Micro 7 - Consumer surplus

Question 1

Consumer surplus definition

Answer 1

The difference between what consumers are willing to pay and what they actually pay

Question 2

What is consumer surplus a measure of?

Answer 2

It’s a measure of the additional benefit that consumers receive because they’re paying less for something than what they were willing to pay.

Question 3

Where is consumer surplus illustrated?

Answer 3

Below the demand curve, above the market price.

Question 4

What is the effect of an increase in price on consumer surplus?

Answer 4

contraction in consumer surplus, meaning it decreases consumer surplus.

Question 5

What is the impact of a decrease in price on consumer surplus?

Answer 5

Expansion in consumer surplus, meaning it increases the consumer surplus.

Question 6

How do you label consumer surplus?

Answer 6

e.g - P1, A, C