Homework 4
Consumer / Producer Surplus
and Market Intervention
ANSWES
1) The horizontal summation of the demands of each consumer at different price levels is
called:
A) the market demand curve.
B) the price elasticity of market demand.
C) speculative demand.
D) consumer
surplus.
Answer: A
Figure 1
2) Refer to Figure 1 above. The figure depicts the individual demands of the only three
consumers in the market for good X. After constructing the market demand curve, we
determine that the quantity demanded at a price of $10.000 is:
A) 15 units.
B) 17 units.
C) 30.000 units.
D) none of the
above
Answer: B
1
, 3) Aggregation examples of market demand could include:
A) the demand for home computers by households with or without children.
B) the domestic and foreign demand for wheat.
C) the demands of different demographic groups.
D) all of the above
Answer: D
4) The difference between what a consumer is willing to pay for a unit of a good and
what must be paid when actually buying it is called:
A) producer surplus.
B) consumer surplus.
C) cost benefit analysis.
D) net utility.
Answer: B
5) The area below the demand curve and above the price line measures:
A) consumer surplus.
B) economic profit.
C) elasticity of demand.
D) the total value obtained from consuming the good
or service.
Answer: A
Figure 2
6) Referto Figure 2 above. The value of consumer surplus when price is $4 equals:
A) $21.
B) $24.
C) $45.
D) none of the above
Answer: A
2
Consumer / Producer Surplus
and Market Intervention
ANSWES
1) The horizontal summation of the demands of each consumer at different price levels is
called:
A) the market demand curve.
B) the price elasticity of market demand.
C) speculative demand.
D) consumer
surplus.
Answer: A
Figure 1
2) Refer to Figure 1 above. The figure depicts the individual demands of the only three
consumers in the market for good X. After constructing the market demand curve, we
determine that the quantity demanded at a price of $10.000 is:
A) 15 units.
B) 17 units.
C) 30.000 units.
D) none of the
above
Answer: B
1
, 3) Aggregation examples of market demand could include:
A) the demand for home computers by households with or without children.
B) the domestic and foreign demand for wheat.
C) the demands of different demographic groups.
D) all of the above
Answer: D
4) The difference between what a consumer is willing to pay for a unit of a good and
what must be paid when actually buying it is called:
A) producer surplus.
B) consumer surplus.
C) cost benefit analysis.
D) net utility.
Answer: B
5) The area below the demand curve and above the price line measures:
A) consumer surplus.
B) economic profit.
C) elasticity of demand.
D) the total value obtained from consuming the good
or service.
Answer: A
Figure 2
6) Referto Figure 2 above. The value of consumer surplus when price is $4 equals:
A) $21.
B) $24.
C) $45.
D) none of the above
Answer: A
2
