Topic Questions (EASY): Consumer, Producer Surplus

What is meant by consumer surplus?

The difference between the amount consumers would be willing to pay for a good and the cost of producing it.

The difference between the cost of production and the amount consumers actually pay for a good.

The difference between the maximum amount consumers would be willing to pay for a good and the amount they actually pay for it.

The difference between the amount consumers are willing to pay for a good and the amount required by producers to supply the good.

A consumer had $700 and preferred to spend the money on a new refrigerator rather than a new washing machine. When she went to the shop, she found out that the refrigerator cost $600 and the washing machine cost $500. She decided to purchase the refrigerator. What was her consumer surplus and opportunity cost?

Consumer surplus: $100; Opportunity cost: $500

Consumer surplus: $100; Opportunity cost: the washing machine

Consumer surplus: $200; Opportunity cost: $500

Consumer surplus: $600; Opportunity cost: the washing machine

In a competitive market, the graph displays equilibrium at price P and quantity Q. Which region on the graph represents the consumer surplus and which region represents the producer surplus?

consumer surplus: OXYQ; producer surplus: OZYQ

consumer surplus: OXYQ; producer surplus: PYZ

consumer surplus: XYP; producer surplus: OZYQ

consumer surplus: XYP; producer surplus: PYZ