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ECS1501-25-EX10C

ECS1501-25-EX10C

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Total surplus is

the difference between price and the cost to the seller.

equal to the area below the demand curve.

always more for consumers than producers.

the sum of consumer and producer surplus.

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This question is based on the following diagram.

If the price rises from P1 to P2, consumer surplus decreases by the area

This question is based on the following diagram.

A binding price ceiling is represented by

point C.

P₃.

P₂.

P₁.

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If the income elasticity of demand for a good is 3, a 10 per cent increase in income results in a

3 per cent increase in the quantity demanded.

300 per cent increase in the quantity demanded.

30 per cent increase in the quantity demanded.

30 per cent decrease in the quantity demanded.

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Lerato decided to start selling ginger beer on her street. The other kids in the neighbourhood noticed that Lerato was making a lot of money selling ginger beer and they decided to open their own ginger beer stand. When they did so, the equilibrium price

decreased and the equilibrium quantity decreased.

increased and the equilibrium quantity increased.

100%

increased and the equilibrium quantity decreased.

decreased and the equilibrium quantity increased.

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Which of the diagrams shows a relatively elastic supply curve?