A level Producer and Consumer Surplus Quizzes

  Revising A level Producer and Consumer Surplus with Quizzes.  

(For Advance Level students studying Economics)

Welcome folks. In this quiz, we are going to look at how beneficial the business(market economy) can be beneficial to both the Producer and the consumers, together with details about the benefits. Before we begin, let us look at the market Economy.

The market is a place for exchange of goods and services. These goods and services together play an important role in the market economy. The market economy comprises of Producers and Consumers. Exchange of goods is done by mainly producers for the services of consumers which could either be payment(cash), or through working for the goods. In these market economies, consumers as well as producers benefit from one another. Even so, there is a point when both parties benefit more than 100% from one another certain times. These extra benefits are what we refer to as consumer and producer surpluses.

Consumer surplus 

This simply is the gain a consumer gets when they spend less money than they normally have to. That is, a consumer getting goods at the same price the producer made the goods, or at an even lower price than that. This could be due to a number of factors for example -Low demand of such goods, old goods/expired products, Private problems/issues the producer have etc .It is also important to note that consumer surplus generally declines with consumption, the more the consumer buys and consumes that same product over and over again, the less utility he gets out of consumption of that product, and this is generally termed Declining consumer surplus. Another logical explanation of this is the law of diminishing marginal utility .

Producer Surplus

Now , producer surplus on the other hand is all about the extra or additional profit, a producer gets for giving out a good at a more higher price than they normally have to. Say for example, a bottle of beer like booster would normally be 650frs, but then in most snacks, that same bottle is sold at even 800frs. Implying a profit of more than 20% normal. this profit is now what is known as producer surplus. A producer surplus combined with a consumer surplus equals overall economic surplus or the benefit provided by producers and consumers interacting in a free market economy as opposed to one with price controls. 

We will now dive into the quizzes where you will be tested on how well you know producer/consumer profit interactions work.

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ENJOY!!!