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Question Bank - Economics

Markets: Elasticity

Q1. Joe has ten pairs of football boots and Sue has none. A pair of football boots costs €50 to produce. If Joe values an additional pair of boots at €100 and Sue values a pair of boots at €40, then to maximize

(Select one answer)

(a) * efficiency Sue should receive the glove. b. . c. equity, Joe should receive the glove. d. consumer surplus both should receive a glove
(b) * negative but greater than -1
(c) * positive and greater than 1
(d) * zero

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Q2. Consumer surplus is the area

(Select one answer)

(a) * below the demand curve and above the price
(b) * above the supply curve and below the price
(c) * above the demand curve and below the price
(d) * below the supply curve and above the price
(d) * below the demand curve and above the supply curve

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Q3. Total surplus is the area

(Select one answer)

(a) * above the supply curve and below the price
(b) * below the demand curve and above the price
(c) * below the demand curve and above the supply curve
(d) * below the supply curve and above the price
(e) * above the demand curve and below the price

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Q4. If a benevolent social planner chooses to produce less than the equilibrium quantity of a good, then

(Select one answer)

(a) * total surplus is maximized
(b) * the value placed on the last unit of production by buyers exceeds the cost of production
(c) * producer surplus is maximized
(d) * the cost of production on the last unit produced exceeds the value placed on it by buyers
(e) * consumer surplus is maximized

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Q5. An increase in the price of a good along a stationary supply curve

(Select one answer)

(a) * increases producer surplus
(b) * does all of the things described in these answers
(c) * decreases producer surplus
(d) * improves market equity

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Q6. A buyer's willingness to pay is that buyer's

(Select one answer)

(a) * minimum amount they are willing to pay for a good
(b) * producer surplus
(c) * consumer surplus
(d) * maximum amount they are willing to pay for a good

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Q7. The seller's cost of production is

(Select one answer)

(a) * none of these answers
(b) * the minimum amount the seller is willing to accept for a good
(c) * the seller's producer surplus
(d) * the maximum amount the seller is willing to accept for a good
(e) * the seller's consumer surplus

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