Title: Surplus
Course: TEST Course

Q: Country A has great expertise in the production of planes and produces a large quantity of planes while country B has expertise in the production of automobiles and produces large quantities of cars. When the two countries trade planes for automobiles
- both countries improve allocative efficiency because they will both have the same number of cars and automobiles after trade.
- only country B benefits because through trade they can acquire planes that are more valuable than automobiles.
- both countries improve allocative efficiency because they can now consume a more desirable combination of goods and services (planes and cars) through trade.
A: both countries improve allocative efficiency because they can now consume a more desirable combination of goods and services (planes and cars) through trade.

Q: The country of Zanabar produces computers and produces them in a large quantity while the country of Abathana expertly produces cell phones in large quantities. In order for both countries to consume more desirable combinations of goods and services (computers and cell phones) they should
- allow only Abathana to trade a small quantity of cell phones for computers since cell phones are worth more.
- trade until each country has exactly equal number of cell phones and computers which will then create efficiency.
- freely trade computers and cell phones to meet improve allocative efficiency.
A: freely trade computers and cell phones to meet improve allocative efficiency.

Q: Paul has two tickets to the next Texan game while Bella has two tickets to the next Rockets game. Bella values the Rockets tickets at $200 while she values the Texans tickets at $250. Paul values the Rockets tickets at $250 and the Texans tickets at $150. Allocative efficiency can be improved for Paul and Bella if
- Paul buys the Rockets tickets from Bella and keeps the Texan tickets.
- Bella buys the Rockets tickets from Paul and keeps the Rockets tickets.
- Paul and Bella exchange tickets for a price agreeable to both.
A: Paul and Bella exchange tickets for a price agreeable to both.

Q: Sanjai has two tickets to a P!nk concert this summer in Houston. Heather has two tickets to the Justin Bieber concert this summer. Heather values the P!nk tickets at $250 while she values the Bieber tickets at $150. Sanjai values the Bieber tickets at $300 and the P!nk Tickets at $175. If Heather and Sanjai want to improve their allocative efficiency,
- Heather can buy the P!nk tickets from Sanjai and keep the Bieber tickets.
- Sanjai can buy the Bieber tickets from Heather and keep the P!nk tickets.
- Heather and Sanjai exchange the tickets for a price they agree upon to satisfy both.
A: Heather and Sanjai exchange the tickets for a price they agree upon to satisfy both.

Q: Countries or individuals will keep trading computers for phones until
- each country acquires as many computers and phones as they can.
- the additional benefit from the last traded phone will equal the additional benefit from the last computer.
- the value of each additional phone and computer is equal for both countries or individuals.
A: the value of each additional phone and computer is equal for both countries or individuals.

Q: Individuals and countries will continue to trade airplanes for cars until
- each country acquires as many airplanes and cars as they can.
- the additional benefit from the last traded car will equal the additional benefit from the last plane.
- the value of each additional airplane and car is equal for both countries or individuals.
A: the value of each additional airplane and car is equal for both countries or individuals.

Q: Isabel experiences diminishing marginal utility when
- the price of each additional hat she purchases falls when she gets volume discounts.
- the value of the hats she purchased start to fall as they wear out over time.
- the value to her of each additional hat she purchases start falling.
A: the value to her of each additional hat she purchases start falling.

Q: When Ian experiences diminishing marginal utility when buying shirts,
- the price of each additional shirt he purchases falls when he gets volume discounts.
- the value of the shirt he purchased start to fall as they wear out over time.
- the personal value of each additional shirt he purchases starts to fall.
A: the personal value of each additional shirt he purchases starts to fall.

Q: Which of the following describes consumer surplus?
- The difference between an item's production cost and the amount paid by consumers.
- The amount a seller is paid for a good minus the seller's actual cost.
- The social surplus minus producer surplus.
A: The social surplus minus producer surplus.

Q: If you were describing consumer surplus, you would say it is
- the difference between an item's production cost and the amount paid by consumers.
- the amount a seller is paid for a good minus the seller's actual cost.
- the social surplus minus producer surplus.
A: the social surplus minus producer surplus.

Q: When describing consumer surplus, you would say it is the extra benefit consumers receive when they ________.
- pay more than they would have been willing to pay
- pay exactly what they would have been willing to pay
- pay less than they would have been willing to pay
A: pay less than they would have been willing to pay

Q: Consumer surplus is best described as the extra benefit consumers receive when they ________.
- pay more than they would have been willing to pay
- pay exactly what they would have been willing to pay
- pay less than they would have been willing to pay
A: pay less than they would have been willing to pay

Q: Which of the following represents consumer surplus?
- B
- B+A
- A
A: A

Q: Look at the graph provided. What area on the graph represents consumer surplus?
- B
- B+A
- A
A: A

Q: Look at the graph provided below. Consumer surplus is:

and has an upward slope. D1 starts at approximately (0,16) and has a downward slope. The two lines cross at the point (30,14))
- $60
- $120
- $30
A: $30

Q: Refer to the figure below. Consumer surplus is:
- $60
- $120
- $30
A: $30

Q: Which area represents producer surplus in the following figure?
- Area A
- Area B
- Area C
A: Area C

Q: In the following figure, which area represents producer surplus?
- A
- B+A
- B
A: B

Q: Refer to the figure below (remember to use the formula for a triangle to find the amount of surplus). What is the producer surplus?
- $400
- $60
- $180
A: $180

Q: In the following figure, which area represents producer surplus?
- Area A
- Area B
- Area C
A: Area C

Q: Which of the following represents producer surplus?
- A
- B+A
- B
A: B

Q: Refer to the figure below. What is producer surplus?
- $420
- $60
- $180
A: $180

Q: If Von’s company can produce hang gliders for $10,000 but Valeria is willing to pay $15,000 and finds the model she wants and pays $15,000 for it from his company. Von’s company has
- a consumer surplus of $5,000.
- a social surplus of $15,000.
- a producer surplus of $5,000.
A: a producer surplus of $5,000.

Q: The Kreidler Kids company can produce swing sets for $1,000. Kendra wants a new swing set for her children and will pay $1,500 for it. Kendra finds the swing set she wants and pays $1,500 for it from the Kreidler Kids company. The Kreidler Kids company has
- a consumer surplus of $500.
- a social surplus of $1,500.
- a producer surplus of $500.
A: a producer surplus of $500.

Q: Social surplus is ________.
- consumer surplus minus producer surplus
- producer surplus minus consumer surplus
- the sum of consumer surplus and producer surplus
A: the sum of consumer surplus and producer surplus

Q: If the total surplus in a market with no government intervention is $500 and consumer surplus is $200, producer surplus is ________.
- $700
- $250
- $300
A: $300

Q: If the consumer surplus is $1000 and the producer surplus is $300, social surplus is ________.
- $700
- -$700
- $1300
A: $1300

Q: Refer to the figure below. What is total surplus area?
- $105
- $420
- $210
A: $210

Q: The sum of consumer surplus and producer surplus is know as ________.
- consumer surplus
- producer surplus
- social surplus
A: social surplus

Q: If the total surplus in a market is $5000, and there is has no government intervention, but the producer surplus is $200, consumer surplus is ________.
- $700
- $250
- $300
A: $300

Q: If the producer surplus is $1000 and the consumer surplus is $300, social surplus is ________.
- $700
- -$700
- $1300
A: $1300

Q: What is total surplus area from the figure below?
- $105
- $420
- $210
A: $210

Q: In a market with an upward sloping supply curve and a downward sloping demand curve, a price floor ________.
- does not affect surplus
- increases total social surplus
- creates deadweight loss
A: creates deadweight loss

Q: ________ describes the loss in social surplus that occurs when the economy produces at an inefficient quantity.
- Consumer surplus
- Producer surplus
- Deadweight loss
A: Deadweight loss

Q: Compare a market operating at a quantity lower than equilibrium (ie. a price floor) with the same market operating at the equilibrium quantity. Which of the following statements are true?
- It is unclear if the consumer surplus is greater or less at the market operating below equilibrium.
- A market operating below equilibrium will transfer some producer surplus to consumers.
- A market operating below equilibrium will transfer some consumer surplus to producers.
A: A market operating below equilibrium will transfer some consumer surplus to producers.

Q: Which of the following statements are true if you are comparing a market that is operating at a quantity lower than equilibrium (ie. a price floor) with the same market operating at the equilibrium quantity?
- It is unclear if the consumer surplus is greater or less at the market operating below equilibrium.
- A market operating below equilibrium will transfer some producer surplus to consumers.
- A market operating below equilibrium will transfer some consumer surplus to producers.
A: A market operating below equilibrium will transfer some consumer surplus to producers.

Q: A price ceiling causes consumer surplus to
- decrease.
- move to equilibrium.
- increase.
A: increase.

Q: An increase in consumer surplus is caused by
- a move to equilibrium.
- a price floor.
- a price ceiling.
A: a price ceiling.

Q: Consider the market for purple potatoes below and assume that a price ceiling of $30 is imposed by the government. Calculate the deadweight loss:
- The deadweight loss is $2500.
- The deadweight loss is $2000.
- The deadweight loss is $5000.
A: The deadweight loss is $5000.

Q: Consider the market for purple potatoes below and assume that a price ceiling of $30 is imposed by the government. While calculating the deadweight loss, what is the loss of consumer surplus?
- The loss of consumer surplus is $5000.
- The loss of consumer surplus is $2000.
- The loss of consumer surplus is $2500.
A: The loss of consumer surplus is $2500.