A level Producer and consumer Surplus Quiz 1

15 Questions

Quiz Description

In this quiz, we are going to be looking at the study of producer and consumer surplus. It contains a lot of interesting theories such as Adam Smith’s invisible hand concept, cost of production, the demand curve, supply curve, and so on. You will learn a lot about this topic after going through this quiz.

Producer surplus can be defined as the difference between the price received by a firm, and the price it is willing to sell at. It is thus the difference between the supply curve and the market price. On the other hand, consumer surplus has to deal with the area between the demand curve and the market price. That is, consumer surplus is the difference between the price consumers pay and the price they are willing to pay. Another important thing to take note of is the marginal cost, which is the price of a product unit along the supply curve. Also, total surplus = producer surplus + consumer surplus.

This economics quiz contains 15+ powerful revision questions to aid you in understanding this topic to your fingertips. All you need to do is take the quiz and see how much you know. Have a nice time answering. 

1:

 If a market generates a side effect or externlity then free market solutions ? 


Correct
  • 1:
    maximize producer surplus
  • 2:
    are efficient
  • 3:
    are inefficient
  • 4:
    are equitable
2:

 If a producer has market power (can influence the price of the product in the market) then free market solutions ? 


Correct
  • 1:
    are equitable.
  • 2:
    are efficient
  • 3:
    maximize consumer surplus
  • 4:
    are inefficient
3:

 If buyers are rational and there is no market failure ? 


Correct
  • 1:
    free market solutions are efficient
  • 2:
    free market solutions are efficient and free market solutions maximize total surplus
  • 3:
    free market solutions are equitable
  • 4:
    all of these answers
4:

 Adam smith’s invisible hand concept suggests that a competitive market outcome ? 


Correct
  • 1:
    maximizes total surplus
  • 2:
    generates equality among the members of society
  • 3:
    minimizes total surplus
  • 4:
    both maximizes total surplus and generates equality among the members of society
5:

 Suppose that the price of a new bicycle is Rs300 Natalie values a new bicycle at Rs 400 it costs Rs200 for the seller to produce the new bicycle. What is the value of total surplus if Natalie buys a new bike ? 


Correct
  • 1:
    Rs500
  • 2:
    Rs300
  • 3:
    Rs200
  • 4:
    Rs400
6:

 The seller’s cost of production is ? 


Correct
  • 1:
    the minimum amount the seller is willing to accept for a good
  • 2:
    the seller’s producer surplus
  • 3:
    the maximum amount the seller is willing to accept for a good
  • 4:
    none of these answers.
7:

 Producer surplus is the area ? 


Correct
  • 1:
    below the supply curve and above the price
  • 2:
    below the demand curve and above the supply curve
  • 3:
    below the demand curve and above the price
  • 4:
    above the demand curve and below the price
8:

 An increase in the price of a good along a stationary demand curve ? 


Correct
  • 1:
    improves the material welfare of the buyers.
  • 2:
    decrease consumer surplus
  • 3:
    improves market efficiency.
  • 4:
    increase consumer surplus.
9:

 A buyer’s willingness to pay is that buyer’s ? 


Correct
  • 1:
    minimum amount they are willing to pay for a good
  • 2:
    producer surplus.
  • 3:
    consumer surplus
  • 4:
    maximum amount they are willing to pay for a good
10:

 Jamil has ten pairs of football boots and saleem has none. A pair of football boots cost Rs50. to produce. If jamil values an additional pair of boots at RS100 and saleem values a pair of boots at Rs40, then the maxime ? 


Correct
  • 1:
    efficiency Saleem should receive the glove
  • 2:
    Efficiency Jamil should receive the glove
  • 3:
    equity Jamil should receive the glove
  • 4:
    consumer surplus both should receive a glove
11:

 Medical care clearly enhance people’s lives. Therefore, we should consume medical care until ? 


Correct
  • 1:
    everyone has as much as they would like
  • 2:
    the benefit buyers place on medical care is equal to the cost of producing it
  • 3:
    buyers receive no benefit from another unit of medical care.
  • 4:
    we must cut back on the consumption of other goods.
12:

 If a market is efficient then_______? 


Correct
  • 1:
    the market allocates buyers to the sellers who can produce the good at least cost
  • 2:
    the quantity produced in the market maximizes the sum of consumer and producer surplus
  • 3:
    the market allocates output to the buyers that value it the most
  • 4:
    all these answers
13:

 In general, if a benevolent social planner wanted to maximize the total benefits received by buyers and sellers in a market, the planner should? 


Correct
  • 1:
    choose a price below the market equilibrium price
  • 2:
    allow the market to seek equilibrium on its own.
  • 3:
    Choose any price the planner wants because the losses to the sellers (buyers) from any change in price are exactly offset by the gains to the buyers (sellers).
  • 4:
    choose a price above the market equilibrium price
14:

 An increase in the price of a good along a stationary supply curve______________? 


Correct
  • 1:
    increase producer surplus
  • 2:
    does all the things describe in these answers
  • 3:
    decrease producer surplus
  • 4:
    improves market equity
15:

 If a buyer’s willingness to pay for a new Honda is Rs20,000 and she is able to actually buy it for Rs18,000 her consumer surplus is ? 


Correct
  • 1:
    Rs18,000
  • 2:
    Rs20,000
  • 3:
    Rs2,000
  • 4:
    Rs0.

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A level Producer and consumer Surplus Quiz 1
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