1.2.8: Consumer And Producer Surplus

Question 1

What is consumer surplus?

Answer 1

The difference between the price the consumer is willing to pay and the price they actually pay.

Question 2

What is producer surplus?

Answer 2

The difference between the price the producer is willing to produce at and the price they actually produce at.

Question 3

Consumer Surplus + Producer Surplus =

Answer 3

Total Surplus/Net Welfare.

Question 4

The more ________ the curve is, the ________ both surpluses are.

Answer 4

Inelastic, higher.

Question 5

Which part of the graph represents consumer surplus?

Answer 5

A, P1, B (the orange triangle).

Question 6

Which part of the graph represents producer surplus?

Answer 6

0, P1, B (the purple triangle).

Question 7

What does the movement D2 -> D1 mean, and how does it affect consumer and producer surpluses?

Answer 7

A rise in demand, and an increase in consumer and producer surpluses.

Question 8

What does the movement D1 -> D2 mean, and how does it affect consumer and producer surpluses?

Answer 8

A fall in demand, and a decrease in consumer and producer surpluses.

Question 9

What does the movement S2 -> S1 mean, and how does it affect consumer and producer surpluses?

Answer 9

A rise in supply, and an increase in consumer and producer surpluses.

Question 10

What does the movement S1 -> S2 mean, and how does it affect consumer and producer surpluses?

Answer 10

A fall in supply, and a decrease in consumer and producer surpluses.