MRU: 3.3: A Deeper Look at the Demand Curve

Q1: Consumer surplus is defined as: - the consumer's gain from exchange. - the number of units that remain unpurchased. - the number of units a consumer purchases. - the amount of profit the seller earns.

A: the consumer's gain from exchange.

Q8: With a linear, or straight line, demand curve, total consumer surplus can be calculated using what formula from geometry? - The formula for the area of a triangle - The Pythagorean Theorem - The formula for the circumference of a circle - The formula for the area of a rectangle

A: The formula for the area of a triangle

Q3: What is shown by the height of the demand curve? - The market equilibrium quantity - The market price of a particular unit of a good - The maximum willingness to pay for a particular unit of a good - The maximum quantity buyers will buy at a particular price

A: The maximum willingness to pay for a particular unit of a good

Q6: In what two ways can a demand curve be read? - As a price and as a quantity - Horizontally and vertically - From the top down and from the bottom up - From the right to the left and from the left to the right

A: Horizontally and vertically

Q2: In a market where a good has one price for all consumers, which consumer gets the most consumer surplus from the good? - The consumer who values the good the most - The consumer who pays the lowest price for the good - The consumer who purchases the most units of the good - The consumer who consumes the most units of the good

A: The consumer who values the good the most

Q7: Graphically, total consumer surplus is shown as the area _______ the demand curve and _______ the price. - above; above - above; below - below; above - below; below

A: below; above

Q9: The statement, "at $55 per barrel, consumers are willing and able to purchase 5 million barrels of oil per day", is an example of reading a demand curve: - horizontally. - as a quantity. - vertically. - as a price.

A: horizontally.

Q4: For a particular consumer, consumer surplus can be calculated as the difference between: - the maximum price a consumer is willing to pay and the market price. - the market price and the minimum price a consumer is willing to pay. - the maximum quantity a consumer is willing to buy and the market quantity. - the maximum price any consumer is willing to pay and the minimum price any consumer is willing to pay.

A: the maximum price a consumer is willing to pay and the market price.

Q5: The statement, "for the five millionth barrel of oil, the most that consumers are willing to pay is $55", is an example of reading a demand curve: - from right to left. - from left to right. - horizontally. - vertically.

A: vertically.

Q10: Which of the following shows the calculation that Professor Cowen did in order to determine the total consumer surplus in the market for oil? - ½ × $80 × 90 million = $3,600 million - ½ × ($80 - $20) × 90 million = $2,700 million - ($80 - $20) × 90 million = $5,400 million - $80 × $20 × 90 million = $1,440 billion

A: ½ × ($80 - $20) × 90 million = $2,700 million