Question

1. A consumer is willing to pay $12 for a good. The equilibrium price is $15. What is the consumer surplus?

	A.	$3
	B.	$12
	C.	$27
	D.	$0; the consumer will not purchase the good at all.

2. The cost to produce good B is $22. the equilibrium price is $31. Find producer surplus.

	A.	$9
	B.	$22
	C.	$31
	D.	$53

3. A price ceiling is more appropriate when lawmakers are concerned about the welfare of

	A.	Consumers.
	B.	Producers.
	C.	Both consumers and producers equally.

4. In order to be binding, a price floor must be set

	A.	Below the market equilibrium price.
	B.	At the market equilibrium price.
	C.	Above the market equilibrium price.

5. A binding price ceiling will create a

	A.	Surplus.
	B.	Shortage.
	C.	Neither a surplus or shortage.
	D.	Impossible to tell.

6. The price elasticity of demand for good Y is 0.9. The price elasticity of supply for good Y is 0.65. A tax is applied to good Y. Who will pay a larger share of the tax?

	A.	Consumers.
	B.	Producers.
	C.	Both will split the tax equally.