1. If total surplus fails, there may have been a(n)___ in demand or a(n)____ in
ID: 1136813 • Letter: 1
Question
1. If total surplus fails, there may have been a(n)___ in demand or a(n)____ in supply
A) increase, decrease
B ) increase, increase
C) decrease, increase
D) decrease, decrease
2. Along a straight-line downward sloping demand curve, a decrease in the market price of a good
A)may either decrease or increase consumer surplus
B) will decrease consumer surplus
C) will increase consumer surplus
D) will cause no change in consumer surplus
3. A price floor that is set above the normal equilibrium price will lead to
A) An increase in consumer surplus, an increase in producer surplus and dead weight loss
B) A decrease in consumer surplus, an increase in producer surplus and dead weight loss
C) A decrease in consumer surplus,a decrease in producer surplus and dead weight loss
D) An increase in consumer surplus, a decrease in producer surplus and dead weight loss
Explanation / Answer
1.Total surplus falls as a result of a reduction in demand or in supply
Answer-D
2.A decrease in market price of a good may increases consumer's surplus because quantity increases when price falls.
Answer-C
3.A price floor which is binding or set above the equilibrium price reduces consumer's surplus because consumers have to pay more,increases producer's surplus and dead weight loss.
Answer--B
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