1.2.8

Question 1

What is consumer surplus?

Answer 1

A measure of the welfare that people gain from consuming goods and services

Question 2

Consumer surplus is the different between?

Answer 2

The maximum consumers are willing and able to pay for the good/service and the total amount they actually pay

Question 3

How is consumer surplus affected by elasticity of a demand curve?

Answer 3

Demand in inelastic there is greater potential consumer surplus as some buyers are willing to pay a high price to continue consuming.

Question 4

When demand for a good or service is perfectly elastic consumer surplus is?

Answer 4

ZERO
Because the price that people pay matches what they are willing to pay

Question 5

When demand is perfectly inelastic consumer surplus is?

Answer 5

INFINITE
Demand does not respond to price change

Question 6

How do producers take advantage of consumer surplus when setting prices?

Answer 6

Identify consumers who are willing/able to pay different prices for same product, they use PRICE DISCRIMINATION

Question 7

How does price discrimination impact consumer surplus?

Answer 7

Turns it it into producer surplus

Question 8

What is producer surplus?

Answer 8

Difference between what producers are willing and able to supply a good for and the price they actually recieve