Multiple Choice
In microeconomics, the percentage of total market sales accruing to one specific firm is called the:
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
Multiple Choice
Refer to Figure 7-9. At equilibrium, total surplus is represented by the area:
A
between the demand and supply curves beyond the equilibrium quantity
B
below the supply curve and above the equilibrium price
C
between the demand and supply curves up to the equilibrium quantity
D
above the demand curve and below the equilibrium price
Verified step by step guidance1
Step 1: Understand the concept of total surplus in microeconomics. Total surplus is the sum of consumer surplus and producer surplus, representing the overall net benefit to society from the production and consumption of a good.
Step 2: Recall that consumer surplus is the area between the demand curve and the market price, up to the equilibrium quantity, while producer surplus is the area between the supply curve and the market price, also up to the equilibrium quantity.
Step 3: Recognize that the equilibrium quantity is where the demand and supply curves intersect, and the equilibrium price is the price at this intersection point.
Step 4: Visualize or refer to the graph (Figure 7-9) and identify the area between the demand and supply curves from zero quantity up to the equilibrium quantity. This area represents the total surplus because it includes both consumer and producer surplus.
Step 5: Conclude that total surplus is the area between the demand and supply curves up to the equilibrium quantity, not beyond it or below the supply curve or above the demand curve.
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