Quiz 2

Question 1

Amy buys a new computer for her studies for $1500. She receives consumer surplus of $250 from the purchase. How much does Amy value her computer?

Answer 1

$1750

Question 2

Donald produces nails at a cost of $700 per ton. If he sells the nails for $900 per ton, his producer surplus is:

Answer 2

$200 per ton

Question 3

A consumer’s willingness to pay is:

Answer 3

the maximum amount he or she is prepared to pay for a good

Question 4

A group of people are bidding on an internet auction for a used car. Each bidder will not bid more than a maximum amount that is unique to them. This maximum is called:

Answer 4

willingness to pay

Question 5

A demand curve reflects each of the following EXCEPT the:

Answer 5

ability of buyers to obtain the quantity they desire

Question 6

Lucy often buys fish and is able to buy it for less than she is willing-to-pay. She later learns that fish has more health benefits than she realised. She now values fish even more than before. If the market price of fish does not change then:

Answer 6

Lucy’s consumer surplus will increase

Question 7

When the price falls from P2 to P1, which of the following is NOT true?

Answer 7

the total cost of what is now sold by sellers is actually higher

Question 8

Lee is willing and able to pay $250 for an iPhone but is able to buy it for $199. Lee’s consumer surplus is:

Answer 8

$51

Question 9

Producer surplus measures the:

Answer 9

wellbeing of sellers

Question 10

If Brock is willing to pay $800 for a new suit but is able to buy the suit for $450, his consumer surplus is:

Answer 10

$350