Welfare economics is the study of
how the allocation of resources affects economic well-being.
If the cost of producing sofas decreases, then consumer surplus in the sofa market will
increase
If the government removes a tax on a good, then the quantity of the good sold will
increase
Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will
increase, and producer surplus in the industry will increase.
If the tax on a good is increased from $0.30 per unit to $0.90 per unit, the deadweight loss from the tax
increases by a factor of 9.
A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it
maximizes the combined welfare of buyers and sellers.
The particular price that results in quantity supplied being equal to quantity demanded is the best price because it
maximizes the combined welfare of buyers and sellers.
Consumer surplus
measures the benefit buyers receive from participating in a market.
When a tax is placed on the buyers of a product, buyers pay
more and sellers receive less than they did before the tax.
The benefit that government receives from a tax is measured by
tax revenue
Jeff decides that he would pay as much as $2,000 for a new laptop computer. He buys the computer and realizes a consumer surplus of $300. How much did Jeff pay for his computer?
$1,700
Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is
$105
In the market for widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3. The government is able to raise $750 per month in revenue from the tax. The deadweight loss from the tax is
$125
Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is
$131,000
Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is
$150
Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is
$150
Cameron visits a sporting goods store to buy a new set of golf clubs. He is willing to pay $750 for the clubs but buys them on sale for $575. Cameron's consumer surplus from the purchase is
$175
Suppose a tax of $5 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300. The deadweight loss from the tax is
$250
Roland mows Karla's lawn for $25. Roland's opportunity cost of mowing Karla's lawn is $20, and Karla's willingness to pay Roland to mow her lawn is $28. Refer to Scenario 8-2. If Karla hires Roland to mow her lawn, Karla's consumer surplus is
$3
Bill created a new software program he is willing to sell for $200. He sells his first copy and enjoys a producer surplus of $150. What is the price paid for the software?
$350
Roland mows Karla's lawn for $25. Roland's opportunity cost of mowing Karla's lawn is $20, and Karla's willingness to pay Roland to mow her lawn is $28. Refer to Scenario 8-2. If Karla hires Roland to mow her lawn, Roland's producer surplus is
$5
Tom tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $155 per tuning. One particular week, Tom is willing to tune the first piano for $120, the second piano for $125, the third piano for $140, and the fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. His producer surplus is
$80
Assume that for good X the supply curve for a good is a typical, upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. If the good is taxed, and the tax is tripled, the
(all of the above) base of the triangle that represents the deadweight loss triples. height of the triangle that represents the deadweight loss triples. deadweight loss of the tax increases by a factor of nine.
Inefficiency can be caused in a market by the presence of
(all of the above) market power. externalities. imperfectly competitive markets.
A seller's willingness to sell is
(all of the above) measured by the seller's cost of production. related to her supply curve, just as a buyer's willingness to buy is related to his demand curve. less than the price received if producer surplus is a positive number.
Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i) supply is more elastic than the demand. (ii) demand in more elastic than the supply. (iii) tax is placed on the sellers of the product. (iv) tax is placed on the buyers of the product.
(ii) only
What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?
Consumer surplus may increase, decrease, or remain unchanged.
Welfare economics explains which of the following in the market for televisions?
The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers.
Which of the following would not interfere with market equilibria?
a non-binding price floor
When a tax is placed on the buyers of cell phones, the size of the cell phone market
and the effective price received by sellers both decrease.
On a graph, consumer surplus is represented by the area
below the demand curve and above price.
A price ceiling will be binding only if it is set
below the equilibrium price.
Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to
both existing sellers who now receive higher prices on the pizzas they were already selling and new sellers who enter the market because of the higher prices.
When a tax is placed on the sellers of energy drinks, the
burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.
When a tax on a good is enacted,
buyers and sellers share the burden of the tax regardless of whether the tax is levied on buyers or on sellers.
To say that a price floor is binding is to say that the price floor
causes quantity supplied to exceed quantity demanded.
Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?
consumer and producer surplus
If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the
consumer does not purchase the good.
On a graph, the area below a demand curve and above the price measures
customer surplus
Oil is used to produce gasoline. If the price of oil increases, consumer surplus in the gasoline market
decreases
A tax levied on the buyers of a good shifts the
demand curve downward (or to the left).
Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $20 per ticket, then the
demand curve will shift upward by $30, and the price paid by buyers will decrease by less than $30.
Sellers of a product will bear the larger part of the tax burden, and buyers will bear a smaller part of the tax burden, when the
demand for the product is more elastic than the supply of the product.
Total surplus is
equal to the total value to buyers minus the total cost to sellers.
The decisions of buyers and sellers that affect people who are not participants in the market create
externalities.
If the tax on gasoline increases from $2 to $4 per gallon, the deadweight loss from the tax increases by a factor of
four
Inefficiency exists in a market when a good is
not being consumed by buyers who value it most highly.
The benefit to sellers of participating in a market is measured by the
producer surplus
The welfare of sellers is measured by
producer surplus
When a tax is imposed on a good for which the demand is relatively elastic and the supply is relatively inelastic,
sellers of the good will bear most of the burden of the tax.
Externalities are
side effects passed on to a party other than the buyers and sellers in the market
Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the
smaller is the price elasticity of supply.
Buyers of a product will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the
supply of the product is more elastic than the demand for the product
One result of a tax, regardless of whether the tax is placed on the buyers or the sellers, is that the
tax reduces the welfare of both buyers and sellers.
When a tax is levied on a good,
there is a decrease in the quantity of the good bought and sold in the market.
A seller's opportunity cost measures the
value of everything she must give up to produce a good.
At the equilibrium price of a good, the good will be purchased by those buyers who
value the good more than price.
Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called
willingness to pay
Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called
willingness to pay
The maximum price that a buyer will pay for a good is called
willingness to pay.
The marginal seller is the seller who
would leave the market first if the price were any lower
If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is
zero
