Consumer's Surplus

Question No. 1 Marks +1 -0 Time

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The concept of Consumer's Surplus was first introduced by which economist?

A. Alfred Marshall
B. Vilfredo Pareto
C. Jules Dupuit
D. Arthur Cecil Pigou

Question No. 2 Marks +1 -0 Time

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Consumer's Surplus is defined as the difference between:

A. Total revenue and total cost
B. Price paid and the total utility received
C. What a consumer is willing to pay and what they actually pay
D. Marginal utility and marginal cost

Question No. 3 Marks +1 -0 Time

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Graphically, Consumer's Surplus is represented by the area:

A. Above the supply curve and below the market price
B. Below the demand curve and above the market price
C. Between the demand and supply curves
D. Below the demand curve and above the x-axis

Question No. 4 Marks +1 -0 Time

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When the price of a product falls, the Consumer's Surplus for existing consumers will:

A. Decrease
B. Increase
C. Remain unchanged
D. Become negative

Question No. 5 Marks +1 -0 Time

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If a consumer is willing to pay ₹100 for a good but buys it for ₹70, their Consumer's Surplus from that unit is:

A. ₹30
B. ₹70
C. ₹100
D. ₹170

Question No. 6 Marks +1 -0 Time

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Which of the following statements about Consumer's Surplus is generally true when the demand curve is downward sloping?

A. It is always zero at the market equilibrium.
B. It decreases with a decrease in price.
C. It is positive for most units consumed.
D. It represents the producer's profit.

Question No. 7 Marks +1 -0 Time

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A perfectly inelastic demand curve implies that Consumer's Surplus is:

A. Zero
B. Infinite
C. Potentially very large if the market price is low
D. Equal to total revenue

Question No. 8 Marks +1 -0 Time

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Total Consumer's Surplus for a market is the sum of:

A. Individual consumer's surpluses at their respective prices
B. The surpluses of all consumers who purchase the product
C. The difference between total utility and total expenditure
D. Both B and C

Question No. 9 Marks +1 -0 Time

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The concept of Consumer's Surplus assumes that the marginal utility of money is:

A. Increasing
B. Decreasing
C. Constant
D. Zero

Question No. 10 Marks +1 -0 Time

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If the government imposes a price ceiling below the equilibrium price, how does it affect Consumer's Surplus?

A. It always increases Consumer's Surplus.
B. It always decreases Consumer's Surplus.
C. It may increase or decrease, depending on the elasticity of demand and supply, and it often leads to a deadweight loss.
D. It transfers surplus from consumers to producers.

Question No. 11 Marks +1 -0 Time

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Which of the following scenarios would lead to an increase in Consumer's Surplus?

A. An increase in the price of a complementary good.
B. A decrease in consumer income for a normal good.
C. Technological advancements leading to lower production costs and prices.
D. An increase in sales tax on the product.

Question No. 12 Marks +1 -0 Time

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Consumer's Surplus is a measure of:

A. Producer efficiency
B. Consumer welfare
C. Government tax revenue
D. Market share

Question No. 13 Marks +1 -0 Time

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In the case of perfect price discrimination (first-degree price discrimination), what happens to Consumer's Surplus?

A. It increases significantly.
B. It remains unchanged.
C. It is completely eliminated.
D. It is transferred entirely to the government.

Question No. 14 Marks +1 -0 Time

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If the market price of a good increases, assuming a downward-sloping demand curve, Consumer's Surplus will:

A. Increase
B. Decrease
C. Remain constant
D. Become equal to producer surplus

Question No. 15 Marks +1 -0 Time

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Which of the following is NOT an application of the Consumer's Surplus concept?

A. Evaluating the welfare impact of government policies (e.g., taxes, subsidies).
B. Determining the optimal level of production for a firm.
C. Assessing the benefits from public goods.
D. Measuring the gains from international trade.

Question No. 16 Marks +1 -0 Time

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A consumer values the first unit of a good at ₹50, the second at ₹40, and the third at ₹30. If the market price is ₹35 per unit, what is the total Consumer's Surplus for this consumer?

A. ₹15
B. ₹20
C. ₹25
D. ₹30

Question No. 17 Marks +1 -0 Time

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If the demand curve is perfectly elastic, the Consumer's Surplus will be:

A. Maximum
B. Minimum
C. Zero
D. Equal to total expenditure

Question No. 18 Marks +1 -0 Time

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The concept of Consumer's Surplus is directly linked to the principle of:

A. Economies of scale
B. Diminishing marginal utility
C. Increasing returns to scale
D. Comparative advantage

Question No. 19 Marks +1 -0 Time

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A subsidy provided to producers of a good will likely lead to:

A. A decrease in Consumer's Surplus
B. No change in Consumer's Surplus
C. An increase in Consumer's Surplus
D. A transfer of surplus from consumers to the government

Question No. 20 Marks +1 -0 Time

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Which factor, if it increases, would tend to decrease Consumer's Surplus for a specific product?

A. Consumer income (for a normal good)
B. Availability of close substitutes
C. Product quality
D. Production efficiency

Question No. 21 Marks +1 -0 Time

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If the demand curve for a product is represented by P = 100 - 2Q, and the market price is P = 40, what is the Consumer's Surplus?

A. ₹900
B. ₹1200
C. ₹1600
D. ₹1800

Question No. 22 Marks +1 -0 Time

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The paradox of value (water-diamond paradox) can be partially explained by recognizing that:

A. Water has a higher total utility but lower marginal utility, resulting in significant Consumer's Surplus.
B. Diamonds have a higher total utility but lower marginal utility, resulting in minimal Consumer's Surplus.
C. The price of water reflects its total utility, while the price of diamonds reflects their total utility.
D. Consumer's Surplus is irrelevant in understanding intrinsic value.

Question No. 23 Marks +1 -0 Time

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An excise tax imposed on a good will typically lead to a reduction in Consumer's Surplus because:

A. It decreases the quantity demanded but keeps the price constant.
B. It increases the price paid by consumers and reduces the quantity consumed.
C. It shifts the demand curve upwards, increasing willingness to pay.
D. It transfers surplus solely to producers.

Question No. 24 Marks +1 -0 Time

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Which type of elasticity of demand would generally result in a larger Consumer's Surplus, assuming a given market price?

A. Perfectly elastic demand
B. Relatively elastic demand
C. Unit elastic demand
D. Relatively inelastic demand

Question No. 25 Marks +1 -0 Time

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The concept of Consumer's Surplus is crucial for evaluating market efficiency, especially when considering:

A. Only the profits of firms.
B. Only the costs of production.
C. The overall welfare derived by consumers and producers from market exchange.
D. The size of government intervention.

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