consumer and producer surplus

Question 1

what is consumer surplus

Answer 1

the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually pay.

Question 2

which part of a graph shows consumer surplus

Answer 2

the area under the demand curve and above the market price

Question 3

what effect does higher supply costs have on consumer surplus

Answer 3

a fall in consumer surplus

Question 4

what effect does lower supply costs have on consumer surplus

Answer 4

a rise in consumer surplus

Question 5

what effect does higher market demand have on consumer surplus

Answer 5

consumer surplus rises

Question 6

what effect does lower market demand have on consumer surplus

Answer 6

consumer surplus falls

Question 7

what is producer surplus

Answer 7

the difference between the price that producers are willing and able to supply a good or service for and the price they actually receive

Question 8

which part of a graph shows consumer surplus

Answer 8

the area above the supply curve and below the current market price

Question 9

what effect does lower supply have on producer surplus

Answer 9

producer surplus increases

Question 10

what effect does higher supply have on producer surplus

Answer 10

producer surplus decreases

Question 11

what effect does an increase in market demand have on producer surplus

Answer 11

a rise in producer surplus

Question 12

what effect does a decrease in market demand have on producer surplus

Answer 12

a fall in producer surplus

Question 13

what is the coordination problem

Answer 13

when there are unlimited wants but finite resources, it is necessary to make decisions on which goods and services should be provided, how and for who