surplus Mcqs
1. A buyers willingness to pay is that buyers ?
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A. consumer surplus

B. none of these answers

C. producer surplus.

D. minimum amount they are willing to pay for a good

E. maximum amount they are willing to pay for a good
2. 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 ?
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A. efficiency Saleem should receive the glove

B. Efficiency Jamil should receive the glove

C. equity Jamil should receive the glove

D. consumer surplus both should receive a glove

3. Medical care clearly enhance peoples lives. Therefore, we should consume medical care until ?
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A. everyone has as much as they would like

B. we must cut back on the consumption of other goods.

C. buyers receive no benefit from another unit of medical care.

D. the benefit buyers place on medical care is equal to the cost of producing it
4. An increase in the price of a good along a stationary supply curve______________?
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A. decrease producer surplus

B. increase producer surplus

C. improves market equity

D. does all the things describe in these answers

5. If a producer has market power (can influence the price of the product in the market) then free market solutions ?
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A. maximize consumer surplus

B. are inefficient

C. are equitable.

D. are efficient

6. Total surplus is the area_______________?
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A. below the supply curve and above the price

B. below the demand curve and above the supply curve

C. above the supply curve and below the price

D. above the demand curve and below the price

E. below the demand curve and above the price

7. The sellers cost of production is ?
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A. the sellers consumer surplus

B. none of these answers.

C. the sellers producer surplus

D. the minimum amount the seller is willing to accept for a good

E. the maximum amount the seller is willing to accept for a good

8. Adam smiths invisible hand concept suggests that a competitive market outcome ?
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A. maximizes total surplus

B. generates equality among the members of society

C. minimizes total surplus

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

9. If a benevolent social planner chooses to produce more than the equilibrium quantity of a good, then ?
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A. the value placed on the last unit of production by buyers exceeds the cost of production

B. the cost of production on the last unit produced exceeds the value placed on it by buyers.

C. producer surplus is maximized

D. consumer surplus is maximized

E. total surplus is maximized

10. If buyers are rational and there is no market failure ?
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A. free market solutions are efficient

B. all of these answers

C. free market solutions maximize total surplus

D. free market solutions are efficient and free market solutions maximize total surplus

E. free market solutions are equitable

11. In general, if a benevolent social planner wanted to maximize the total benefits received by buyers and sellers in a market, the planner should?
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A. 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).

B. allow the market to seek equilibrium on its own.

C. choose a price below the market equilibrium price

D. choose a price above the market equilibrium price

12. 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 ?
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A. Rs200

B. Rs400

C. Rs300

D. Rs500

13. If a benevolent social planner chooses to producer less than the equilibrium quantity of a good, then ?
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A. the value placed on the last unit production by buyers exceeds the cost of production.

B. the cost of production on the last unit produced exceeds the value placed on it by buyers.

C. producer surplus is maximized

D. total surplus is maximized

E. consumer surplus is maximized

14. An increase in the price of a good along a stationary demand curve ?
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A. decrease consumer surplus

B. improves market efficiency.

C. improves the material welfare of the buyers.

D. increase consumer surplus.

15. Producer surplus is the area ?
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A. below the demand curve and above the supply curve

B. above the supply curve and below the price

C. below the demand curve and above the price

D. above the demand curve and below the price

E. below the supply curve and above the price

16. If a market is efficient then_______?
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A. the market allocates buyers to the sellers who can produce the good at least cost

B. the market allocates output to the buyers that value it the most

C. the quantity produced in the market maximizes the sum of consumer and producer surplus

D. none of these answers

E. all these answers
17. If a market generates a side effect or externlity then free market solutions ?
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A. are equitable

B. are inefficient

C. are efficient

D. maximize producer surplus

18. Consumer surplus is the area ?
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A. above the demand curve and below the price.

B. below the supply curve and above the price.

C. below the demand curve and above the supply curve

D. below the demand curve and above the price.

E. above the supply curve and below the price.

19. If a buyers 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 ?
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A. Rs2,000

B. Rs20,000

C. Rs18,000

D. Rs0.

20. 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 ?
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A. One vase will be sold, and consumer surplus is Rs30.

B. Three vases will be sold, and consumer surplus is Rs0.

C. Three vases will be sold, and consumer surplus is Rs80

D. Two vases will be sold, and consumer surplus is Rs5.

E. One vase will be sold, and consumer surplus is Rs5.