MCQs of Economics - Surplus – Multiple Choice Question

Question 1 of 20

1. Question

Consumer surplus is the area:

below the demand curve and above the price.
above the supply curve and below the price.
above the demand curve and below the price.
below the supply curve and above the price.
below the demand curve and above the supply curve

Question 2 of 20

2. Question

A buyer’s willingness to pay is that buyer’s

minimum amount they are willing to pay for a good
producer surplus.
consumer surplus
maximum amount they are willing to pay for a good
none of these answers

Question 3 of 20

3. Question

If a buyer’s willingness to pay for a new Honda is Rs20,000 and she is able to actually buy it for Rs18,000 her consumer surplus is

Rs18,000
Rs20,000
Rs2,000
Rs0.

Question 4 of 20

4. Question

An increase in the price of a good along a stationary demand curve

improves the material welfare of the buyers.
decrease consumer surplus
improves market efficiency.
increase consumer surplus.

Question 5 of 20

5. Question

Suppose there are three identical vases available to be purchased. Buyer 1 is willing to pay Rs30 for one, buyer 2 is willing to pay Rs25 for one, and buyer 3 is willing to pay Rs20 for one. If the price is Rs25, how many vases will be sold and what is the value of consumer surplus in this market?

Three vases will be sold and consumer surplus is Rs80
One vase will be sold and consumer surplus is Rs5.
One vase will be sold and consumer surplus is Rs30.
Three vases will be sold and consumer surplus is Rs0.
Two vases will be sold and consumer surplus is Rs5.

Question 6 of 20

6. Question

Producer surplus is the area

below the supply curve and above the price
below the demand curve and above the supply curve
below the demand curve and above the price
above the demand curve and below the price
above the supply curve and below the price

Question 7 of 20

7. Question

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

total surplus is maximized
the value placed on the last unit production by buyers exceeds the cost of production.
producer surplus is maximized
the cost of production on the last unit produced exceeds the value placed on it by buyers.
consumer surplus is maximized

Question 8 of 20

8. Question

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

the value placed on the last unit of production by buyers exceeds the cost of production
the cost of production on the last unit produced exceeds the value placed on it by buyers.
consumer surplus is maximized
total surplus is maximized
producer surplus is maximized

Question 9 of 20

9. Question

The seller’s cost of production is

none of these answers.
the minimum amount the seller is willing to accept for a good
the seller's producer surplus
the maximum amount the seller is willing to accept for a good
the seller's consumer surplus

Question 10 of 20

10. Question

Total surplus is the area

above the supply curve and below the price
below the demand curve and above the price
below the demand curve and above the supply curve
below the supply curve and above the price
above the demand curve and below the price

Question 11 of 20

11. Question

Suppose that the price of a new bicycle is Rs300 Natalie values a new bicycle at Rs 400 it costs Rs200 for the seller to produce the new bicycle. What is the value of total surplus if Natalie buys a new bike?

Rs500
Rs300
Rs200
Rs400

Question 12 of 20

12. Question

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

increase producer surplus
does all of the things described in these answers
decrease producer sruplus
improves market equity

Question 13 of 20

13. Question

Adam smith’s invisible hand concept suggests that a competitive market outcome

maximizes total surplus
generates equality among the members of society
minimizes total surplus
both maximizes total surplus and generates equality among the members of society

Question 14 of 20

14. Question

In general, if a benevolent social planner wanted to maximize the total benefits received by buyers and sellers in a market, the planner should:

choose a price below the market equilibrium price
allow the market to seek equilibrium on its own.
Choose any price the planner wants because the losses to the sellers (buyers) from any change in price are exactly offset by the gains to the buyers (sellers).
choose a price above the market equilibrium price

Question 15 of 20

15. Question

If buyers are rational and there is no market failure

free market solutions are efficient
free market solutions maximize total surplus
all of these answers
free market solutions are equitable
free market solutions are efficient and free market solutions maximize total surplus

Question 16 of 20

16. Question

If a producer has market power (can influence the price of the product in the market) then free market solutions.

are equitable.
are efficeint
maximize consumer surplus
are inefficient

Question 17 of 20

17. Question

If a market is efficient then

the market allocates buyers to the sellers who can produce the good at least cost
all of these answers
none of these answers
the quantity produced in the market maximizes the sum of consumer and producer surplus
the market allocates output to the buyers that value it the most

Question 18 of 20

18. Question

If a market generates a side effect or externlity then free market solutions

maximize producer surplus
are efficient
are inefficient
are equitable

Question 19 of 20

19. Question

Medical care clearly enhance people’s lives. Therefore, we should consume medical care until:

everyone has as much as they would like
the benefit buyers place on medical care is equal to the cost of producing it
buyers receive no benefit from another unit of medical care.
we must cut back on the consumption of other goods.

Question 20 of 20

20. Question

Jamil has ten pairs of football boots and saleem has none. A pair of football boots cost Rs50. to produce. If jamil values an additional pair of boots at RS100 and saleem values a pair of boots at Rs40, then the maxime

efficiency Saleem should receive the glove
Efficiency Jamil should receive the glove
equity Jamil should receive the glove
consumer surplus both should receive a glove

MCQs of Economics – Surplus

Economics - Surplus

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